Let me be clear: I believe in the promise of AI. As a power user, I rely on multiple foundation models daily to streamline my work and solve problems faster than ever. The productivity is real, the tools are evolving quickly, and the cost per use keeps dropping. Naturally, I want to invest in the future I’m already living. And like many of my colleagues, I’ve tilted my portfolio to give a little extra love to AI-heavy tech stocks. But here’s the thing… I’m also an economist. Which means I’ve seen this movie before. And I know how it ends.

Wealth built on asset bubbles feels exhilarating until the floor gives out. As investors, professionals, and decision-makers, we owe it to ourselves to remember a basic truth: price may ride the wave, but value is tethered to the ocean floor. When the current recedes, the fundamentals remain. That is where wealth actually lives.

This article is a guide to navigating the excitement of asset bubbles, especially the AI boom, while staying grounded in financial reality. It draws on economic history, hard data, and the cautionary tales of past bubbles to offer a simple message: Invest, yes. But don’t forget to check your parachute.

Earlier this year, John, a seasoned professional with a major firm, decided it was time for a leap. The stock market had been climbing steadily, financial headlines were full of optimism, and investor sentiment seemed to signal a revitalised economy. And John was getting increasingly tired of feeling left out. So, convinced that growth had returned, he left his stable job to join a consumer–facing start‑up.

Six weeks later, John was unemployed.

The start‑up’s sales projections were built on an assumed rebound in household demand, but real personal consumption expenditures had stalled. Delinquency rates on credit‑card loans were climbing toward the highest level recorded since the early 2020s, and unemployment‑insurance claims had been trending upward since April. Meanwhile, corporate profits after tax had registered their first significant drop in more than two years, and real exports had flattened.

John’s decision was shaped by a popular narrative: when equities rise, the economy must be healthy. That narrative is both persistent and dangerous.