Investors have been well rewarded for taking risk and for exposure to innovation. Since 2023, the AI‑driven rally in global technology stocks has boosted equities, while bonds lagged due to inflation and fiscal shocks such as the US tariff shock and the Middle East war.

This divergence has left many portfolios less balanced. Christian Mueller‑Glissmann, head of asset allocation research at Goldman Sachs, notes that equity outperformance has reshaped allocations, with the Magnificent Seven dominating the S&P 500 and semiconductor firms in the US and North Asia adding cyclical risk.

Historical periods — the 1920s, 1950s, dot‑com bubble — show similar concentration, but today’s AI capex boom could hurt returns if profitability falls before adoption benefits appear. Inflation volatility and fiscal risks also reduce bonds’ buffering capacity.

Rather than timing the market, the author recommends staying invested while adding diversification: real assets (commodities, infrastructure, real estate), style diversification (low‑volatility, high‑dividend stocks), and regional/currency exposure. The dot‑com bust showed low‑volatility stocks rising while the S&P 500 fell ~50% and Nasdaq ~80%.