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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'

#121

Post by nradov »

Irishsteve wrote: post #107
vineyardmike wrote: post #89

Earlier quoted context omitted.

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.

Right, insurance companies are the new "financial dark matter". The next financial crisis will probably be triggered when a few large life and property insurers fail because they purchased debt assets which were highly rated but turn out to be junk. (Medical and auto insurers aren't exposed here because they operate on much shorter timeframes.)

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

#122

Post by TrainedMonkey »

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?

It's more complex than that, a summary of my highly subjective understanding:

1. AI companies manage to build AGI and achieve takeoff. I have no idea on how to hedge against that.

2. The market is not allowed to crash. There will likely be some lag between economic weakness and money printing. Safer option is probably to buy split 50% SPY and 50% bonds. A riskier option is trying to time the market.

3. The market is allowed to crash. Bonds, cash, etc.

Depending on what you believe will happen and risk appetite you can blend between the strategies or add a short component. I am holding #2 with no short positions in post-tax accounts and full SPY in tax advantaged accounts.

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

#123

Post by 0cf8612b2e1e »

estimator7292 wrote: post #103
jordanb wrote: post #78

Earlier quoted context omitted.

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 incapab…

This is the thing that worries me the most. The market is past due for a market correction. Yet this government is willing to burn down everything for short term gains.

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

#124

Post by dabockster »

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?

US government bonds

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

#125

Post by lazide »

gretch wrote: post #112
nurettin wrote: post #106

Earlier quoted context omitted.

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.

If you buy ETFs, you basically hold some stocks you don't want. For example, stock from war profiteering companies (lockheed, raytheon). Note that investing in war profiteers is a proven way to build wealth. I just don't want to do that. This argument not only applies to evil companies, but also dumb ones. For example, I have no interest in investing in IBM or Oracle even those both of those are also money makers.

Ok?

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

#126

Post by lazide »

bigbuppo wrote: post #104
pksebben wrote: post #72

Earlier quoted context omitted.

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.

Considering how much of the world runs on WhatsApp alone, that’s laughably wrong.

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

#127

Post by AstroBen »

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.

Broad, global diversification with a long term time horizon. So I'm doing exactly nothing

I'm not able to predict what the overall market is going to do short or medium term

What makes you think your guess is better than the rest of the money in the market, most of it acting with better information than you?

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

#128

Post by prism56 »

nradov wrote: post #116
nurettin wrote: post #106

Earlier quoted context omitted.

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.

Buying index funds (either mutual funds or ETFs) has been an effective approach for retail investors. But the concern now is that some US stock index funds are so heavily weighted to the "Magnificent 7" stocks that much of the previous benefit of diversification has been lost. The Mag 7 are all highly correlated with each other so if one falls then usually the others do as well. https://www.fidelity.com/learning-cent…

I'm in a global tracker and the sheet amount in these big stocks is scary.

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

#129

Post by ajross »

_zoltan_ wrote: post #118
ajross wrote: post #101

Earlier quoted context omitted.

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-ridi…

into? bonds?

A few bond funds, but frankly just a lot of money market cash in the short term. Most of our guts say that the crash is imminent and if it is the extra fees and hassle won't be worth it.
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