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In my years, I've noticed bubbles tend to burst after we move past the phase of bubble skepticism being the dominant voice. When the dominant voices begin to c

by ijidak 1y ago

In my years, I've noticed bubbles tend to burst after we move past the phase of bubble skepticism being the dominant voice. When the dominant voices begin to claim, "This time it's different!!" that's usually a sign we're nearing the end. Look this up. During the dot-com bubble, the popular notion emerged that the business cycle might have ended. "The end of the business cycle!!" Many media outlets pushed the narrative that humanity would experience endless growth thanks to technological advancements. During the housing bubble, towards the end, multiple media outlets suddenly started repeating the idea that housing prices, in real terms, have never fallen. When I heard that farcical argument gain steam, I got out of housing immediately—before the bubble burst. So, for me, that AI-bubble skepticism is still the dominant opinion suggests that this bubble is far from over. I think we're closer to the Netscape IPO than we are to the .com crash. Maybe we're at the halfway point. Just one person's opinion.

cosmic_cheese 1y ago
Not a bad theory. Throwing caution to the wind and going all in usually follows abandonment of skepticism, which accelerates the bubble’s progression quickly landing it in its end phase.
ojbyrne 1y ago
Somewhat similar to the Shoeshine Boy Theory: https://quotulatiousness.ca/blog/2020/06/11/in-1929-the-warning-sign-was-getting-stock-tips-from-shoeshine-boys-and-elevator-operators/ https://quotulatiousness.ca/blog/2020/06/11/in-1929-the-warn...
deleted 1y ago
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jerf 1y ago
The parallel doesn't hold, because the AI-bubble skepticism was near zero even six months ago. Yes, I was a skeptic, and I know where I was getting my info from, so I know it was not zero, but it was not a significant market force and nobody in the mainstream was issuing any cautionary notes on it. It has now progressed to what you might call a "mainstream contrarian" position. The relevant Overton window has shifted to where it is just barely in the acceptable discourse window. It's been a while, but if I remember my dotcom bubble, that never happened from the zero-skepticism position. It was all RAH RAH RAH and then blammo it blew apart. Skepticism was always around... again, I know because I was a skeptic and I arranged my career, with modest but far from total success, around the bubble not being sustainable, but everyone around me had no idea what I was talking about (although since my alternative was "go to grad school" I didn't get much flak since they figured the market would still be as hot years later). The skeptical position was never in the Overton window, so I don't think the comparison is useful on this particular metric. Personally I'm watching, intrigued, to see how far the general awareness that this is a bubble can go while the bubble refuses to pop. At some point that awareness needs to translate into ceasing to feed the bubble the feedstock capital it is so rapaciously consuming, but "I can always find a bigger idiot to unload on" can run quite a ways, it seems. (I don't find that an appealing investment thesis personally but I seem to be in the minority.)
- ilamont 1y ago
  > It was all RAH RAH RAH and then blammo it blew apart. Skepticism was always around... again, I know because I was a skeptic and I arranged my career, with modest but far from total success, around the bubble not being sustainable, but everyone around me had no idea what I was talking about There were some very prominent skeptics. Warren Buffett was regularly quoted as saying he didn't get what was going on and speculated that maybe it was time to retire. Where I worked, people had seen tech boom and bust cycles before but what was different was the irrational exuberance wasn't just confined to a handful of stocks. Many people really did believe it was a new era and old rules didn't apply, and they were only too happy to check in on their rising Schwab and E-trade balances.

by ijidak 1y ago

cosmic_cheese 1y ago

Not a bad theory. Throwing caution to the wind and going all in usually follows abandonment of skepticism, which accelerates the bubble’s progression quickly landing it in its end phase.

ojbyrne 1y ago

Somewhat similar to the Shoeshine Boy Theory: https://quotulatiousness.ca/blog/2020/06/11/in-1929-the-warning-sign-was-getting-stock-tips-from-shoeshine-boys-and-elevator-operators/ https://quotulatiousness.ca/blog/2020/06/11/in-1929-the-warn...

deleted 1y ago

[deleted]

jerf 1y ago

The parallel doesn't hold, because the AI-bubble skepticism was near zero even six months ago. Yes, I was a skeptic, and I know where I was getting my info from, so I know it was not zero, but it was not a significant market force and nobody in the mainstream was issuing any cautionary notes on it. It has now progressed to what you might call a "mainstream contrarian" position. The relevant Overton window has shifted to where it is just barely in the acceptable discourse window. It's been a while, but if I remember my dotcom bubble, that never happened from the zero-skepticism position. It was all RAH RAH RAH and then blammo it blew apart. Skepticism was always around... again, I know because I was a skeptic and I arranged my career, with modest but far from total success, around the bubble not being sustainable, but everyone around me had no idea what I was talking about (although since my alternative was "go to grad school" I didn't get much flak since they figured the market would still be as hot years later). The skeptical position was never in the Overton window, so I don't think the comparison is useful on this particular metric. Personally I'm watching, intrigued, to see how far the general awareness that this is a bubble can go while the bubble refuses to pop. At some point that awareness needs to translate into ceasing to feed the bubble the feedstock capital it is so rapaciously consuming, but "I can always find a bigger idiot to unload on" can run quite a ways, it seems. (I don't find that an appealing investment thesis personally but I seem to be in the minority.)

ilamont 1y ago
> It was all RAH RAH RAH and then blammo it blew apart. Skepticism was always around... again, I know because I was a skeptic and I arranged my career, with modest but far from total success, around the bubble not being sustainable, but everyone around me had no idea what I was talking about There were some very prominent skeptics. Warren Buffett was regularly quoted as saying he didn't get what was going on and speculated that maybe it was time to retire. Where I worked, people had seen tech boom and bust cycles before but what was different was the irrational exuberance wasn't just confined to a handful of stocks. Many people really did believe it was a new era and old rules didn't apply, and they were only too happy to check in on their rising Schwab and E-trade balances.