Hi, I’m Richard. On this blog I share my thoughts, not investment advice. This is not a recommendation to buy or sell securities.
A Middle-Class Confidence Crisis Could Trigger the Next Stock Market Crash
By Richard Golian20 April 2025 Castellano Français Slovenčina
When someone loses their job, their sense of security collapses, and their belief that hard work guarantees a decent life is shattered, they sell their stocks either immediately—because they must—or as soon as the prices start falling. This reaction is quite probable.
In this post, I'll describe a black scenario with a non-negligible probability. I sincerely hope it never materializes.
The scenario revolves around the potential response of the middle class—who actively invest in stocks—to changes caused by the rapid advancement of artificial intelligence.
Morning in an open-space office. Petra, a senior marketing manager at a small tech firm, walks between rows of desks, coffee in hand. A notification pops up on Slack: “New AI tool creates an entire campaign in just three clicks—we’re launching a pilot.” Petra feels a sharp pinch in her stomach. It’s not that she adores writing banners, but behind those banners lie her mortgage payments and her daughter's tuition. At lunchtime, she quietly opens her brokerage app to check her portfolio—the stocks she’s been investing 10% of her salary into for years. Her thumb hesitates over the "Sell" button. For now, she resists.
Petra represents countless retail investors among lawyers, IT specialists, accountants, bankers, managers, and doctors—people who regularly invest part of their earnings into index funds, mutual funds, or stocks. To illustrate: in the U.S. stock market, this group accounts for a substantial share of daily trading volume—estimates suggest the lower double-digit percentages. Collective actions from this group—mass selling or buying simultaneously—can significantly shake stock prices.
Imagine a chain of events: negative headlines about layoffs due to AI appear increasingly often, starting with economic news titles like “Automation Eliminates More Jobs.” The fundamental belief of the middle class—that diligence ensures a decent life—begins to crumble.
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