Bank of America strategist says the market recently did something similar to the 2000 dot-com bubble. Protect yourself.

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Famed investor Michael Burry recently said the stock market’s heavy dependence on artificial intelligence (AI) today feels like “the last months of the 1999-2000 bubble,” per CNBC (1).

And he’s not alone. In early May, Paul Tudor Jones — an American billionaire hedge fund manager — told CNBC that he, too, had noticed today’s AI-fueled market looks quite similar to the dot-com bubble.

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Bank of America’s Michael Hartnett also agrees, but he’s not just guessing wildly. He’s got some compelling evidence to back up the claim.

Why Hartnett is concerned

Writing in a Bank of America research report from late May (2), Hartnett pointed to one of the most popular stock market indexes — the S&P 500 — as proof that the market is headed down an eerily similar path as the dot-com bubble from 26 years ago.

At the time he was writing the report, which is not publicly available but excerpts are reported by CNBC, the S&P 500 had just closed at a record of 7,580.06 on May 29, a record that was surpassed a few days later on June 2 (3). However, that was not what concerned Hartnett — he was more concerned about the companies driving these new highs.

The U.S. stock market saw incredible growth in May, a month in which investors remained bullish on AI, as well as memory chipmakers like SK Hynix, Micron Technology, Samsung and Advanced Micro Devices. During that month alone, Micron Technology soared 88%, SK Hynix by 81%, AMD by 46% and Samsung by 44%.

But it was the companies involved in AI that concerned Hartnett the most. As CNBC reports, he observed that 20 of the S&P 500’s stocks managed to close at a record high on May 29 — and of those 20 companies, only seven have no direct ties to AI. He further observed that at the top of the dot-com bubble in March 2000, just 20 stocks hit new all-time highs as well.

The parallel is hard to miss.

Hartnett did admit that “speculative price action” around AI is likely to continue, but this occurrence is an eerie sign that a dot-com bubble-type crash could be on the horizon.

Read More: Millionaires under 43 hold just 25% of their wealth in stocks — here is where their money is going instead

Stock advances ‘have been extremely narrow’

Despite the market’s recent success, a number of financial strategists are concerned that a failure for this bull run to extend beyond AI and tech stocks could mark its end.

“Even though the U.S. and [emerging market] equity indexes have reached new highs, their advances have been extremely narrow,” states a May 20 report from BCA Research (4). “Poor breadth is often a sign of underlying stock market vulnerability.”

With the market showing signs that it’s on a concerning path, Hartnett said in his note that he’s now advising his clients to take on a more defensive position in the coming months (2).

“Post-bubble investor roadmap since 1929 is long bonds, and long combo of defensives and/or sectors which dramatically underperformed in the last months of the bubble,” he wrote.

Stocks have been on a wild ride over the past couple of years. Sticky inflation, shifting interest rates and ongoing geopolitical tensions have all contributed to market swings — and now, growing concerns around stretched valuations are making investors rethink where they’re putting their money.

That’s where diversification comes in. Rather than relying only on stocks, bonds or cash, spreading your money across different types of assets can help protect your portfolio when one corner of the market takes a hit.

For instance, gold has historically played this role. The precious metal has long been viewed as a “safe haven” because it doesn’t move in lockstep with stocks or bonds. When equities stumble, investors often turn to gold as a store of value.

Open a gold IRA

One way to invest in gold that also provides significant tax advantages is to open a gold IRA with the help of Priority Gold.

Gold IRAs allow investors to hold physical gold or gold-related assets within a retirement account, which combines the tax advantages of an IRA with the protective benefits of investing in gold, making it an attractive option for those looking to potentially hedge their retirement funds against economic uncertainty.

To learn more, you can get a free information guide that includes details on how to get up to $10,000 in free silver on qualifying purchases.

Diversify with real estate

Real estate can also provide another layer of diversification when stock markets look expensive or volatile. Unlike equities, which can swing quickly based on investor sentiment, property values often move on a different timeline. After all, even during periods of economic uncertainty, people still need places to live.

Another advantage? Real estate can generate income. Rental properties can provide a steady stream of cash flow, creating a passive source of income when your stock portfolios are under pressure. And you don’t necessarily need to buy a second home or deal with tenants to invest in real estate.

These days, you can tap into this market by investing in shares of vacation homes or rental properties through platforms like Arrived.

Backed by world-class investors, including Jeff Bezos, Arrived allows you to invest in shares of vacation and rental properties, earning a passive income stream without the extra work that comes with being a landlord of your own rental property.

To get started, simply browse through their selection of vetted properties, each picked for their potential appreciation and income generation. Once you choose a property, you can start investing with as little as $100, potentially earning monthly dividends.

The best part? For a limited time, when you open an account and add $1,000 or more, Arrived will credit your account with a 1% match.

Invest in multifamily real estate

Those with more capital on hand can diversify their real estate portfolio even further.

For instance, you could leverage multifamily real estate investing. In fact, in a report prepared by JPMorgan Chase, Al Brooks — the firm’s vice chair of Commercial Banking — said, “I think multifamily housing is absolutely where you want to be as an investor (5).”

Accredited investors can now tap into this opportunity through platforms such as Lightstone DIRECT, which gives accredited investors access to single-asset multifamily and industrial deals.

Lightstone DIRECT’s direct-to-investor model ensures a high degree of alignment between individual investors and a vertically-integrated, institutional owner-operator — a sophisticated and streamlined option for individual investors looking to diversify into private-market real estate.

With Lightstone DIRECT, accredited individuals can access the same multifamily and industrial assets Lightstone pursues with its own capital, with minimum investments starting at $100,000.

A finer alternative

The market’s recent run has been impressive. But with valuation concerns mounting — especially as the Shiller P/E has soared past 40x — you might want to consider whether your portfolio is prepared for a period of slower growth or increased volatility.

With these warning signs, diversification isn’t just smart — it’s essential. Billionaires like Jeff Bezos and Bill Gates continue to invest heavily in stocks, but they also carve out a portion of their portfolios for assets that behave differently from the market.

One standout example: post-war and contemporary art, which outpaced the S&P 500 by 15% from 1995 to 2025 while showing near-zero correlation to traditional equities.

Until recently, this world was off-limits. But now, with Masterworks, you can buy fractional shares in multimillion-dollar works by icons like Banksy, Picasso and Basquiat. While art can be illiquid and typically requires a long-term hold, it offers unique portfolio diversification.

Masterworks has sold 27 artworks so far, yielding net annualized returns like 14.6%, 17.6% and 17.8%.*

Moneywise readers can get priority access to diversify with art: Skip the waitlist here.

*Past performance is not indicative of future returns. Investing involves risk. See important Regulation A disclosures atMasterworks.com/cd.

— With files from Chase Kell.

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Article sources

We rely only on vetted sources and credible third-party reporting. For details, see oureditorial ethics and guidelines.

CNBC (1),(2); Yahoo Finance (3); BCA Research (4); JPMorgan Chase (5)

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.