Riding the AI Bubble Without Bubble-Sized Risks

Making money from a civil war is a breeze compared with investing in a financial bubble.

That's the experience of Jay Cooke... a man who helped secure a Union victory over the Confederacy from behind a banker's desk in Philadelphia.

At the time, the North needed to fund its army. But it couldn't sell enough bonds to bring in the money.

So the government turned to northern banks for help. If bankers could get investors for the bonds, the government would pay them a commission. It was a win-win for each party.

Cooke, a 23-year veteran of the banking industry, was so successful at selling bonds to fellow bankers that the U.S. Treasury offered him a special deal... The government set aside a new round of war bonds totaling $500 million (about $18 billion in today's dollars) exclusively for him to distribute.

It took a massive campaign, including a newspaper ad blitz and a nationwide network of 2,500 agents, but Cooke got the job done.

He managed to sell every single bond... and reaped a multimillion-dollar commission as a result.

Then the Civil War was over... That was a good thing for most of the country, but it meant Cooke needed a new line of work.

And all anyone in finance in the 1870s was talking about was railroads...

Railroad stocks had surged 150% over the prior decade. The first transcontinental railroad had just been completed, fulfilling our Manifest Destiny to the West. As such, the railroads became a key part of our nation's industry... moving machinery and finished goods around the country.

As this rapid transition sparked a frenzy among investors, Cooke figured that if he could sell war bonds, he could just as easily sell railroad bonds. He became the exclusive bond agent for the Northern Pacific Railway.

Railroads seemed like a sure bet. No one could deny that railroads were the future. Between 1871 and 1900, the U.S. built 170,000 miles of railroad track. But if you bought into railroad stocks in 1873, you immediately got wiped out.

Investors were clamoring for the future, plowing money into both rail construction and railroad shares. But while the railroad industry was real, railroad investments were a bubble. And Cooke had fallen right into the middle of it.

A quarter of all railroad companies went bankrupt.

This collapse spiraled into the broader Panic of 1873 – and the bursting of the railroad bubble.

Even if railroads were the future, it didn't guarantee all railroad investments. So only a few years after the greatest banking success of his career, Cooke's bet on railroads sent him into bankruptcy.

In the same vein, you just couldn't go wrong with the Internet in 2000, right?

However you want to measure it, the Internet was the future. But as you know, the dot-com bubble burst with even more disastrous effects than the Panic of 1873.

Today, the same story is playing out with artificial intelligence ("AI").

Much like with railroads and the Internet, AI will be a huge part of the future. But as with rail stocks and tech stocks, it won't be a straight shot higher.

My colleagues Joel Litman and Joe Austin – from our corporate affiliate Altimetry – have found specific traits they believe separate the strongest opportunities from the companies likely to fall behind...

They explain how they identify businesses with strong earnings strength, rising momentum, and direct exposure to the massive build-out happening across America's energy and AI-infrastructure sectors.

If you want to learn more about the country's emerging "shadow grid," several stocks they believe could benefit most, and the companies they warn investors should avoid entirely before the next phase of this trend accelerates, click here.

Now, let's get to this week's Q&A... And as always, keep sending your comments, questions, and topic suggestions to feedback@healthandwealthbulletin.com. My team and I read every e-mail.

Is Any Alcohol Safe to Drink? 

Q: Dear Doc, regarding alcohol consumption, until recently, the advice has been that moderation is key. However, a number of recent studies have indicated that any amount of alcohol is detrimental to people's health and that we should avoid alcohol altogether. Could we have your thoughts on this topic in a Health & Wealth Bulletin please? Many thanks. – A.M.

A: Thanks for the question, A.M. The short answer is I'm not giving up my wine.

But let's dig into the facts...

The fear of alcohol really ramped up a couple years ago when JAMA Network Open published a study titled "Alcohol Consumption Patterns and Mortality Among Older Adults With Health-Related or Socioeconomic Risk Factors."

A trio of researchers from Spain reviewed U.K. Biobank data on 135,013 current drinkers aged 60 and up. The data spanned a 12-year period and included questionnaires, medical exams, and bloodwork. And the team looked at the average amount and type of alcohol consumed as well as whether the participants drank during meals.

Here's how they categorized folks by drinking tendencies...

"Occasional" drinking: having at the most two servings per week.

"Low risk" drinking: up to two servings per day (or more than two servings per week) among men and one drink per day (or two servings per week) for women.

"Moderate risk" drinking: between two and four servings per day for men and one to two servings for women.

"High risk" drinking: more than four servings per day for men and more than two for women.

What researchers found was that...

• Low-risk drinking was associated with a 15% higher risk of dying early from cancer.

• Moderate-risk drinking was associated with a 10% higher risk of dying early from all causes and a 19% higher risk of dying early from cancer.

It all sounds grim upon first glance. But at the end of the sentence containing those two findings comes an essential, widely overlooked point: "among those with health-related risk factors."

They also provide some other terrible-sounding numbers...

• Low- and moderate-drinking patterns were associated with a 14% and 17% higher risk, respectively, of early death due to all causes.

• Low- and moderate-drinking patterns were associated with a 25% and a 36% higher risk, respectively, of dying early from cancer.

Turns out, those results were "among those with socioeconomic risk factors," or folks who were in impoverished areas.

So, in other words... the study specifies that it's certain subgroups of older folks from the poor parts of town whose occasional drinking is linked to a higher risk of a shorter lifespan.

We've seen similar studies that conclude any level of alcohol is dangerous but don't adequately account for other life factors, like smoking.

I'm not going to defend overconsumption of alcohol. It's hazardous. It can damage your liver and brain, raise your risk of cancer and cardiovascular problems, and lead to alcohol dependence. Even just a little too much puts you at risk of injuring yourself from a fall.

What I am here to defend is responsible drinking. I'm talking about sipping one alcoholic drink a day, or sometimes two. And we have plenty of studies to back up the health benefits of alcohol...

A systematic review published in Nutrients in 2023 looked at more than 90 randomized controlled trials on studies involving red wine during the past 23 years.

Well, the results didn't surprise me much... But if you've been shaken by the antidrinking headlines, you'll likely be relieved.

Researchers concluded that both short- and long-term red-wine drinking still showed "positive effects" on health, namely on...

• Inflammation and immune function.

• Thrombosis, where you get dangerous blood clots.

• Lipid profile, like lowering levels of "bad" LDL cholesterol (a marker of oxidative stress), while increasing levels of "good" HDL cholesterol.

• Gut microbiota, which, as we know, includes the majority of our bodies' immune cells.

With all that said, if you have the slightest inkling that your drinking may be causing problems in your life, I strongly encourage you to pay attention to that feeling and do the work necessary to remedy those worries. If it's more than two glasses of wine, cut back immediately.

Moderation is the goal here, and we understand that it's a lot harder for some people to maintain that than it is for others.

Sure, I'd love for all of you to drink my wine (Eifrig Cellars)... But I'm not telling you to go out and start guzzling the stuff. I just want to explain that, should you wish to indulge, wine would be your best bet for the extra antioxidants.

And despite what the media has been crowing about lately, that one glass (or two) won't kill you if you incorporate it into a healthy lifestyle.

What We're Reading... 

• Did you miss it? These unloved, AI-proof stocks crush the market.

• Something different: Japan's snack packaging is going black and white.

Here's to our health, wealth, and a great retirement,

Dr. David Eifrig and the Health & Wealth Bulletin Research Team
May 15, 2026