But with valuations getting stretched and geopolitical tensions rising, fears of a new incoming crash are starting to spread. And just last month, billionaire investor Ray Dalio expressed his concerns about a potentially incoming market meltdown.

So, what exactly is he predicting? And what should investors do to protect themselves?

An incoming “capital war”

Dalio may not be as well-known as Warren Buffett. But he similarly has established an impressive track record of beating the market over the long run and is the founder of Bridgewater Associates, the largest hedge fund in the world.

Speaking in Dubai in February, he expressed fears that geopolitical, trade, and sanction escalation is driving down purchases of US Treasuries from foreign investors, particularly from China.

Why is this so dangerous?

With lower demand to buy US debt, the yield for government bonds goes up to attract investors back. But since treasury yields also drive the coupons demanded by investors for corporate bonds, US debt as a whole becomes more expensive.

Left unchecked, borrowing costs for both the US government and American businesses could rise dramatically.

That’s obviously a problem for businesses of all sizes. But it’s particularly disastrous for US tech giants who are currently relying heavily on debt financing to fund their aggressive AI spending plans.

If debt becomes too expensive, AI infrastructure spending could drastically increase, bursting the so-called AI-bubble and potentially triggering a stock market crash.

What now?

It’s certainly concerning to hear investors as skilled as Dalio warn of an impending market implosion. However, it’s important to recognise that this scenario is far from guaranteed.

So far, the latest data from the US Treasury Department actually show the opposite happening. In 2025, $1.6trn was invested by foreign investors into US assets, up from $1.2trn in 2024. And while China has been a net seller of US Treasuries, the higher yields seen so far have attracted new pension funds, asset managers, and insurance groups to take advantage.

In other words, Dalio’s prediction of a debt spiral may never come to pass.

But let’s assume the worst and say disaster is right around the corner. What should investors do now?

Capitalising on chaos

With so much wealth concentrated into the tech sector, there are a lot of other businesses in other sectors that have fallen under the radar. And consequently, even in today’s market, some attractive non-AI opportunities have emerged.

Take Waste Management (NYSE:WM) as a prime example to consider.

The idea of investing in a glorified garbage collection business may not sound particularly thrilling. But underneath the ugly shell lies a US monopoly, with a long-term contractually locked-in revenue stream that automatically scales with inflation.

During recessions, demand stays the same. This continuous, reliable income, paired with promising landfill gas-to-energy projects, has translated into impressive free cash flow generation that’s paved the way to 23 consecutive years of dividend hikes.

Dalio’s higher borrowing costs forecasts do potentially pose a threat. After all, building and maintaining waste management infrastructure isn’t cheap. And it could hamper future free cash flow growth. But as a defensive long-term holding, Waste Management definitely looks interesting in an uncertain stock market environment.

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In particular, software-as-a-service (SaaS) and tech/data platform stocks have been absolutely hammered. From peak to now, shares like Salesforce, ServiceNow, Adobe, Snowflake, Rightmove, and London Stock Exchange Group are down between 30% to 55%.

The world’s largest software company, Microsoft, has even started wobbling. The firm’s recent earnings showed that while it’s spending more on AI, growth in its cloud unit (Azure) actually levelled off, spooking the market.

This has tipped the software sector into a bear market, which is typically defined as a drop of 20% or more from recent highs.

In contrast to this, semiconductor-related stocks like Micron Technology and ASML have hit new heights.

Where’s the money?

Stepping back, what’s happening here is the market is separating firms making money via AI from those that are currently not.

For example, Micron posted 57% revenue growth in its Q1 2026 results. For Q2, it anticipates “substantial records across revenue, gross margin, EPS and free cash flow“.

As for Rightmove, the property portal said it’s going to spend more money than previously announced on AI. While this should improve its platform features, investors are concerned that it’s having to spend more cash to essentially stay where it already is (already dominant).

After three years of hype and giddy expectations, the market is suddenly saying: “Show us the money“. In other words, investors now want to see AI spending produce tangible returns.

Disruption fears

However, there’s another layer, which is potential disruption from autonomous AI agents. The concern here is that agentic AI lowers the barrier to entry for upstarts, possibly reducing the need for expensive enterprise software.

If the impact is limited to software, I don’t fear a market crash. But if an AI agent can eventually do the work of five people, companies need fewer software licences. That means fewer human workers, and this is where I see potential risk for the stock market. 

Fewer people employed would have huge ramifications for businesses across travel, retail, e-commerce, office REITs, and even banks (rising defaults). 

Trusty trash

I don’t see the Ai crash threat as imminent. But to minimise risk, investors could consider ‘boring’ stocks viewed as safe from AI disruption to increase diversification.

Take WM (NYSE:WM), formerly Waste Management. It’s North America’s largest rubbish and recycling company.

Whether AI or humans do certain jobs, rubbish still needs collecting. And this makes the firm safer from AI disruption.

Or does it? If AI replaces a lot of jobs and consumption falls, could rubbish volumes follow? More restaurants and small shops might disappear, along with their bins.

Despite these potential risks, I see WM operating in three resilient areas. There’s household, with people still producing waste at home, no matter what. Then there’s the medical waste industry, which is incredibly predictable.

And finally, the company produces renewable natural gas (RNG) by capturing methane from its landfills. The company is even using this RNG to fuel its own fleet of collection lorries! 

The stock trades at 27 times forward earnings, which isn’t conventionally cheap. But given the reliable business model, I think this could be a solid compounder to consider today.

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There’s no question the US has some quality defensive names, but these often come with prohibitively high price tags. There’s one however, that I think’s worth a look. 

Rubbish

Even in a recession, people keep producing rubbish. And Waste Management‘s (NYSE:WM) the biggest business that makes money by dealing with this.

As its name suggests, the company collects and processes waste products. And its no secret that the firm has a dominant market position in an industry that’s likely to grow over time.

The stock generally trades at a price-to-earnings (P/E) ratio well above the S&P 500 average. But despite this, it has generated terrific returns for long-term investors. Over the last five years, the stock’s up 127%, compared to 89% for the index. So the firm’s predictable cash flows haven’t come at the expense of total returns.

Growth and competition

Waste Management might be one of the most difficult businesses to compete with in the S&P 500. Possibly the firm’s biggest competitive advantage is its scale. An extensive network of collection vehicles and processing infrastructure gives the firm an edge when it comes to costs. And it creates a barrier major for competitors.

Waste Management also has scope for growth that shouldn’t be underestimated. Part of this involves increasing prices to offset inflation, but its prospects go much further than this. A global push towards sustainability incentivises the firm to develop initiatives that support this. And this looks like a durable trend that could support long-term growth. 

Risks

It’s difficult to see much to dislike about Waste Management from an investment perspective. It’s hard to compete with and demand isn’t going away. 

The biggest risk, in my view, is regulation. Changing legislation around the way things are disposed of could force the company to invest to change its existing practices. Waste Management isn’t directly regulated like a utilities company. But there’s enough interaction with local governments for this to be a meaningful risk for the firm.

In other words, while the regulated nature of the industry has the effect of raising the barrier to entry for competitors, it’s also a challenge. And investors should keep this in mind. 

Recession resistance

It’s very rare that I think investors should consider paying a high price for predictable earnings. But Waste Management is the exception that proves the rule. The fact a business has been successful in the past is no guarantee of future returns. But it’s hard to see a meaningful challenge to the company’s position any time soon.

That’s why I think the stock might be one for investors looking for recession protection to consider. A strong position in a predictable industry is an asset in any environment.

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