09/2025 AI - World Takeover?
Full written article below with sources.
Disclaimer: Because of the increased regulation and compliance in the financial industry, I want to start with saying everything in this newsletter is based on my opinion and is not predictive in any way.
Is AI going to take over the world? Are significant jobs going to be lost because of AI? Is AI a growing bubble, I mean, Nvidia is now larger than the German, UK, and France markets combined! source
These are some of the common questions I’m getting from clients around AI.
As I see it, the real issue being posed here isn’t just around AI, it’s around saying “this time is different” – this time with AI, the future is going to be different than in all the times prior.
Is that a correct statement or sentiment? Who knows. No one on this earth knows the future.
What we do know is history. In this month’s newsletter I’m going to use history as a guide and look at other periods of time with great uncertainty and see if this helps to put the AI conversation in perspective.
Over the past century, the stock market has endured many “this time is different” moments —times when the future seemed uncertain or even incredibly bleak, similar to today's AI anxieties about job displacement and overvaluation. These events often caused sharp declines, but historically, markets recovered every time, rewarding patient, diversified investors. Here are some examples:
The 1929 Stock Market Crash and Great Depression (1929–1939)
Speculative bubbles and bank failures led to unemployment reaching 25% and the Dow plunging 89%. It felt like the end of capitalism.
World War II Outbreak (1939–1945)
Global conflict fears caused the S&P 500 to drop 40%. Wartime rationing amplified uncertainty.
Cuban Missile Crisis (October 1962)
Nuclear brinkmanship paralyzed the world, with the S&P 500 falling 22.8%.
1973–1974 Oil Crisis and Stagflation
OPEC's embargo quadrupled oil prices, triggering a 48% S&P drop amid inflation and recession fears.
Black Monday (October 1987)
A 22.6% single-day Dow crash amid trading fears evoked systemic panic.
Dot-Com Bubble Burst (2000–2002)
Internet hype collapsed, worsened by 9/11, with the Nasdaq down 78% and S&P 49%.
Global Financial Crisis (2007–2009)
Mortgage failures sparked a 57% S&P plunge, feeling like finance's collapse.
COVID-19 Pandemic (2020)
Uncertainty caused a 34% S&P drop in March.
These periods highlight that while uncertainty—like AI's potential bubble or job shifts—feels and is unprecedented, markets have historically adapted, every time.
Today's AI concerns echo past times where “this time was different.”
So how do I see it?
Let’s say that every time we had a “this time is different” moment, we moved to cash, ask yourself with having the benefit of history, would that have been the right decision?
Of course, staying invested has historically been the right decision! But…. Could this time be different? Of course it could!
Don’t take my word for it, listen to the famous investor Sir John Templeton who said… “This time is different are the four most dangerous words in investing.”
Here’s a fun chart, a little dated, but you get the idea. If you listened to the “experts” when they said to get out of the market. Sourced from JPM
What’s my broad encouragement?
Stay the course, stay invested, we don’t know how this will all turn out. We do know that the businesses we invest in have a history of navigating market changes and figuring out ways to make money and return value to their shareholders, people like you and me.
My guess is that AI will aide these businesses in making money and returning value to their shareholders.
If you’re reading this and you aren’t 100% confident in your strategy, please reach out to me so we can discuss.
Additional Data: Each month I get asked by clients what additional resources I’m looking at. Please hear me in stating I’m not trying to predict anything whatsoever, just some of the interesting data I’m watching.
- Why Diversify? The first chart outlines the surprising reality that US and International Small Cap stocks have outperformed the S&P 500 over the past 5 years. The second chart show that they Nasdaq 100 has just compounded at 8% per year this century. Did these surprise you? awealthofcommonsense.com
- Breakeven Inflation Rate - 5-Year Breakeven inflation rate is now 2.48%. When you study this chart, you’ll see it goes back to 2004.
