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I think it's the AI titanic era. Everyone spent ages telling us that the idea was unsinkable. The peonage in the bottom is currently bailing out water by the bu

by hggigg 2y ago

I think it's the AI titanic era. Everyone spent ages telling us that the idea was unsinkable. The peonage in the bottom is currently bailing out water by the bucket (layoffs) while the rich are still telling everyone the ship isn't sinking by shouting "BUY TITANIC". It's going to sink. We will learn a few useful trivial but useful things from it. That's about it. We've been here before and will be here again. But we will never learn.

blueboo 2y ago
Titanic had sister ships, one of which hit a mine and sank, the other lived out a full life. The peril came from being led into dangerous waters. Maybe your analogy is more right than you know. The question is, who’s Titanic, Olympic, and Brittanic…
- hggigg 2y ago
  RMS Olympic, the longest survivor, was captained by a drunken moron and nearly got sunk as well...
  - lazide 2y ago
    Damn, the business analogies really are solid aren’t they?
- rsynnott 2y ago
  > The peril came from being led into dangerous waters. Eh? No it didn't; operating in water with icebergs was entirely standard for ocean liners of that era. Titanic was operator error, coupled with some questionable design, and extremely poor safety regulations around lifeboats (Titanic actually had more boat space per capita than was common at the time; the lifeboats were largely envisaged for ferrying people from a stricken ship to an assisting ship, and weren't really planned around a ship _rapidly_ sinking. It wasn't until after the accident that regulators required enough boat space for the entire complement.) But mostly operator error. The captain _should_ have hit the iceberg head-on, and indeed this was standard procedure if you couldn't stop in time. This would certainly have damaged the ship, but would not have sunk it.
  - vernkinsler 2y ago
    Eh so the operator errored by leading the Titanic into a dangerous ice berg. Like AI developer rent seekers leading is into a new Ponzi scheme to generate more bag holders than unicorns. Trickle down on us! Open your mouths all and say aaaaah
Mistletoe 2y ago
The worst part is the SP500 is completely held up by this last grift. Once we see the emperor has no clothes look out below. And I don’t know what will prop it up after that. We could be in for a very long decade reminiscent of the 2000s’ lost decade. The carnage from everyone blindly buying tech stocks and even the SP500 (mostly propped up by the Magnificent 7) is going to be unimaginable. https://www.aqr.com/Insights/Perspectives/Value-Spreads-Back-to-Tech-Bubble-Highs-Are-You-People-Crazy https://www.aqr.com/Insights/Perspectives/Value-Spreads-Back...
- benreesman 2y ago
  I'm not a pricing quant by a long way (though AQR at least historically employed more than a few extremely serious quants), so take my hot take with a cold grain of salt. To my untrained eye it looks like most of the Magnificent Seven are priced as though they captured the entire pie at the expense of all the others, which more or less can't happen by definition. The amount of the US equity market based on that pricing outlook would be a terrifying thing to see corrected abruptly.
  - benreesman 2y ago
    I’m not bothered by the downvotes, I don’t consider a comment worth typing unless it pisses median people off enough to get buried. I’m perplexed that a low-key armchair chart trader hot take would run up 5 and back down while brutal Swiftian genocides of everything from Docker to Paul Graham get upvoted. Why is this a thing?
- hggigg 2y ago
  Yeah that. The ETF (IVZ QQQ) I had a chunk of cash in is at risk as well as that tracks SP500 roughly due to the holdings distribution. I pulled it recently. I might lose a few % at the top but when it goes bang I don't want to be near it.
- hakfoo 2y ago
  The awkward factor is that we could have avoided this sort of bubble on a broader scale by sticking to more traditional pension rules. When everyone gets a 401(k), and everyone gets the cookie-cutter advice that index funds are cheap and tend to outperform active management on the long term, it couples WAY more of the American public to the stock market than was conventional. If the market fizzled in 1980, it would bankrupt some rich traders and a few over-margined firms, but the aspects of the economy that actually made and sold useful things would soldier on. People with guaranteed pensions and secured debts would make it out (relatively) whole. Today, a proper reckoning would be political suicide. We're now forced to deal with the political consequences of "NVDA retreating to $10 per share means a bunch of grandpas (who vote) are evicted from their retirement homes." I expect we'll see a lot of elaborate Rube Goldberg schemes to keep stock prices afloat. We'll insist there's an AI gap with China to unlock endless federal grift, much as the missile gap with the USSR made it of vital national interest that we showered Lockheed and Raytheon with trillions. I wonder if we'd eventually see the equivalent of 'capital controls'-- limiting the ability of institutional investors to sell their shares to prevent price deflation if there's a "market-spooking" event. Of course, this bleeds actual productive assets, and when the bottom finally falls out-- when there's no amount of state intervention that will hold back the obvious-- it's going to burn far worse. Maybe the final endgame is that we end up nationalizing part of the market-- swallowing everyone's IRAs/401(k)s/ESAs and converting them to funny-money that can be marked at whatever price is necessary to keep Grandpa from losing his shirt.

