Many technology funds and shares are trading at or near all-time highs but will this stock market boom end the same way it did last time — with an almighty bust? Is artificial intelligence (AI) just a new way to exploit natural stupidity?

Even before the shutdown of the federal government of the world’s biggest economy on Wednesday (which slashed America’s economic output by $11 billion — £8.2 billion — the last time it happened, according to the Congressional Budget Office) investors had reason to be fearful.

Stock valuations are stretched to levels last seen before the technology media and telecommunications (TMT) bubble burst and share prices plunged 25 years ago. No wonder some who survived that wealth-destroying experience, including your humble correspondent, fear that something similar could happen again soon.

Never mind what I think, here’s what Sam Altman, the chief executive of OpenAI, the unlisted company that owns ChatGPT and was valued at $500 billion on Thursday, had to say: “Are we in a phase where investors as a whole are overexcited about AI? My opinion is yes. Is AI the most important thing to happen in a very long time? My opinion is also yes.”

Many tech giants are priced for perfection and had better not disappoint. For example, consider the world’s most valuable company, the microchip-maker Nvidia, whose graphic processing units (GPUs) are vital to delivering AI.

Relatively few people had heard of this firm a decade ago but it is valued at $4.4 trillion and its shares are trading at 56 times corporate earnings. Those facts make the world’s second and third-most valuable companies — the software giant Microsoft and the iPhone-maker Apple — look relatively reasonable on price-earnings ratios of 38 and 40 respectively.

The p/e ratio is a simple way to assess whether a share is cheap or expensive by showing how many years’ corporate earnings are needed to repay its price today. Dividends, or the income paid to investors, are another way to measure value; Nvidia pays shareholders barely visible dividends of 0.02 per cent.

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This would be a good point at which to confess that Nvidia is a sensitive topic for me because the 12-year-old son of a senior colleague told me about this business in 2021. Cheers, George. It just goes to show that investment ideas can come from all sources and ages. Foolishly I didn’t buy any shares, partly because my cerebral software dates back to the 1950s and I wouldn’t know one end of a GPU from the other.

Another reason I didn’t log into this soaraway success is that Apple was, and is, my most valuable shareholding. As reported here at the time I paid the equivalent of $23.75 in February 2016, allowing for a subsequent four-for-one split, for stock that traded at $258 on Friday. The shares I bought nine years ago are still paying dividend income of 2.2 per cent but the yield (income expressed as a percentage of share price) for buyers today has been squeezed down to 0.4 per cent.

Meanwhile, Microsoft sits just outside my top ten by value after shares I bought for $233 in January 2023, as also reported here at that time, traded at just under $520 at the end of the week. News that the company had invested $10 billion in OpenAI was the main reason I took the plunge and, despite much mockery back then, I have no regrets.

My other main exposure to this sector is via the global investment trust Polar Capital Technology. I first invested here more than a decade ago and transferred these shares from a paper-based broker in September 2013, when they were trading at 43p, allowing for a subsequent 10-for-1 split. Polar Capital Technology shares cost £4.28 on Friday and its biggest underlying holdings are Nvidia followed by Microsoft, with Apple also in its top ten.

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Those three shareholdings represent nearly 13 per cent of my life savings, which is quite enough exposure to technology, however enthusiastic I am about my AirPods, iPhone and the MacBook Air that this is being written on now. Diversification (spreading our money over different companies, countries and currencies) is a simple way to diminish the risk of capital destruction that is inherent in stock markets. Fund and share prices can fall without warning. Nor is there anything theoretical about that danger, as any investors who experienced the explosion of the TMT sector in 2000 will never forget.

On a brighter note all the above listed businesses are profitable and sitting on massive cash piles — unlike many companies that were highly valued a quarter of a century ago. Now, as then, tech stocks look like the future.

If anyone can make a commercial success of augmented reality I suspect it might be Apple. Meanwhile, in addition to AI, Microsoft owns software that many people and businesses rely on every day — including Windows, Word, Excel and PowerPoint. It also owns the Call of Duty and World of Warcraft games giant, Activision Blizzard. Bear in mind that digital games now generate bigger revenues than the film and music industries combined.

So I don’t intend to sell any of my tech funds or shares but continue to believe that a diversified portfolio is the best defence against an uncertain future. That’s why I will continue to diversify into other sectors, such as with my recent investment in Britain’s biggest baker, Greggs. Its disclosure that the summer heat had depressed sales of sausage rolls caused a double-digit slump in the share price that day in July, which seemed a bit overdone to me.

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That decline pushed the dividend yield up to 5 per cent last month, when I invested 2 per cent of my life savings at £15.54 and £16.01. A reassuring trading update saw the share price rise to £16.70 at close of business on Friday and there might be further to go. They were trading at £29.56 a year ago.

Another reason I am optimistic about this great British business, based in Newcastle, is that even after the rising share price pushed its dividend yield for buyers today down to 4.2 per cent, it remains priced at 11 times earnings. That looks cheap as chips compared to the microchip-makers.

Market-timing is very difficult but, over several decades, this long-term shareholder has found time in the market a relatively easy way to grow wealthier. Perennial pessimism might impress the credulous but it rarely leads to profits. Or, as City cynics say, bears sound clever but bulls make money.

Snobs may sneer but good value food on the go is unlikely to fall out of fashion with cost-conscious consumers who might be too busy to cook. I don’t eat here every week but there have been many cold and wet mornings in Gosport harbour when Greggs’s bacon and cheese wraps have hit the mark.

To return to where we began, when it comes to short-term stock market forecasts there are only two types of expert: those who don’t know and those who don’t know they don’t know. With a nod to the Greek philosopher Socrates and his paradox, I am with the first group.

• Full disclosure: Ian Cowie’s shareholdings