In short: His suggested diversifier for a subscriber asking how to get away from AI exposure without leaving equities: "within financials the property and casualty subsector is uncorrelated to AI and to the economy" — one of "three" ETFs he names. Same answer as Aug 28, now given as an explicit suggestion.
An ETF is a fund that trades like a single stock but holds a basket of companies. This one holds property and casualty insurers, the companies that insure homes, cars and businesses. Eisman's point is that their profits depend on insurance pricing, not on artificial intelligence or on how fast the economy grows.
So for someone whose portfolio is full of AI-linked stocks, this is one way to own something that moves for different reasons. He offers it as a suggestion for spreading risk, not as a call that insurers will beat the market.
20:26So buying a healthcare or staples ETF would help diversification. Thankfully almost every sector of the S&P 500 has a subsector that is uncorrelated. So for example within financials the property and casualty subsector is uncorrelated to AI and to the economy and there are ETFs that have low volatility stocks that would provide subdiversification.
In short: The one concrete instrument he names, offered as a lower-risk place to sit for someone de-risking out of concentrated AI gains: "I could tell you certain ETFs that you could buy that would be lower risk. Like you could buy the KBWP, which is the property and casualty insurance index ETF. Just as one example." Explicitly an example, not a recommendation.
An ETF is a fund that trades like a share; this one holds property and casualty insurers — the companies that insure homes, cars and businesses. Their earnings come from premiums and investment income, and have essentially nothing to do with whether AI spending continues.
Eisman raises it in answer to a hard practical problem. People who bought the AI winners early are sitting on huge unrealised gains, and selling triggers "35% plus in capital gains taxes." That tax bill keeps them locked into a concentrated position even when they are nervous — which is why he thinks "most people are going to sell" is the wrong assumption to build a crash forecast on. For anyone who does want to reduce risk, he names this ETF as one example of somewhere less exposed to the single trade dominating everything else. He frames it as an illustration, not a recommendation — "just as one example."
14:20Like you could buy the KBWP, which is the property and casualty insurance index ETF. Just as one example. But the problem is people have such embedded gains that I don't think most people are going to sell. And so, I think it's a very difficult question. — Mhm. Let me present to you another long-term trend, Steve.
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