by hggigg 2y ago

blueboo 2y ago

Titanic had sister ships, one of which hit a mine and sank, the other lived out a full life. The peril came from being led into dangerous waters. Maybe your analogy is more right than you know. The question is, who’s Titanic, Olympic, and Brittanic…

hggigg 2y ago
RMS Olympic, the longest survivor, was captained by a drunken moron and nearly got sunk as well...
- lazide 2y ago
  Damn, the business analogies really are solid aren’t they?
rsynnott 2y ago
> The peril came from being led into dangerous waters. Eh? No it didn't; operating in water with icebergs was entirely standard for ocean liners of that era. Titanic was operator error, coupled with some questionable design, and extremely poor safety regulations around lifeboats (Titanic actually had more boat space per capita than was common at the time; the lifeboats were largely envisaged for ferrying people from a stricken ship to an assisting ship, and weren't really planned around a ship _rapidly_ sinking. It wasn't until after the accident that regulators required enough boat space for the entire complement.) But mostly operator error. The captain _should_ have hit the iceberg head-on, and indeed this was standard procedure if you couldn't stop in time. This would certainly have damaged the ship, but would not have sunk it.
- vernkinsler 2y ago
  Eh so the operator errored by leading the Titanic into a dangerous ice berg. Like AI developer rent seekers leading is into a new Ponzi scheme to generate more bag holders than unicorns. Trickle down on us! Open your mouths all and say aaaaah

Mistletoe 2y ago

The worst part is the SP500 is completely held up by this last grift. Once we see the emperor has no clothes look out below. And I don’t know what will prop it up after that. We could be in for a very long decade reminiscent of the 2000s’ lost decade. The carnage from everyone blindly buying tech stocks and even the SP500 (mostly propped up by the Magnificent 7) is going to be unimaginable. https://www.aqr.com/Insights/Perspectives/Value-Spreads-Back-to-Tech-Bubble-Highs-Are-You-People-Crazy https://www.aqr.com/Insights/Perspectives/Value-Spreads-Back...

benreesman 2y ago
I'm not a pricing quant by a long way (though AQR at least historically employed more than a few extremely serious quants), so take my hot take with a cold grain of salt. To my untrained eye it looks like most of the Magnificent Seven are priced as though they captured the entire pie at the expense of all the others, which more or less can't happen by definition. The amount of the US equity market based on that pricing outlook would be a terrifying thing to see corrected abruptly.
- benreesman 2y ago
  I’m not bothered by the downvotes, I don’t consider a comment worth typing unless it pisses median people off enough to get buried. I’m perplexed that a low-key armchair chart trader hot take would run up 5 and back down while brutal Swiftian genocides of everything from Docker to Paul Graham get upvoted. Why is this a thing?
hggigg 2y ago
Yeah that. The ETF (IVZ QQQ) I had a chunk of cash in is at risk as well as that tracks SP500 roughly due to the holdings distribution. I pulled it recently. I might lose a few % at the top but when it goes bang I don't want to be near it.
hakfoo 2y ago
The awkward factor is that we could have avoided this sort of bubble on a broader scale by sticking to more traditional pension rules. When everyone gets a 401(k), and everyone gets the cookie-cutter advice that index funds are cheap and tend to outperform active management on the long term, it couples WAY more of the American public to the stock market than was conventional. If the market fizzled in 1980, it would bankrupt some rich traders and a few over-margined firms, but the aspects of the economy that actually made and sold useful things would soldier on. People with guaranteed pensions and secured debts would make it out (relatively) whole. Today, a proper reckoning would be political suicide. We're now forced to deal with the political consequences of "NVDA retreating to $10 per share means a bunch of grandpas (who vote) are evicted from their retirement homes." I expect we'll see a lot of elaborate Rube Goldberg schemes to keep stock prices afloat. We'll insist there's an AI gap with China to unlock endless federal grift, much as the missile gap with the USSR made it of vital national interest that we showered Lockheed and Raytheon with trillions. I wonder if we'd eventually see the equivalent of 'capital controls'-- limiting the ability of institutional investors to sell their shares to prevent price deflation if there's a "market-spooking" event. Of course, this bleeds actual productive assets, and when the bottom finally falls out-- when there's no amount of state intervention that will hold back the obvious-- it's going to burn far worse. Maybe the final endgame is that we end up nationalizing part of the market-- swallowing everyone's IRAs/401(k)s/ESAs and converting them to funny-money that can be marked at whatever price is necessary to keep Grandpa from losing his shirt.