Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

The AI trade now runs on borrowed money, and the lenders are repricing it

greyswansignals.com

Post reply on HN
Print view View original

71–80 of 178 posts

Re: The AI trade now runs on borrowed money, and the lenders are repricing it

#71

Post by rapind »

eru wrote: post #51
rapind wrote: post #39

Earlier quoted context omitted.

I was able to create a custom index based on the top 500 that I stripped the big AI stocks from (shovels too). Then I added decent chunks of international, small cap, and treasury ETFs to it. I have no illusions that I can time a bubble, but I'm hopeful I'm at least partially shielded, and most importantly I feel better about ignoring wall street again.

Instead of starting with the top 500 American stocks, and then adding international and small caps, you can start with a global all-market stock index--and then remove AI from that.

Yeah I couldn't figure that out with Questrade (Canada). It's a pretty new feature, but I think it's great, so I hope they expand their baseline indexes.

I was considering writing a tool that simply follows any index you choose with a .toml of simple config options, like which stocks to exclude, potential fixed locks for specific stocks (or maybe upper and lower percentage of portfolio settings), a hard per stock cap (say AAPL at 3%), and drift threshold. Something you just run once a day and it spits out your buy / sell orders. Seems like this is something brokerages are already offering in some variation though, and I'm not sure what, if any, API access looks like, or export / import options.

Re: The AI trade now runs on borrowed money, and the lenders are repricing it

#72

Post by okzgn »

gpt5 wrote: post #57
okzgn wrote: post #37

Key reports to understand the root problem (no ROI): - Gen AI: Too Much Spend, Too Little Benefit?: https://www.goldmansachs.com/insights/top-of-mind/gen-ai-too... (Goldman Sachs) - AI’s $600 Billion Question: https://sequoiacap.com/article/ais-600b-question/ (Sequoia Capital) - The Simple Macroeconomics of AI: https://www.nber.org/system/files/working_papers/w32487/w324... (MIT / Daron Acemoglu)

How can people in Hacker News still doubt AI's benefit when they are seeing in front of their eyes every technical profession getting disrupted to oblivion in the last year. Just ask basically any software engineer how much their profession has changed over the last 12 months Obviously there is risk, but can't we really extrapolate the AI gains forward and just see how big it's ahead to become?

A simple analogy: If you have kids, you love them and want to give them whatever makes them happy. But on the other hand, you run a household, you pay for bills, healthcare, heating, education, and heavy overhead. You must keep things under control. You don't hand a blank check to an immature child who doesn't even know how to manage that money yet, right? So, even if your child wants to push forward at an extraordinary pace, you have to keep a level head, manage spending, and ensure everything doesn't end in ruin.

That’s the point: making growth sustainable over time.

Re: The AI trade now runs on borrowed money, and the lenders are repricing it

#73

Post by eru »

mempko wrote: post #23

As a side note. All money is borrowed. That's how money gets created! Short explainer video by the great late David Graeber https://youtu.be/LxJW7hl8oqM?is=IjdyHwZchaiMHk4C

First, and obviously, the article is talking about capital when they say 'money'. Not all capital is borrowed.

Second, not all money is created via borrowing (but the vast majority is!)

And the YouTube video you linked to is very confused even about the money that is created via borrowing.

Government debt is not required to create money. The Bank of Japan bought stock ETFs to get 'freshly printed' money into circulation. ('Freshly printed' in scare quotes, because these days it's just entries in a database.) Another example: Singapore's central bank (MAS) does not use Singapore government debt to create Singapore dollars; I'm not even quite sure they would even be allowed to.

You can say that money itself is a debt of the central bank; and that's sort-of true, but it's not what David Graeber talks about.

A bit of a pedantic last point: silver coins or bitcoin also require no borrowing to create. Silver coins have been used as money, bitcoin could conceivably be used as money. (There are other problems with these options, but that's besides the narrow point.)

Re: The AI trade now runs on borrowed money, and the lenders are repricing it

#74

Post by bayarearefugee »

gpt5 wrote: post #57
okzgn wrote: post #37

Key reports to understand the root problem (no ROI): - Gen AI: Too Much Spend, Too Little Benefit?: https://www.goldmansachs.com/insights/top-of-mind/gen-ai-too... (Goldman Sachs) - AI’s $600 Billion Question: https://sequoiacap.com/article/ais-600b-question/ (Sequoia Capital) - The Simple Macroeconomics of AI: https://www.nber.org/system/files/working_papers/w32487/w324... (MIT / Daron Acemoglu)

How can people in Hacker News still doubt AI's benefit when they are seeing in front of their eyes every technical profession getting disrupted to oblivion in the last year. Just ask basically any software engineer how much their profession has changed over the last 12 months Obviously there is risk, but can't we really extrapolate the AI gains forward and just see how big it's ahead to become?

> How can people in Hacker News still doubt AI's benefit

The internet and railroads were highly beneficial, still crashed the economy.

