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Is the A.I. Boom Turning Into an A.I. Bubble?

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Re: Is the A.I. Boom Turning Into an A.I. Bubble?

#111

Post by jonfromsf »

abraxas wrote: post #81
jonfromsf wrote: post #65

Earlier quoted context omitted.

Just buy $RSP or a similar equal-weightage ETF.

Those techniques rarely worked in the past as the broad stock market retreat usually affects stocks across the board. The best diversification is into uncorrelated asset classes. But there is some art in determining what's likely to remain uncorrelated. Bonds and gold are usually decent guesses.

They certainly solve the stated problem of concentration in a few tech companies. But I agree, non-tech companies are overvalued. Bonds are terrifying, they’re a bet against inflation and in favor of the US dollar. MLPs and oil companies are a nice place to stash money because they aren’t correlated with tech. MLPs flow about 7% tax free yield which isn’t bad. Bitcoin and Gold are good hedges against inflation.

Re: Is the A.I. Boom Turning Into an A.I. Bubble?

#112

Post by jonfromsf »

bcrosby95 wrote: post #97
cloverich wrote: post #96

Earlier quoted context omitted.

> It's actually pretty easy to lose money. By what mechanism / who exactly? Or referring explicitly to the ultra wealthy? When I think of the normal wealthy, the 1-20 million camp, can't they just stuff all of their money into index funds for the last 20 years and everyone grows 10%+ a year (most years)? That's what the few multi millionaires I personally know have done -> step 1 put money in e.g. Vanguard, step 2 ma…

Earning $1mil and stuffing 100% of it into the stock market is a risky move. You lay out basically the situation I found myself in. But I set aside some for a future house down payment (less risk for that chunk), future wedding (less risk for that chunk), and even ignoring that, most advice wouldn't say to stuff the remaining 100% into markets. So maybe 60% went into markets. With hindsight it oftentimes sounds like…

Most people earn money over time. Putting these savings 100% into the stock market as you earn them is pretty reasonable. It’s only a sudden cash windfall that presents problems. The fix for that is to put money in 1, 2, and 3 year treasuries, and invest that money into equities as the treasuries mature.

Re: Is the A.I. Boom Turning Into an A.I. Bubble?

#113

Post by xorcist »

it_citizen wrote: post #13

> The global pandemic will tank the stock market > War in Ukraine will tank the stock market > High interest rates will tank the stock market > Tariffs will tank the stock market > IA will tank the stock market All those statements made sense to me at the time. And I have no doubt that one of these days, someone will make a correct prediction. But who the hell know what and when. Diversify, be reasonable and be prepa…

All of your examples did tank the stock market. At least in the meaning a 20+% drop over a time period in the order of months of less.

They are however not examples of long depressions. Which I think is reasonable to expect we'll see less of, given that more and more regular people feel the need to put their money in the stock market. There is simply no alternative. And every time we reach new heights. This is also expected.

Will this go on forever? Probably not. But it won't look like the 1930s. The stock market is a crowd, not a science.

Re: Is the A.I. Boom Turning Into an A.I. Bubble?

#114

Post by techpineapple »

hodgehog11 wrote: post #18

I get this sinking feeling that this "bubble" may never burst on its own, since the political environment now is different from the 2000s. Inequality is much higher post-COVID, with the ultra-wealthy sucking up the assets of the middle class. Those assets are going into the stock market for AI companies with the objective of eventually replacing people so they never need to pay the working or middle class ever again.…

I've been trying to figure this out, like I think the 2008 bubble burst for a lot of reason but it was basically a ponzi scheme that ran out of new people to buy houses at constantly inflated rates.

Bernie Madoff got caught when 2008 happened and he didn't have enough money to pay back investors, if 2008 never happened he maybe keeps going.

For Elon Musk, and maybe why he bought Twitter, he has to stay popular enough that enough people believe his companies are the best investment available. If someone surpassed him, and Tesla didn't seem like the place where robots or self-driving might happen, then people would probably move away.

