I would still be selectively buying, but not aggressively.
The three risks you listed are real, yet they are very different in nature:
1. U.S.-Iran tensions: Historically, geopolitical shocks tend to create short-term volatility unless they significantly disrupt oil supply through the Strait of Hormuz.
2. Inflation and rates: This is the most important factor. If inflation remains sticky, valuations for high-growth AI stocks face pressure because future earnings are discounted at higher rates.
3. AI spending concerns: Markets have priced in near-perfect execution. Any sign that hyperscaler AI spending growth is slowing can trigger sharp corrections in names like NVIDIA, Broadcom, and Marvell.
For long-term investors, a 10% drop in SOXL is noise, not a thesis change. However, leveraged ETFs can easily fall 50-70% during deeper corrections, so caution is warranted.
My approach:
Continue DCA into diversified ETFs.
Keep cash reserves for larger drawdowns.
Avoid chasing leveraged semiconductor ETFs.
Add to quality names only if fundamentals remain intact.
This feels more like a valuation reset than the start of a bear market, but I would expect volatility to remain elevated until inflation and rate expectations stabilise. For now: buy gradually, not all at once.
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