Re: The AI trade now runs on borrowed money, and the lenders are repricing it

#75

Post by stnikolauswagne »

aurareturn wrote: post #61
anukin wrote: post #17

Earlier quoted context omitted.

That’s because they were reinvesting the profits. I think they had given a profitable quarter just to show that they could do it.

And I'm sure Anthropic would be immensely profitable if they stopped investing their inference profits into training newer models.

For how long though? If Amazon never built AWS the core business conceivably would still be around today, if Anthropic stopped providing new models two years ago no one would care about them now.

Re: The AI trade now runs on borrowed money, and the lenders are repricing it

#76

Post by eru »

rapind wrote: post #71
eru wrote: post #51

Earlier quoted context omitted.

Instead of starting with the top 500 American stocks, and then adding international and small caps, you can start with a global all-market stock index--and then remove AI from that.

Yeah I couldn't figure that out with Questrade (Canada). It's a pretty new feature, but I think it's great, so I hope they expand their baseline indexes. I was considering writing a tool that simply follows any index you choose with a .toml of simple config options, like which stocks to exclude, potential fixed locks for specific stocks (or maybe upper and lower percentage of portfolio settings), a hard per stock cap…

I'm in Singapore. My money is in VWRA (without bothering to remove AI companies).

Your idea for the tool sounds interesting. I suspect even just copy-and-pasting the paragraph you wrote here into your favourite AI programming agent would get you pretty close to a prototype you can play around with. At least in terms of 'spit out buy / sell orders' and leaving out the API integration.

Re: The AI trade now runs on borrowed money, and the lenders are repricing it

#77

Post by Deukhoofd »

gpt5 wrote: post #57
okzgn wrote: post #37

Key reports to understand the root problem (no ROI): - Gen AI: Too Much Spend, Too Little Benefit?: https://www.goldmansachs.com/insights/top-of-mind/gen-ai-too... (Goldman Sachs) - AI’s $600 Billion Question: https://sequoiacap.com/article/ais-600b-question/ (Sequoia Capital) - The Simple Macroeconomics of AI: https://www.nber.org/system/files/working_papers/w32487/w324... (MIT / Daron Acemoglu)

How can people in Hacker News still doubt AI's benefit when they are seeing in front of their eyes every technical profession getting disrupted to oblivion in the last year. Just ask basically any software engineer how much their profession has changed over the last 12 months Obviously there is risk, but can't we really extrapolate the AI gains forward and just see how big it's ahead to become?

I don't doubt that AI has benefits, but I do doubt that the major AI providers will be able to make back their investments. They've spent trillions of dollars, and yet they've barely created a moat. We're seeing open weight models being released that are only months behind them, that can run for way cheaper. This makes the future of OpenAI and Anthropic suddenly look rather bleak.

Re: The AI trade now runs on borrowed money, and the lenders are repricing it

#78

Post by spaceman_2020 »

gpt5 wrote: post #57
okzgn wrote: post #37

Key reports to understand the root problem (no ROI): - Gen AI: Too Much Spend, Too Little Benefit?: https://www.goldmansachs.com/insights/top-of-mind/gen-ai-too... (Goldman Sachs) - AI’s $600 Billion Question: https://sequoiacap.com/article/ais-600b-question/ (Sequoia Capital) - The Simple Macroeconomics of AI: https://www.nber.org/system/files/working_papers/w32487/w324... (MIT / Daron Acemoglu)

How can people in Hacker News still doubt AI's benefit when they are seeing in front of their eyes every technical profession getting disrupted to oblivion in the last year. Just ask basically any software engineer how much their profession has changed over the last 12 months Obviously there is risk, but can't we really extrapolate the AI gains forward and just see how big it's ahead to become?

I use AI a lot but my final output isn’t drastically different

Writing a lot of code doesn’t mean much when the moat was never “writing a lot of code”

Re: The AI trade now runs on borrowed money, and the lenders are repricing it

#80

Post by 4ndrewl »

gpt5 wrote: post #57
okzgn wrote: post #37

Key reports to understand the root problem (no ROI): - Gen AI: Too Much Spend, Too Little Benefit?: https://www.goldmansachs.com/insights/top-of-mind/gen-ai-too... (Goldman Sachs) - AI’s $600 Billion Question: https://sequoiacap.com/article/ais-600b-question/ (Sequoia Capital) - The Simple Macroeconomics of AI: https://www.nber.org/system/files/working_papers/w32487/w324... (MIT / Daron Acemoglu)

How can people in Hacker News still doubt AI's benefit when they are seeing in front of their eyes every technical profession getting disrupted to oblivion in the last year. Just ask basically any software engineer how much their profession has changed over the last 12 months Obviously there is risk, but can't we really extrapolate the AI gains forward and just see how big it's ahead to become?

Tell me you weren't around during the dot com boom without etc, etc.

The benefit is neither here nor there - it's whether the borrowed money will ever be repaid on the lenders' terms.

Post reply on HN