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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?

#101

Post by thisisit »

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…

> The global pandemic will tank the stock market - the market did crash and then Fed stepped in. Rates were cut and Fed

> War in Ukraine will tank the stock market - Market did go down by -30% between Jan-Oct 2022 and went nowhere for sometime after that.

> High interest rates will tank the stock market - Impact for this remains to be seen. Even during 2008 the high interest rates risk persisted for couple of years before the crash. So, I'd give it more time.

> Tariffs will tank the stock market - Did we not see a 20% drop before tariffs were put on hold for 90 days?

> IA will tank the stock market - I don't have much conviction on this one.

It is true that no one knows when a prolonged market crash like 2008 will happen. Maybe never. Government has figured out that Fed intervention can help the market stay afloat. So, maybe unless Fed doesn't step in for a long time these predictions will come true.

The flip side of this is that investment returns of a diversified portfolio (net of inflation) is slowly going down. The choices are to either concentrate or find alternative investing vehicles. That is one of reasons private equity is out looking for alternate income sources like buying up houses and hiking up the rents etc.

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

#102

Post by squishington »

jordanb wrote: post #74
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…

One interpretation is that asset owners as a class have complete control in our system and they will always be made whole no matter what happens. This may require extracting additional rents from consumers, from workers, from renters, from debtors (including the government) but whatever changes have to be made to protect asset holders will be made regardless of the cost. An example of this in action was the collapse…

This interpretation seems accurate to me. I think the big concern is what happens once the asset and passive wealth class have squeezed the working class dry. And the governments don't have enough wealth for a welfare state solution. What is the point of working hard and smart and trying to innovate as a young person without family wealth when you can't even achieve basic economic security.

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

#103

Post by ringeryless »

apwell23 wrote: post #15
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…

Trump election will tank the stock market - Many nobel prize economists and experts .

oh, wait and see, my child, this is merely the beginning of the story.

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

#105

Post by AbstractH24 »

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…

> But who the hell know what and when.

It’s not hard to predict that events will happen. It’s hard to do so with more precision than the next guy.

Something I learned in H2 of 2021, when I nearly went broke betting on a correction. Wasn’t wrong, one did occur. Just failed to realize I couldn’t figure out exactly when.

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

#106

Post by AbstractH24 »

thisisit wrote: post #101
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…

> The global pandemic will tank the stock market - the market did crash and then Fed stepped in. Rates were cut and Fed > War in Ukraine will tank the stock market - Market did go down by -30% between Jan-Oct 2022 and went nowhere for sometime after that. > High interest rates will tank the stock market - Impact for this remains to be seen. Even during 2008 the high interest rates risk persisted for couple of years b…

In 2000 and 2008 how many people falsely predicted the top before it actually came?

I’m too young to remember the naysayers, just the hype.

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

#107

Post by thisisit »

AbstractH24 wrote: post #106
thisisit wrote: post #101

Earlier quoted context omitted.

> The global pandemic will tank the stock market - the market did crash and then Fed stepped in. Rates were cut and Fed > War in Ukraine will tank the stock market - Market did go down by -30% between Jan-Oct 2022 and went nowhere for sometime after that. > High interest rates will tank the stock market - Impact for this remains to be seen. Even during 2008 the high interest rates risk persisted for couple of years b…

In 2000 and 2008 how many people falsely predicted the top before it actually came? I’m too young to remember the naysayers, just the hype.

You can watch the Big Short. Michael Burry started paying out premiums on CDS in 2005. The premiums were huge. He got into a fight with his biggest investors and then had to freeze withdrawals. So, that he could still pay the premiums on the CDS. Did he falsely predict the top?

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

#108

Post by AbstractH24 »

thisisit wrote: post #107
AbstractH24 wrote: post #106

Earlier quoted context omitted.

In 2000 and 2008 how many people falsely predicted the top before it actually came? I’m too young to remember the naysayers, just the hype.

You can watch the Big Short. Michael Burry started paying out premiums on CDS in 2005. The premiums were huge. He got into a fight with his biggest investors and then had to freeze withdrawals. So, that he could still pay the premiums on the CDS. Did he falsely predict the top?

Right, but was he an outlier or part of a chorus?

And how many people before him incorrectly predicted the top? For how long?

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

#109

Post by Tuna-Fish »

impossiblefork wrote: post #64
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…

The way I see it, prices are too high. War is one thing, but it's abroad and the restrictions have been minimal. But interest rates went from Tesla has a P/E ratio something like 26 times what other well-run automotive companies have. Boeing has a price like Airbus, despite no profits, etc. Commercial real estate prices have gone down, and that's reasonable, but you've had both the interest rate increases and this WF…

> This means that investors are pricing companies as if though interests rates can be lowered. I don't think they can, because inflation in the US already quite high despite the 4.5% interest rates and with these tariffs upon that, it probably can't be lowered.

This is why Trump is replacing people doing the statistics with people who very publicly say that they will print what Trump wants. He really wants to cut rates, and I think he will eventually get his way.

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

#110

Post by impossiblefork »

Tuna-Fish wrote: post #109
impossiblefork wrote: post #64

Earlier quoted context omitted.

The way I see it, prices are too high. War is one thing, but it's abroad and the restrictions have been minimal. But interest rates went from Tesla has a P/E ratio something like 26 times what other well-run automotive companies have. Boeing has a price like Airbus, despite no profits, etc. Commercial real estate prices have gone down, and that's reasonable, but you've had both the interest rate increases and this WF…

> This means that investors are pricing companies as if though interests rates can be lowered. I don't think they can, because inflation in the US already quite high despite the 4.5% interest rates and with these tariffs upon that, it probably can't be lowered. This is why Trump is replacing people doing the statistics with people who very publicly say that they will print what Trump wants. He really wants to cut rat…

If employment is down though, then that would be justification for lowering the interest rates. I think it's more a matter of maintaining appearances than something strategic to make the, by Trump desired, low interest rate economy possible.

Even though he wants lower rates, rather than saying 'the Fed is prioritizing price stability over employment and that's wrong-- we can't waste American lives, they need to have jobs' he's denying the numbers despite that they could in principle allow him to do something he wants.

Maybe other things are signs of knowing these problems, maybe this demand for investments from Japan and the EU are motivated by concerns that stock market and to some degree commercial housing valuations are unreasonable, but it's not certain that Trump or anybody else is fully aware. This isn't complicated stuff, and I've even seen newspapers detail ideas like this, maybe toned down a bit, but it's hard to know who understands what.

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