Can AI still surge, can the US stock market still rise?

Last night, I talked with a friend about the US stock market; he is a well-funded practitioner in the real economy but a novice investor.
His investment style is extremely conservative, having only allocated physical gold and money market funds in recent years.
Last Friday, he invested $100k into a private hedge strategy product, fully loaded, close to the market.
At the same time, his friend entered at the April low and has doubled his investment, but he did not feel envious or follow impulsively; he remains calm and even sincerely advised me to study US stocks.
From him, I observed common issues among ordinary retail investors:
1. Holding mentality bias: focusing only on take-profit, ignoring stop-loss
After holding, the instinct is to be optimistic, only presetting a 50% profit target to exit, with no consideration of stop-loss plans.
I suggested he set a strict stop-loss at 20%-25%, forming a reasonable risk-reward ratio of about 2:1 to 2.5:1.
2. Investment logic misconceptions: detaching price from fundamentals
Many retail investors equate industry prospects (AI, storage sectors booming), stellar earnings reports, and large corporate investments directly with buy signals, completely ignoring the price of the asset and the market position.
I believe this kind of subjective optimism-based investing lacks a complete system; short-term gains are more luck-based and cannot sustain long-term profitability. Even if the overall US stock market is in a long bull and short bear cycle, the damage during downturns can be equally terrifying.
3. My personal trading philosophy and its reasons
Only earn Beta, not chase Alpha
I never analyze individual stocks or pursue Alpha; I only trade major instruments like NASDAQ futures, Bitcoin, and gold.
The reason is simple: these markets have many participants, full competition, and are almost impossible for a single entity to manipulate, naturally smoothing out individual risks and black swan volatility of specific assets.
Moderate leverage can also amplify Beta returns, saving the time and effort spent on analyzing earnings reports, industries, and individual fundamentals.
4. My three core investment suggestions for my friend
Suggestion 1: Prioritize core business cash flow, invest by doing less
Core logic: His competitive advantage lies in real economy; past success can be directly reused, and the cash flow generated from real business is the only thing he can fully control.
Investment advice: No need to spend a lot of energy researching individual stocks or complex strategies; just invest long-term in broad-based indices like NASDAQ, S&P 500, CSI 300, etc. Over time, this will surely outperform the current very low bank deposit rates and effectively hedge against currency devaluation.
Suggestion 2: Asset allocation—use a barbell strategy, combining offense and defense
Considering his desire to participate in high-yield investments but lacking experience and risk tolerance, I recommend the classic barbell approach (using 1 million yuan as an example):
60% Defensive core: allocate government bonds + broad index funds. Features include low volatility, strong resilience, and the ability to steadily earn market Beta in both bull and bear markets, serving as the ballast of the entire portfolio.
40% Aggressive position: entrusted to trustworthy, historically stable public/private funds, aiming specifically for Alpha excess returns.
Research and actual trading should be strictly separated; you can learn investment knowledge but avoid using your own money to experiment with individual stocks.
Currently, market levels have a typical risk-reward ratio; do not fully invest in high-volatility AI-themed private funds, or you may face unbearable large drawdowns.
The specific proportions of offense and defense can be flexibly adjusted according to personal risk preferences.