Rotating Out of AI? Or Just Smart Portfolio Management

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Wall Street’s chattering classes are buzzing about a “rotation out of the AI trade,” as if it’s some shocking revelation. Big surprise—after massive gains, some AI stocks have run far ahead. But here’s the real takeaway: rotation shouldn’t be a headline event. It should be a constant discipline.
Chris explains why trimming winners, taking profits, and rebalancing oversized positions isn’t bearish—it’s smart risk management. AI has driven markets and remains a powerful long-term theme, but no one truly knows which companies will dominate years from now. Admitting what you don’t know is what protects capital.
Like Mr. Miyagi tending a bonsai tree—cut here, snip there—prudent investors regularly rebalance, redeploy profits, and look for quality companies that are temporarily out of favor. This isn’t market timing. It’s proper portfolio management, asset allocation, and risk control—the kind that’s served investors well for decades.

Episode Transcript

Speaker 1 (00:00):
The Watchdog on Wall Street podcast explaining the news coming
out of the complex worlds of finance, economics, and politics
and the impact it will have on everyday Americans. Author,
investment banker, consumer advocate, analyst, and trader Chris Markowski.

Speaker 2 (00:16):
Rotating out of the AI trade. A lot of talk,
little chitter chat out there amongst the chattering classes on
the business networks, talking about, oh yeah, there's a rotation
out of the AI trade. Some of these AI companies
are going up too far and row rotating. You don't say, well, here,

(00:36):
here's a bit of a tip, and this is what
has served served our clients well over the past thirty years.
I completely comprehend that I don't know what I don't know.
I've seen new technology, I've seen things boom at certain
points of time. Sometimes it's very difficult to figure out

(01:00):
who the winners and losers are going to be. With
that being said, that being said, without a doubt, there
is a massive investment, has been a massive investment in
this area of our economy. In fact, it's driven the market.
So you have to be involved with it. What it
means rotating, Okay, you should perpetually be rotating. I like

(01:28):
to try to get people too. Smart move to do
is to take profits. There is nothing wrong with trimming
a position, taking some money off the table. If XYZ
in your portfolio has done very well, very well, and

(01:51):
it becomes oversized, the prudent thing to do is to
take some money off the table. Now, again, I still
think that this company's great. I think it has a
ways to go. But guess what I could be wrong.
I could be wrong, And also what she wins. There's

(02:11):
a lot of other great companies that are doing well
but might be out of favor at this point in time,
meaning that they're on sale, meaning that they're on sale.
And again, you may want to put some new money
to work in those ideas. But again, there's nothing wrong
with rebalancing a portfolio. Again, I equated it to mister

(02:33):
Miyagi and his Bonzai tree cut here snip there. This
is nothing new. You should always do this. It's proper
proper portfolio management, proper asset management, proper risk management. Watchdog
on Wall Street dot com