- Debt Interest Payments – Most in this country would agree that the Federal Debt is just too high, but did you realize that the interest payments on this debt is now over 1.1 trillion a year? What should we do about it? My guess is we should balance the government budget…. But no one is asking me. What’s more, there’s about 3 Trillion in debt to be reissued in 2025 and the broad assumption is that the new interest rates will be quite a bit higher on the reissued debt. So what will this mean? It’ll likely mean even a greater about of debt interest payments.
- Government Tax Receipts vs. Expenditures – This resource looks at the quarter over quarter changes in Government receipts versus expenditures. We’ll hopefully, see a trend start to emerge.
In closing: We of course cannot control what the market does from here and we cannot predict when the next market downturn will occur. But we can control our behavior to these outside events and continue to stick with our long-term investment strategy.
As always, if you have any questions/concerns please contact me.
David Hobbs, CFP®
Wealth Advisor | Owner
Hobbs Wealth Management
Past performance may not be indicative of future results. Investing in securities involves risks, including the potential for loss of principal. There is no guarantee that any investment plan or strategy will be successful.
**Case Study Disclosure** The case study presented is purely hypothetical and does not represent actual client results. This study is provided for educational purposes only. Similar, or even positive results, cannot be guaranteed. Each client has their own unique set of circumstances so products and strategies may not by suitable for all people. Please consult with a qualified professional before implementing any strategy discussed herein. No portion of this case study is to be interpreted as a testimonial or endorsement of the firms' investment advisory services.
Standard & Poor’s 500 (S&P 500) - a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy.
Russell 2000 – The index measures the performance of the small-cap segment of the US equity universe. It is a subset of the Russell 3000 and includes approximately 2000 of the smallest securities based on a combination of their market cap and current index membership.
MSCI ACWI ex USA – The index measures the performance of the large and mid-cap segments of the particular regions, excluding USA equity securities, including developed and emerging market. It is free float-adjusted market-capitalization weighted.
Federal Funds Rate - refers to the target interest rate set by the Federal Open Market Committee (FOMC). This target is the rate at which commercial banks borrow and lend their excess reserves to each other overnight.
This report was prepared by Hobbs Wealth Management a State registered investment adviser under the Investment Advisers Act of 1940. Registration as an investment adviser does not imply a certain level of skill or training. The oral and written communications of an adviser provide you with information about which you determine to hire or retain an adviser. Neither the information nor any opinion expressed it so be construed as solicitation to buy or sell a security of personalized investment, tax, or legal advice. For more information please visit: https://adviserinfo.sec.gov/ and search for our firm name.
This newsletter is prepared to provide a degree of insight into the analysis used by Hobbs Wealth Management to make investment decisions. It is not a complete description of all factors used by Hobbs Wealth Management to make decisions on behalf of clients. The opinions included are not intended to be taken as fact, but are Hobbs Wealth Management’s interpretation of the impact of external events on investments.
The information herein was obtained from various sources. Hobbs Wealth Management does not guarantee the accuracy or completeness of information provided by third parties. The information in this report is given as of the date indicated and believed to be reliable. Hobbs Wealth Management assumes no obligation to update this information, or to advise on further developments relating to it.
This article contains external links directing you to a third-party website. Although we have reviewed the website prior to creating the link, we are not responsible for the content of the sites.
An index is an unmanaged portfolio of specific securities, the performance of which is often used as a benchmark in judging the relative performance of certain asset classes. Investors cannot invest directly in an index. An index does not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the performance shown.
The mention of specific securities and sectors illustrates the application of our investment approach only and is not to be considered a recommendation. The specific securities identified and described herein do not represent all of the securities purchased or sold for the portfolio, and it should not be assumed that investment in these securities were or will be profitable. There is no assurance that the securities purchased remain in the portfolio or that securities sold have not been repurchased. For a complete list of holdings please contact your portfolio advisor.
Hobbs Wealth Management may discuss and display, charts, graphs, formulas, stock and sector picks which are not intended to be used by themselves to determine which securities to buy or sell, or when to buy or sell them. This specific information is limited and should not be used on their own to make investment decisions. This information is offered as educational only.