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Bank of England flags risk of 'sudden correction' in tech stocks inflated by AI

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Re: Bank of England flags risk of 'sudden correction' in tech stocks inflated by AI

#131

Post by 1vuio0pswjnm7 »

fasteo wrote: post #21

From the actual report[1] >>> Despite persistent material uncertainty around the global macroeconomic outlook, risky asset valuations have increased and credit spreads have compressed. Measures of risk premia across many risky asset classes have tightened further since the last FPC meeting in June 2025. On a number of measures, equity market valuations appear stretched, particularly for technology companies focused o…

"Actually the quoted 'sudden correction' is not referring specifically to AI, but the market in general"

As I read that quote it states that valuations "particularly" for AI companies "appear stretched"

This suggests the "correction" will apply to those valuations in particular

The report later refers specifically to these so-called "technology" companies

"5: Equity market valuations had increased since Q2, to near all-time highs, partly driven by strong Q2 earnings of US _technology firms_. The price appreciation of the largest _technology firms_ this year had increased the concentration within US equity indices to record levels. The market share of the top 5 members of the S&P 500, at close to 30%, was higher than at any point in the past 50 years."

"6: Equity valuations appeared stretched, particularly in backward-looking metrics in the US. For example, the earnings yield implied by the Cyclically-Adjusted Price-to-Earnings (CAPE) ratio was close to the lowest level in 25 years - comparable to the peak of the dot com bubble. ... Some _technology companies_ were trading at valuation ratios which implied high future earnings growth, and concentrations within US equity indices meant that any _AI-led_ price adjustment would have a high level of pass-through into the returns for investors exposed to the aggregate index."

Given their "stretched" valuations according to this report, any "sudden correction" would apply to these so-called "technology" companies

Aside from the instances where the report refers to overvalued "tecchnology" companies particularly, the parent comment is correct that the report does not refer to "AI" specifically

Thus, ...

Re: Bank of England flags risk of 'sudden correction' in tech stocks inflated by AI

#132

Post by SideburnsOfDoom »

lossolo wrote: post #108
SideburnsOfDoom wrote: post #85

Earlier quoted context omitted.

> A chimpanzee can use tools and solve problems, but it will never construct a factory, design an iPhone, or build even a simple wooden house. Humans can, because our intelligence operates at a qualitatively different level. Humans existed in the world for hundreds of thousands of years before they did any of those things, with the exception of wooden hut, which took less time than that. But also wasn't instant. Your…

My point wasn't so much about how fast humans achieved these things, but about what's possible at all given a certain cognitive architecture. Chimpanzees could live for another million years and still wouldn't build a factory, not because they don't have enough time, but because they lack the cognitive and cultural mechanisms to accumulate and transmit abstract knowledge. So I completely agree that intelligence alone…

> Chimpanzees could live for another million years and still wouldn't build a factory, not because they don't have enough time, but because they lack the cognitive and cultural mechanisms

Given a million years, that could change.

Re: Bank of England flags risk of 'sudden correction' in tech stocks inflated by AI

#133

Post by Paradigma11 »

NoMoreNicksLeft wrote: post #35
estomagordo wrote: post #17

Earlier quoted context omitted.

What's a sign it's going to happen ever?

Humans. There are arrangements of atoms that if constructed and activated, act perfectly like human intelligence. Because they are human intelligence. Human intelligence must be deterministic, any other conclusion is equivalent to the claim that there is some sort of "soul" for lack of better term. If human intelligence is deterministic, then it can be written in software. Thus, if we continue to strive to design/cre…

"Human intelligence must be deterministic, any other conclusion is equivalent to the claim that there is some sort of "soul" for lack of better term. "

Determinism is a metaphysical concept like mathematical platonism or ghosts.

Re: Bank of England flags risk of 'sudden correction' in tech stocks inflated by AI

#134

Post by CraigJPerry »

whimsicalism wrote: post #32
CraigJPerry wrote: post #24

Earlier quoted context omitted.

>> sovereign debt burden So all the entities that want to hold the debt (social security administration, mutual funds, pension funds etc) where should they go instead? Riskier assets is what you're saying right? Is that a great idea?

I'm not giving investment advice, just commenting that our current fiscal trajectory has become completely unsustainable & dangerous and very few people seem to be seriously discussing it. Probably the closest US bond equivalent would be debt from well-run Asian countries. I would avoid fixed-income dollar denominated assets.

>> completely unsustainable

in what way? as a sovereign currency issuer, the US can't ever be made to default or can it?

What definition of unsustainable fits?

What event could cause public debt growth to reach some kind of insurmountable maximum?

It's not like private debt, when you run out of money, that is the end of the road. There is no such limit for a sovereign currency issuer. The complete settlement of outstanding public debt could be executed tomorrow without collecting another penny in taxes. I wouldn't recommend it, but it could be done.

Re: Bank of England flags risk of 'sudden correction' in tech stocks inflated by AI

#135

Post by SideburnsOfDoom »

breuleux wrote: post #115
kragen wrote: post #81

Earlier quoted context omitted.