For AI, maybe something similar? People would have to start deciding that investing somewhere else is better than investing in AI and let the AI companies start to fail.

Presumably the cause of a bubble is just too many people thinking AI is the best place to invest their money? And the bubble will pop when they decide to invest somewhere else?

Re: Is the A.I. Boom Turning Into an A.I. Bubble?

#115

Post by techpineapple »

smitty1e wrote: post #100
hodgehog11 wrote: post #18

I get this sinking feeling that this "bubble" may never burst on its own, since the political environment now is different from the 2000s. Inequality is much higher post-COVID, with the ultra-wealthy sucking up the assets of the middle class. Those assets are going into the stock market for AI companies with the objective of eventually replacing people so they never need to pay the working or middle class ever again.…

TINFOIL HAT SAYS: Since you used the P-word, consider the 2008 election and the possibility that a similar bubble-bursting occurring at the appropriate time to maximize chances to flip Congress in 2026.

You think the kind of people propping up the AI bubble want congress to flip?

Re: Is the A.I. Boom Turning Into an A.I. Bubble?

#116

Post by techpineapple »

strange_quark wrote: post #86
NitpickLawyer wrote: post #45

Earlier quoted context omitted.

Yeah, this is what all the bubbleists miss. We got FAANG++ out of the last bubble, and they literally rule the world with the tech that was promised during said bubble. Catsdotcom and dogsdotcom failing had 0 impact on the tech itself. It's the same today. A lot of the hyperVCfunded startups will fail, without a doubt. But the tech giants will get their money from this tech, and it will be ubiquitous in ways we can't…

I'm not sure that the dotcom bubble leaving behind the web means that AI (and by AI I mean LLMs) are going to be transformative in the same way the internet was. Just because it happened once doesn't necessarily mean it's going to happen again. To be clear, I don't think LLMs are going to vanish, there's clearly some things they're good for, but there's also some really big differences between the AI bubble and the d…

I think the comparison between AI and the web is interesting. I still feel like AI has this assumption that it's going to surmount a gap that it may not surmount.

The internet basically just got gradually better at all the things around it. Better graphics, faster internet, better programming languages, bigger hard drives.

But we still don't know what LLM's are. They're maybe just a feature, not a whole suite of technologies creating an ecosystem, the idea that they'll make the leap from Fancy Lisa AI Companion to colleague is fanciful. I don't think there's a direct line that shows that up and to the right automatically means superintelligence.

Re: Is the A.I. Boom Turning Into an A.I. Bubble?

#117

Post by ac29 »

koolba wrote: post #59
it_citizen wrote: post #13

> The global pandemic will tank the stock market > War in Ukraine will tank the stock market > High interest rates will tank the stock market > Tariffs will tank the stock market > IA will tank the stock market All those statements made sense to me at the time. And I have no doubt that one of these days, someone will make a correct prediction. But who the hell know what and when. Diversify, be reasonable and be prepa…

> Diversify, be reasonable and be prepared for it to happen someday. Indeed, but even with something like SPY, there’s quite the concentration in tech: Top 10 Holdings (37.99% of Total Assets) NVDA 8.07% MSFT 7.37% AAPL 5.77% AMZN 4.11% META 3.12% AVGO 2.57% GOOGL 2.08% GOOG 1.68% BRK-B 1.61% TSLA 1.61% Now that’s intentional as it’s market cap weighted. But the investing world is in for a rude awakening if things st…

I'd argue only four of those are purely tech companies (NVDA, MSFT, AAPL, AVGO).

AMZN does tech stuff, but also retailing, grocery, logistics, media and more.

META and GOOG are advertising businesses.

BRK is a basically a holding company, its businesses are in a wide variety of markets, mostly non-tech (and it owns public equity too).

TSLA is a car manufacturer.

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