Well, what a week.
Or rather, what a month.
As recently as late June, AI stocks were in full blown “bubble” mode.
And then in the span of 1 month – big name AI stocks like SK Hynix and Sandisk fell more than 50%.
And this week we had news that Leopold Aschenbrenner’s Situational Awareness AI fund was fully liquidated and bought out by Citadel.
Which sparked a massive 20% rally in many AI stocks on the day.
All while the US-Iran war is back in full swing, and Oil price has soared 30% in a month.
So… with all that is going on.
How would I invest $1 million in today’s climate?
AI stocks crash 58% in 1 month
Let’s start with the charts.
Former high flying poster boy Sandisk is down 58% in 1 month:
Meanwhile Korea’s SK Hynix is down 54% over the past month.
Now you’ve probably heard about those Korean retail investors who borrowed money to invest in leveraged SK Hynix ETFs.
When the underlying stock is down 54% in 1 month – you can only imagine the carnage for such investors, where the loss would be massively multiplied and almost certain to result in a margin call.
There are stories about Korean investors losing their life savings in this crash, which is never a pretty sight.
The lesson here is that in highly volatile AI stocks, you want to be cash only (no leverage).
That said – the picture flipped fast when Leopold Aschenbrenner’s Situational Awareness AI fund was fully liquidated and bought out by Citadel this week.
That news triggered a massive rally, with certain AI stocks like Sandisk up 25% on the day.
Oil soars 30% – while interest rates are going nuts
At the same time, oil has soared 30% over the past month, on the resumption of the US-Iran war.
And US 10 year interest rates have soared to 4.6% – well above the 4.5% line in the sand where markets start to break.
What happens next – to AI, the Iran war, and interest rates?
So… what happens next?
A LOT of you have asked me for my views both on the AI “bubble” bursting, and on how the Iran war plays out.
Yes I did share high level thoughts in last week’s article, but I also know some of you were not satisfied.
So let me try to share more in depth views today.
Let’s discuss each separately.
AI – “Bubble” bursting, sell all AI stocks?
On AI stocks, I’m going to say that things are seldom so straight forward.
With the help of AI, I can now run risk-reward analysis on every single stock in my portfolio, and update it on a daily basis.
And you know what – a lot of stocks where the risk reward made absolutely no sense just 1 month ago.
After the sell-off? The risk-reward suddenly looks attractive again.
This is just a mechanical thing, where the 2 – 3 year earnings outlook remains exactly the same as it did 1 month ago, and now that prices are 30 – 50% cheaper, the same stock looks a lot more attractive today.
I’ve also shared that from a fundamental basis, I am very bullish on AI, and I think we are still early in the AI buildout.
The more I use AI, the more use cases I discover for AI, and the more computing requirements I need.
My gut feel is that as time goes on, literally the entire world will go through that discovery, and demand for AI compute will explode.
So from a fundamental point of view, I am bullish AI – even more so after the past month’s sell-off.
But here is where I have to be brutally honest with you guys.
Despite what I may think, when it comes to investing – I see stocks as no more than investments.
And in investments, investment principles apply.
Which means I let my winners run for as long as they can, but I am also quick to cut my losers.
For every stock that I hold, I have a price that if it falls below, I sell the position no questions asked.
This price is calculated largely by technical analysis – which thanks to the help of AI is now applied mechanically today (while I had to compute this manually in the past).
And here’s Micron for an example.
The price dipped below my cut-price this week, but my sell signal watches the weekly close.
The weekly close hasn’t closed below my cut-price just yet, so for now at least, I’m still holding my Micron position.
But of course like I said – if the price changes, I change my mind.
All these prices are shared on my stock watch in FH Premium, which you can check out if you are keen.
Bottom line – I am a big believer in AI, but when it comes to stocks, I don’t fall in love with my positions. I’ll let them run for as long as they trend up, but if that changes, or if prices breach my cut-prices, I will take profit.
Iran war 2.0 – worse than Iran war 1.0?
Again let me just cut straight to the chase.
My honest assessment is that the Iran war this time around looks worse than it did the previous time around.
I could be wrong on this, but my assessment is that Iran, rightly or wrongly, seems to think they have the upper hand over Trump here.
And Trump does seem backed into a corner here.
It’s fairly obvious the US cannot militarily “force” the Strait of Hormuz open.
They can continue bombing Iran, sure, but after a certain point the air strikes are counter-productive, as it strengthens Iranian resolve and proves to everyone that the US is the bad guy here.
So militarily, there is no good option here for Trump short of sending in ground troops for a prolonged invasion, which I have said before would be Ukraine 2.0 and probably mark the end of the US empire (and I continue to hold that view).
At the same time, the interceptor missile stock is rapidly dwindling.
And once that depletes fully, Iran has absolute free rein to take out any target in the region.
So Iran seems to recognise they are in a strong position here, and they felt they did not get a good deal in the original MOU, so they are holding out for a better deal the second time around.
Based on what I am seeing, that looks to be a reasonable position, which suggests this could get ugly.
The reason why oil is still at $90 and not $120, I suppose – is because Trump is Trump.
Despite all that is going on, Trump has proven that when push comes to shove, he can defy all conventional logic and fold like a pack of cards.
So if stocks continue to slide, and Trump realises there is no good military option – could he give in to Iranian demands, and brand it as a win, right before the midterm elections?
I’ve seen enough from Trump to know that this is a very real possibility.
So with the Iran war, it is the same as with AI.
I have my views on how this will play out, but at the end of the day, these are just investments.
I don’t fall in love with positions, and I manage risk brutally. And when the facts change, I change my mind.
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How would I invest $1 million today with the AI bubble bursting and Iran war back on?
Which brings us to the million dollar question.
How would I invest $1 million today?
I recently came up with a macro dashboard for FH Premium subscribers that tracks a number of macro indicators, and tells us which macro regime we are in.
That macro regime (for now) puts us in reflation – growth is accelerating while inflation runs hot; conditions still lean in favour of taking risk.
We are in a reflation regime, and my cut-prices haven’t been hit.
So selling all my stocks and going 100% to cash because of the market volatility doesn’t make sense.
So it’s fairly clear I still want to run risk exposure.
Given we are in a reflation regime, value stocks (e.g. banks, energy, cyclicals etc) should technically outperform growth, which indeed we have seen in the past month.
So I would want a mix of both growth and value stocks, with a slight overweight in favour of value.
And at the same time, given market volatility is elevated, I also don’t think this is a market to be all-in, so some dry powder on the side makes sense to take advantage of market volatility.
The big question that comes to mind though – is that with the AI sell-off, a lot of stocks that made no sense from a fundamental valuation perspective 1 month ago are starting to look attractive once again.
Is that attractive enough for me to deploy some of the cash on the sidelines?
Frankly – I think from a fundamental analysis perspective, the answer is yes, which means that it will come down to price action now.
If we see AI stocks hold above key technical levels for the weekly close, and start to trend up, then yes, absolutely, I will be deploying my cash.
If they don’t, and the volatility continues, then I may cut my positions.
Whatever the case, I share weekly updates when I buy / sell stocks on FH Premium, where you can also see how I am positioned and my full portfolio.
So that’s how I’m thinking about AI, the Iran war, and how I would invest money today — love to hear what you think, especially if you see it differently.
This article was written on 31 July 2026. It will not be updated going forward.
My latest macro views, as well as my full stock watch and personal portfolio, are shared on FH Premium.