Eliezer’s short story “That Alien Message” providing a convincing argument that humans are cognitively limited, not data-limited, through the device of a fictional world where people think faster: https://www.lesswrong.com/posts/5wMcKNAwB6X4mp9og/that-alien... > Yes. There is. The theoretical limit is that every time you see 1 additional bit, it cannot be expected to eliminate more than half of the remaining hypothes…

Regarding "Alien Message", I don't find that story particularly convincing. I think it's muddled and contrived. The basic issue is that we have to deduce stuff about the world we live in, using resources from the world we live in. In the story, the data bandwidth is contrived to be insanely smaller than the compute bandwidth, but that's not realistic. In reality, we are surrounded by chaotic physical systems that ope…

> Regarding "Alien Message", I don't find that story particularly convincing. I think it's muddled and contrived.

Well, yes. it's from Eliezer Yudkowsky. The kind of people who who generally find him persuasive, will do so. Those who don't find him convincing or even find him somewhat of a crank, like the other self-proclaimed "rationalists", will do do. "muddled" is correct, he lacks rigour in everything, but certainly brings the word count.

Re: Bank of England flags risk of 'sudden correction' in tech stocks inflated by AI

#136

Post by xboxnolifes »

an0malous wrote: post #31
whimsicalism wrote: post #13

Earlier quoted context omitted.

Why is that obvious? Even with effectively complete stagnation and just existing technology + limited RLVR, I can see how this could be trillion-dollars level useful.

The existing technology can’t even replace customer support systems, which seems like the lowest bar for a role that’s perfectly well suited to LLMs. How are you justifying the trillion dollar value?

I disagree that customer support is the lowest bar for LLMs. Companies have been trying to reduce customer support spend for decades, and yet it still exists. Why? Because the types of questions and types of callers that fall on-to the remaining customer support requests are not easy to automate. Either the question itself is a complex edge-case that requires human intervention, or the person calling wants to talk to a human and good documentation was not going to change their action.

Re: Bank of England flags risk of 'sudden correction' in tech stocks inflated by AI

#137

Post by regularfry »

an0malous wrote: post #72
regularfry wrote: post #62

Earlier quoted context omitted.

AGI isn't a synonym for smarter-than-human.

What’s your point? I’m saying there’s no level of smartness that can cure cancer, the bottleneck is data and experimentation not a shortage of smartness/intelligence

And I'm saying that AGI doesn't imply a level of smartness at all.

Re: Bank of England flags risk of 'sudden correction' in tech stocks inflated by AI

#138

Post by NoMoreNicksLeft »

SideburnsOfDoom wrote: post #46
NoMoreNicksLeft wrote: post #35

Earlier quoted context omitted.

Humans. There are arrangements of atoms that if constructed and activated, act perfectly like human intelligence. Because they are human intelligence. Human intelligence must be deterministic, any other conclusion is equivalent to the claim that there is some sort of "soul" for lack of better term. If human intelligence is deterministic, then it can be written in software. Thus, if we continue to strive to design/cre…

> Human intelligence must be deterministic, any other conclusion is equivalent to the claim that there is some sort of "soul" for lack of better term. No, not all processes follow deterministic Newtonian mechanics. It could also be random, unpredictable at times. Are the there random processes in the human brain? Yes, there are random quantum processes in every atom, and there are atoms in the brain. Yes, this is no…

>It could also be random, unpredictable at times.

It isn't. But if it were, we can also write that into the algorithm.

>But also, LLMs are not anywhere close to becoming human level intelligence.

They're no farther than about 5 million years distant.

Re: Bank of England flags risk of 'sudden correction' in tech stocks inflated by AI

#139

Post by NoMoreNicksLeft »

lm28469 wrote: post #65
NoMoreNicksLeft wrote: post #35

Earlier quoted context omitted.

Humans. There are arrangements of atoms that if constructed and activated, act perfectly like human intelligence. Because they are human intelligence. Human intelligence must be deterministic, any other conclusion is equivalent to the claim that there is some sort of "soul" for lack of better term. If human intelligence is deterministic, then it can be written in software. Thus, if we continue to strive to design/cre…

> Thus, if we continue to strive to design/create/invent such, it is inevitable that eventually it must happen. ~200 years of industrial revolution and we already fucked up beyond the point of no return, I don't think we'll have resources to continue on this trajectory for 1m years. We might very well be accelerating towards a brick wall, there is absolutely no guarantee we'll hit AGI before hitting the wall

>We might very well be accelerating towards a brick wall, there is absolutely no guarantee we'll hit AGI before hitting the wall

We've already set the course for human extinction, we're about 6-8 generations away from absolute human extinction. We became functionally extinct 10-15 years ago. Still, if we had another 5 million years, I'm one hundred percent certain we could crack AGI.

Re: Bank of England flags risk of 'sudden correction' in tech stocks inflated by AI

#140

Post by yibg »

Esophagus4 wrote: post #45
bartlettD wrote: post #42

Earlier quoted context omitted.

Have you ever heard that "the market can stay irrational longer that you can stay solvent"? The thing about bubbles is, you can often easily spot them, but can't so easily say when they'll pop.

No. Then you haven’t spotted a bubble. You’ve just made a comment that “wow, things are going up!” That’s not spotting bubble, that’s my non-technical uncle commenting at a dinner party, “wow this bitcoin thing sure is crazy huh?” Talk is cheap. You learn what someone really believes by what they put their money in. If you really believe we’re in a bubble, truly believe it based on your deep understanding of the mark…

That’s silly. I can spot a crashing plane (engines on fire, wings torn half off) without being able to predict where and exactly when it’ll crash.

We can spot a bubble without being able to predict when it’ll pop.

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