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Google boss says AI investment boom has 'elements of irrationality'

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Re: Google boss says AI investment boom has 'elements of irrationality'

#101

Post by ajross »

josefritzishere wrote: post #92
helterskelter wrote: post #90

I'm curious what HN is doing with their portfolios right about now. I'd be dumping NVDA and reallocating to more bonds for the time being.

This sub is the most important question in the thread. Where do you put your money to hedge against an AI market crash?

You can't hedge against a whole market. And you can't time bubble pop events anyway. You can dump NVDA today, sure, because it's overvalued at $180. And most of us agree. But that won't prevent it from going to $300 before it pops (which is totally reasonable too!), so dumping it today might hurt as much as it helps. Run-ups at the end of a speculative bubble are by definition irrational and produce in-hindsight-ridiculous numbers.

If you're young and invested for the long term, just leave all your junk in broad index securities. You can't do better than that, you just have to ride the bumps.

On the other hand, I'm approaching retirement and looking seriously at when to pull the trigger. The aggregate downside to me of a large market drop or whatever is much higher than it is to a 20-something, because losing out on (to make a number up) an extra 30% of net worth is minor when compared to "now you have to work another three years before retiring" (or alternate framings like "you have to retire in Houston and not Miami", etc...).

So most of my assets are moving out of volatiles entirely.

Re: Google boss says AI investment boom has 'elements of irrationality'

#102

Post by oulipo2 »

josefritzishere wrote: post #92
helterskelter wrote: post #90

I'm curious what HN is doing with their portfolios right about now. I'd be dumping NVDA and reallocating to more bonds for the time being.

This sub is the most important question in the thread. Where do you put your money to hedge against an AI market crash?

Cash or bonds I assume

Re: Google boss says AI investment boom has 'elements of irrationality'

#103

Post by estimator7292 »

jordanb wrote: post #78
clickety_clack wrote: post #48

Sounds like something an extortionist would say in a movie. “We’re all dirty here!”

They really are shameless aren't they? Makes one think that this was the plan all along. I think they saw how SVB went down and realize that if they're reckless and irresponsible at a big enough scale they can get the government to just transfer money to them. It's almost like this is their new business model "we're selling exposure to the $XX trillion dollar bailout industry."

I don't think it's very difficult to imagine that the usgov is trying to put pressure on industry to make "number go up". Given the general competency level in usgov these days, I also wouldn't be particularly surprised if nobody knew or cared about whether the "up" of the number was real or meaningful, or whether there would be consequences.

Current admin really, really wants the number going up, and is also incapable of considering or is ignorant to any notion of consequence for any actions of any kind.

Re: Google boss says AI investment boom has 'elements of irrationality'

#104

Post by bigbuppo »

pksebben wrote: post #72
ares623 wrote: post #58

Earlier quoted context omitted.

It’s going to pop as soon as they get confirmation the govt will bail them out. Until then they’re going to give it their all to keep it growing.

I think they already have that confirmation. When we bailed the banks out in 08 we basically said "If you're big enough that we'd be screwed without you then take whatever risks you like with impunity". That's a reduction of complexity, of course, but the core of the lesson is there. We have actually kept on with all the practices that led to the housing crash (MBS, predatory lending, Mixing investment and traditiona…

If Meta or Google disappared overnight, it would be, at worst, a minor annoyance for most of the world. Despite the fact that both companies are advertising behemoths, marketing departments everywhere would celebrate their end.

Re: Google boss says AI investment boom has 'elements of irrationality'

#105

Post by bigbuppo »

project2501a wrote: post #62
burnte wrote: post #54

Earlier quoted context omitted.

Agreed, it's when. They're hoping to stave it off or maybe stretch out the pop into a correction by all hedging together with all these incestuous deals, but you can't hold back the tide. They debuted this tech way too early, promised way too much, and now the market is wary about buying AI products until more noise settles out of the system.

They got enough slush money to make this go on for a couple of years. I am shocked at the part they know it is a bubble and they are doing nothing to amortize it. Which means they expect the government to step in and save their butts. ... Well, not that shocked.

They're floating 40 year bonds for technology with a three year lifecycle. They do not have the actual cash for this.

Re: Google boss says AI investment boom has 'elements of irrationality'

#106

Post by nurettin »

helterskelter wrote: post #90

I'm curious what HN is doing with their portfolios right about now. I'd be dumping NVDA and reallocating to more bonds for the time being.

Why trade individual stocks anyway? Cost averaging ETFs is a proven way to building wealth. S&P goes down 20%, you average down, it recovers and you get another 2-3 years of growth. This goes on until civilization collapses.

Re: Google boss says AI investment boom has 'elements of irrationality'

#107

Post by Irishsteve »

vineyardmike wrote: post #89
rchaud wrote: post #80

Most bubbles occur due to excessive levels of credit offered too cheaply, resulting in a whole bunch of defaults happening at the same time. All the major AI players have borrowed money to buy GPUs and build data centers and have used Special Purpose Vehicles to do it so the debt doesn't fall on their own balance sheet, probably using a certain amount of stock as collateral. If the SPV defaults, could that trigger a…

The question is, a sell off for who? If they’ve securitized and sold their data center buildout, will the big clouds and AI labs actually face any severe impact? While the sums are huge, most of these companies have the cash on hand to pay down the debt. The big AI labs have said their models earn enough to cover the cost to train themselves, just not the next one. This means they could at any time walk away from the…

It’s an insurance company so basically pensions.

Re: Google boss says AI investment boom has 'elements of irrationality'

#108

Post by nradov »

josefritzishere wrote: post #92
helterskelter wrote: post #90

I'm curious what HN is doing with their portfolios right about now. I'd be dumping NVDA and reallocating to more bonds for the time being.

This sub is the most important question in the thread. Where do you put your money to hedge against an AI market crash?

In a crash everything gets positively correlated for a while. You can go to cash temporarily but of course no one can consistently time the market.

Re: Google boss says AI investment boom has 'elements of irrationality'

#109

Post by coldpie »

josefritzishere wrote: post #92
helterskelter wrote: post #90

I'm curious what HN is doing with their portfolios right about now. I'd be dumping NVDA and reallocating to more bonds for the time being.

This sub is the most important question in the thread. Where do you put your money to hedge against an AI market crash?

Same thing as always. Stick with your plan and rebalance if you need to. If your plan is 80% stock 20% bond (or whatever ratios), and the increased stock prices are putting you significantly out of balance, then sell your stock funds and buy bonds to put it back to where it should be. If the crash happens, sell your now too-high bonds and buy stocks. Or just buy into one of those funds that does all this for you, or hire a fiduciary financial advisor to do it for you.
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