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How Much Wealth an AI Stock Market Crash Could Destroy

economist.com

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Re: How Much Wealth an AI Stock Market Crash Could Destroy

#91

Post by barbazoo »

IAmBroom wrote: post #19
barbazoo wrote: post #4

Im sure the wealthy find a way to socialize these “losses”. Also what a shit headline. There’s no wealth destroyed, it’s all just numbers go up and down. But until you sell you haven’t lost any money, have you?

Without buying and selling, there is no change in price. Obviously, wealth will therefore be destroyed - just not that of buy-and-hold people. I have no sympathy for the uber-wealthy, but claiming no one's wealth will be affected is ridiculous.

The way I think about it is that it'll affect those most that are the most greedy, those that are exposed to the most risky "products". If your wealth is in bonds or something else boring, won't this be a non event?

I'm not convinced it's not someone in the background choosing wrong (greed) that's the problem.

Re: How Much Wealth an AI Stock Market Crash Could Destroy

#92

Post by jstummbillig »

I find the relationship of the general public with company ownership fascinating.

1) Can just pick and choose buying parts of the best, most well functioning companies without having to figure out anything or do anything, what a life.

2) Kinda hate on people who run those companies

3) Also kinda hate on big companies in general

4) Owning stocks is somewhat cool though. Unless it's not, then it's destruction of wealth.

Re: How Much Wealth an AI Stock Market Crash Could Destroy

#93

Post by mejutoco »

mitthrowaway2 wrote: post #83
smallmancontrov wrote: post #50

Earlier quoted context omitted.

Also: "The stock market is the only market where people complain when things go on sale." -Warren Buffet If you're in a "selling stock" part of your life I understand, but if you're in a "buying stock" part of your life it's worth reflecting on the quote until you can shake the "recent price action IS investor psychology" out of your head.

That's very witty, but not really accurate. I think in any market where you're the seller, you will complain (or at least be grumpy) when your competitors slash prices. Especially when you're not sure the sale is temporary, and the market price is now below your cost basis on your inventory. And especially if your accountants are forced to write down your inventory value to the new, lower price. Even when people are…

> But the stock market offers no such buyer protections.

In some situations you can deduct losses in the stock market from the taxes to pay over the next 5 years. Not the same, but not nothing.

Re: How Much Wealth an AI Stock Market Crash Could Destroy

#95

Post by ndsipa_pomu »

poisonborz wrote: post #86

Stock market crash? I believe less and less a 1929 style crash is possible. Tesla, Uber, hell, look at GameStop still... The market is rigged. The US and the upper class needs numbers go up, the numbers will go up. The only way an adjustment to such stock prices would come is if US power and dollar vanes. There is a chance now this will happen, but I guess it will still take a long time.

That doesn't seem plausible to me, though not because I don't think the upper class would be above such behaviour. If investors try to prop up the price of a company, they'll end up buying more over-priced shares and potentially losing far more money in the long-term, so it's probably only worthwhile if they believe that it's just a short-term blip. Also, the investors that don't believe that it's a sensible long-term bet will be offloading their shares to the people who are willing to pay top price for them, so someone is going to end up holding a lot of expensive stock that's not performing.

Re: How Much Wealth an AI Stock Market Crash Could Destroy

#96

Post by red-iron-pine »

alecco wrote: post #79
vanschelven wrote: post #15

I've never felt right about the framing of "destroying wealth" when stock prices go to some new number. If anything, the word "reflecting" seems more applicable?

Indeed. If it is all a Ponzi/bubble there was no wealth to begin with. More important for the wider economy is how much liquidity it destroyed and the mayhem it will do in the bond markets. But, since the top 10% of American savers (including almost all of US Congress) put most of their savings in stocks they will get a massive bailout. It will make the 2008 Wall Street bailouts look like pocket change. I bet they wi…

> Indeed. If it is all a Ponzi/bubble there was no wealth to begin with.

lotta people buying houses and cars with AI seed company money that funds their 400k salary.

Re: How Much Wealth an AI Stock Market Crash Could Destroy

#97

Post by ethbr1 »

mitthrowaway2 wrote: post #22
vanschelven wrote: post #15

I've never felt right about the framing of "destroying wealth" when stock prices go to some new number. If anything, the word "reflecting" seems more applicable?

Indeed, it just means that the really expensive thing that people put a lot of time into building turned out not to be as valuable as expected. The wealth isn't destroyed, it's being discovered not to exist; a vanishing mirage.

The relevant question is 'What is a custom Meta AI datacenter valuable for, after a hypothetical AI crash?'

Crypto -> LLM -> Repurpose Crypto Power Contracts to Feed LLM Datacenters -> AI crash -> Repurpose LLM Hardware/Power for Crypto ?

Would be curious if anyone has run the numbers on what LLM hardware capacity (including upcoming) would do to blockchains, if a big chunk were reallocated.

Re: How Much Wealth an AI Stock Market Crash Could Destroy

#98

Post by [deleted] »

mejutoco wrote: post #93
mitthrowaway2 wrote: post #83

Earlier quoted context omitted.

That's very witty, but not really accurate. I think in any market where you're the seller, you will complain (or at least be grumpy) when your competitors slash prices. Especially when you're not sure the sale is temporary, and the market price is now below your cost basis on your inventory. And especially if your accountants are forced to write down your inventory value to the new, lower price. Even when people are…

> But the stock market offers no such buyer protections. In some situations you can deduct losses in the stock market from the taxes to pay over the next 5 years. Not the same, but not nothing.

[deleted]

Re: How Much Wealth an AI Stock Market Crash Could Destroy

#99

Post by mitthrowaway2 »

smallmancontrov wrote: post #89
mitthrowaway2 wrote: post #83

Earlier quoted context omitted.

That's very witty, but not really accurate. I think in any market where you're the seller, you will complain (or at least be grumpy) when your competitors slash prices. Especially when you're not sure the sale is temporary, and the market price is now below your cost basis on your inventory. And especially if your accountants are forced to write down your inventory value to the new, lower price. Even when people are…

The numbers in your brokerage account invite you to pretend that you are a seller at times when you are not. It's a nice fiction when prices are going up and a dark story when prices are going down but it's just as illusory either way. We are in violent agreement that price action is psychology, the point of the quote is to fight the loss aversion bias that was calibrated for hunting animals in the savannah not tradi…

But the people complaining the most about falling prices are the sellers, of which there are necessarily many. (If there weren't, the price wouldn't be falling!)

It's not a flaw for people to think from the seller's perspective. For you to be a net buyer, someone else has to be a net seller.

Not to mention the unhappiest of all: the people who borrowed money against the value of the assets they owned.

Re: How Much Wealth an AI Stock Market Crash Could Destroy

#100

Post by cramsession »

smallmancontrov wrote: post #73
cramsession wrote: post #47

Tesla is currently sitting near a $1.5T valuation with $1.47 earnings per share based entirely on AI vaporware. The adjustment to reality cannot come soon enough.

Vaporware like this? https://youtu.be/3DWz1TD-VZg?t=111

Yes, fulfilling regulatory requirements are part of shipping a product.
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