People talk about jobs being replaced and entire industries going away because of AI, yet they keep pouring money into S&P 500 index funds. Think about that for a minute. If you made a list of the 500 companies in the S&P 500, how many of them won’t be here in four or five years? And what happens to them over the next one to two years?
If you put your money in the S&P 500 and half of those companies start heading toward zero, that’s going to really hurt your portfolio. We have to be more careful about which businesses we invest in. That means looking beyond the company itself and asking whether the thing it does is going to exist in the future.
Key points
- Many investors expect AI to disrupt industries but still buy the whole index.
- Some S&P 500 companies may not survive the next four to five years.
- Index funds expose you to the losers as well as the winners.
- Ask whether a company’s core business will still exist in an AI-driven future.
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