While the AI rally looks strong, only a handful of stocks are doing most of the heavy lifting.
Listen to the audio version of this article (generated by AI).
Hello, Reader.
In 2012, the Los Angeles Lakers assembled a marquee roster featuring Kobe Bryant, Dwight Howard, Steve Nash, and Pau Gasol. Despite the hype, the team struggled with injuries and chemistry, finishing 45–37 before getting swept in the first round of the playoffs.
Likewise, today’s headline market looks strong, but its underlying performance is much less impressive.
The S&P 500 has climbed 14% to record highs. At the same time, four out of 10 S&P 500 stocks have fallen this year, according to a Reuters report released today. This is because a handful of AI-related companies are doing much of the heavy lifting, while the broader market struggles to keep pace.
Of course, this doesn’t mean the bull market is about to end. But it does mean caution is warranted.
Here’s my advice: Worry less about missing the next AI rally and more about what happens if the market’s most crowded trades stumble.
And here’s my strategy: Panic early. That’s the only near-certain defense against adversity in the financial markets, and in life generally. As a native of California – the global headquarters of natural disasters – I’ve learned to panic early whenever the whiff of wildfire smoke wafts through the air, or torrential rains start carving mudflows in the nearby hillsides.
No safety tactic is flawless, of course, but panicking early is close. Once you catch a whiff of smoke from a distant wildfire, you don’t hang around until embers are landing on your roof. You toss Rover in the car and hightail it out of there while the roads are still open and the sky is still merely orange.
The same principle holds true in the financial markets. If you sense the danger of red-hot, overheating share prices, it’s usually a good idea to flee the scene – before the ensuing chaos clogs up every escape route.
Successful panicking begins by saying “no” to obvious risks. Only then can you calmly examine and select opportunities that offer a more favorable route to wealth-building.
Just as the Lakers’ collection of stars couldn’t guarantee success, today’s market leaders can’t guarantee that the rally will last. In a market as lopsided as this one – where a handful of AI darlings have absorbed most of the media attention, most of the investor exuberance, and most of the capital – some of the best plays are hiding in plain sight.
The key is knowing how to spot those overlooked opportunities before the crowd catches on – and my colleague Jonathan Rose has spent 28 years in the markets developing a strategy to do just that.
I’ll share what you can learn from his strategy below. But first, let’s take a look back at what we covered here at Smart Money.
Smart Money Roundup
October 7, 2026
Google Just Sent AI to Space – Here’s What That Means for Investors
Alphabet Inc. (GOOGL) recently launched AI chips into orbit to test whether solar-powered data centers can run in space. But the real story is the energy bottleneck driving it – AI demand is outpacing our ability to build power here on Earth. I explain the three physical constraints to watch, and the companies positioned to profit.
October 8, 2026
Before Elon Musk Takes Neuralink Public, Here’s Where to Look for Profits
Brain-computer interfaces are making headlines, but the company drawing the most attention – Elon Musk’s Neuralink – remains private. So, how can everyday investors participate in this emerging field? Jonathan Rose spotlights two public companies on his watchlist, explaining what connects each to the technology, what could move the stocks, and the risks to understand first.
October 10, 2026
3 Stocks to Buy Before the AI Boom Fumbles
Even a record-setting Tom Brady lost the 2018 Super Bowl for one reason: no defense. Tom Yeung argues that investors need defense too, especially in an AI boom where leveraged bets can unravel fast. He breaks down three “AI Survivor” stocks built to keep portfolios climbing even if AI stumbles.
October 11, 2026
2 Cyber Stocks to Buy as AI Risks Rise
AI agents are creating a new kind of security risk, and that’s an opportunity for the companies defending against it. Jonathan Rose goes back to the 2003 SQL Slammer worm to show what’s at stake, then names two cybersecurity stocks to consider now – explaining what each sells and what he watches before placing a trade.
Panic Early, and Spot Opportunities First
Knowing where to look before everyone else catches on means paying attention to more than headlines and share prices. Unusual trading activity, for example, can offer clues about where substantial amounts of money are moving – and which opportunities deserve a closer look.
That’s one of the approaches Jonathan Rose has developed over nearly three decades in the markets, including his time as a market maker. He looks for clues others might miss, tracking unusual trading activity to see where big money is moving. Then he combines those signals with his own market analysis to identify potential trades – each with a defined maximum loss. His goal spot opportunities before the crowd catches on, without leaving risk to chance.
On Wednesday, October 14, at 8 p.m. Eastern, Jonathan will walk through his strategy during his free $10K to $100K Challenge. You can reserve your seat here.
At the event, he’ll explain how he looks for opportunities, evaluates potential gains, and decides how much to risk.
This market has taught us that a collection of big names doesn’t guarantee a winning portfolio. Knowing when to act – and when to protect your capital – matters just as much.
Click here to sign up for Jonathan’s free event.
Regards,
Eric Fry
5 Stocks Our Experts Predict Could Double In the Next Year
By submitting your email, you'll also get a free pivot & flow membership. A free daily market overview. You can unsubscribe at any time.
