If We're in an AI Bubble, History Says This Is the Best Way to Recession-Proof Your Portfolio

The year 2026 has begun with the S&P 500 index hitting new all-time highs, garnering a solid 12% increase year to date. However, some investors are worried about an AI bubble, fearing potential market volatility. While there's no foolproof way to recession-proof a portfolio, maintaining a diversified collection of strong stocks with solid fundamentals can still lead to long-term growth, even during a bear market or recession.

In the past, funds like the State Street SPDR Portfolio S&P 500 ETF (SPYM) have outperformed others during economic downturns. For instance, SPYM declined just -18.1% during the 2022 bear market, compared to the tech-focused Nasdaq-100 index's -32.6% drop. Although a recession may occur, an S&P 500 ETF like SPYM could be a safer bet than a tech-heavy investment, particularly if investors are concerned about an overhyped AI sector.

Some analysts have even issued "Double Down" recommendations for companies they believe are poised for significant growth, such as Nvidia, Apple, and Netflix. It's worth noting that joining Stock Advisor provides access to these recommendations, which may not be available again in the future.