The stock market may be in an AI bubble. Is it time to hoard cash?

Group 1 - The stock market is perceived to be in "bubble" territory, reminiscent of the overhyped markets of 2008 and 1999, with concerns about a potential AI bubble inflating tech stock prices [1][8] - The cyclically adjusted price-to-earnings (CAPE) ratio for the S&P 500 stands at 39.65, a level not seen since the dot-com bubble, indicating that stock prices may be historically high relative to corporate earnings [6][9] - The "Magnificent Seven" tech giants have seen a 698% increase in earnings from 2015 to 2024, significantly outpacing the S&P 500's 178% return during the same period, suggesting that these stocks may be contributing to the bubble [9] Group 2 - Investors are increasingly turning to cash, with money market funds reaching a record $7.7 trillion in assets as of September, indicating a shift in sentiment towards risk aversion [9][10] - Financial advisors recommend maintaining cash reserves to hedge against market volatility, especially for older clients approaching retirement [15] - The difficulty of timing the market is highlighted, as investors face challenges in deciding when to sell high and buy low, which can lead to missed opportunities [12][14]