4 ms·

They always say it's about "AI," but it never turns out to be about AI. I wonder what's it about this time?

by tucnak 8mo ago

mullingitover 8mo ago
The collapse of the yen carry trade.
- bhouston 8mo ago
  I have read that numerous places and it seems plausible but it is beyond my investing experience. I think the new nominated Fed Chair is also a hard money advocate and is spooking USD alternatives (gold, silver, BTC, etc.) But hard money can be quite hard on the economy, so that could limit growth.
  - robocat 8mo ago
    We should just blame "the willies". Investment is all about belief. When the root cause is the willies, then we hallucinate reasons together. Crypto and memes have demonstrated us a lot about the drives of individual investors. Unfortunately it seems that professional investors are not that much more rational (from my limited personal experience with a small hedge fund, and from my years of looking at markets). My favourite term has always been "taking profits" which is generated by the technical analysis (I loath that term) of looking at the prices: taking an effect and publishing a cause (trying to sound smart). We are deeply irrational beings; often the more you go up a professional ladder the more rationalisation you see. During unstable periods, we see lots of weird side-effects and there is a lot that doesn't seem to make sense. Edit: a better meme could be "The use of AI by funds is destabilising markets" Disclaimer: I am not a professional investor. I am a cynic.
    - mullingitover 8mo ago
      Speculation involves belief, sure. However, there is hard math involved in markets as well, and the yen carry trade equation exists whether you believe in it or not.
      - robocat 8mo ago
        I love your juxtapositioning! Can the yen carry trade equation exist outside of belief? Edit: I just noticed your comment is the one result for your "equation"!! https://duckduckgo.com/?q=%22yen+carry+trade+equation%22 https://duckduckgo.com/?q=%22yen+carry+trade+equation%22
- AnimalMuppet 8mo ago
  Not saying you're wrong, necessarily, but as I type this the Dow is at 49,700. Would you expect the collapse of the yen carry trade to cause the Dow to collapse as well? Or is the Dow not high-growth enough for people to put yen-carry money into it?
  - mullingitover 8mo ago
    > Would you expect the collapse of the yen carry trade to cause the Dow to collapse as well? USD devalued ~10% last year, so some of the losses are already priced into the DJI. When you account for that and sprinkle in ~3% inflation, it has lost value despite being up ~11% in the last year.
renegade-otter 8mo ago
Anecdotally, read somewhere that delivery people are going idle. The Orange One wrecked everything with tariffs, and the ripple of destruction is slowly taking its course. That's before we take into account massive outflows of cheap labor and fired government workers.
DaedalusII 8mo ago
wall street analysts are starting to realise that software companies shouldnt trade on a P/E of 300. DocuSign is currently valued at 30 times its annual earnings. Adobe is currently 16. Amazon is 28 -- has been as high as 50 recently. NVDA is 44. Investors are basically starting to realise that enterprise are not going to subscribe to software like DocuSign for 50 years. They'll probably just move to odoo or zohosign or something and save a lot of money. So its probably a better bet to put that capital into something like Nvidia or Tesla or whatever. it also looks like the US Fed isn't going to cut rates, so capital is getting more expensive. Of course, if you are a CEO its great to blame all this on AI and then tell your investors you are increasing AI in your business (see: salesforce whose stock price is down 42% in a year and is now trading at 25x earnings)
- bhouston 8mo ago
  > software companies shouldnt trade on a P/E of 300 You are playing pretty fast and loose with your definition of a "software company" when you include Amazon and NVIDIA in your list. Amazon is many things but it is not a "software company" and neither is "NVIDIA".
  - ecshafer 8mo ago
    50% of amazon operating profit is from AWS. NVIDIA's GPUs aren't really that much better than AMD if it weren't for CUDA. Software company is a pretty good description for both.
    - dd8601fn 8mo ago
      I’ve heard the same about Nvidia, quite a few times, but have never really understood it. I don’t suppose you know a good “for dummies” explanation of why CUDA is such an insurmountable moat for them? Like, what is it about that software that AMD can’t produce for their own hardware, or for a most important subset, with these $1T market stakes?
      - surgical_fire 8mo ago
softwaredoug 8mo ago
Every tech company assumed they would be the benefactors, not victims, of AI. And investors now see that without the alleged AI growth, these companies at best look like stable utilities, not high growth stocks. At worse companies look like they make highly replaceable software as software stops being a moat. Moreover they look like large, inefficient organizations with a lot of human veto points that prevent innovation (requiring more human coordination is an anti moat now)
- symfrog 8mo ago
  Was software ever a moat? Software typically only gave companies a small window of opportunity to turn a fleeting software advantage into a more resilient moat (network effects, switching costs etc.)
  - softwaredoug 8mo ago
    Yes, I would argue good (stable, fast, easy to use) software was somewhat of a moat and much harder before coding agents. Stripe, Square, Shopify, Google, all thrived in some part because their services take a hard problem and make it easier to use. Now more people can take a hard problem and make it easier to use. All you have to do is look around (esp 5+ years ago) and see the many many BAD, unstable, hard to use, slow, etc versions of these companies
  - tonyedgecombe 8mo ago
    Windows was a moat but it looks more like an anchor now.
    - symfrog 8mo ago
      Windows' moat was not the operating system code, but that they were able to get distribution via IBM, and then grow an ecosystem of applications that were targeted at Windows, which created a snowball effect for further applications.
      - 8mo ago

They always say it's about "AI," but it never turns out to be about AI. I wonder what's it about this time?

by tucnak 8mo ago

They always say it's about "AI," but it never turns out to be about AI. I wonder what's it about this time?

mullingitover 8mo ago

The collapse of the yen carry trade.

bhouston 8mo ago
I have read that numerous places and it seems plausible but it is beyond my investing experience. I think the new nominated Fed Chair is also a hard money advocate and is spooking USD alternatives (gold, silver, BTC, etc.) But hard money can be quite hard on the economy, so that could limit growth.
- robocat 8mo ago
  We should just blame "the willies". Investment is all about belief. When the root cause is the willies, then we hallucinate reasons together. Crypto and memes have demonstrated us a lot about the drives of individual investors. Unfortunately it seems that professional investors are not that much more rational (from my limited personal experience with a small hedge fund, and from my years of looking at markets). My favourite term has always been "taking profits" which is generated by the technical analysis (I loath that term) of looking at the prices: taking an effect and publishing a cause (trying to sound smart). We are deeply irrational beings; often the more you go up a professional ladder the more rationalisation you see. During unstable periods, we see lots of weird side-effects and there is a lot that doesn't seem to make sense. Edit: a better meme could be "The use of AI by funds is destabilising markets" Disclaimer: I am not a professional investor. I am a cynic.
  - mullingitover 8mo ago
    Speculation involves belief, sure. However, there is hard math involved in markets as well, and the yen carry trade equation exists whether you believe in it or not.
    - robocat 8mo ago
      I love your juxtapositioning! Can the yen carry trade equation exist outside of belief? Edit: I just noticed your comment is the one result for your "equation"!! https://duckduckgo.com/?q=%22yen+carry+trade+equation%22 https://duckduckgo.com/?q=%22yen+carry+trade+equation%22
AnimalMuppet 8mo ago
Not saying you're wrong, necessarily, but as I type this the Dow is at 49,700. Would you expect the collapse of the yen carry trade to cause the Dow to collapse as well? Or is the Dow not high-growth enough for people to put yen-carry money into it?
- mullingitover 8mo ago
  > Would you expect the collapse of the yen carry trade to cause the Dow to collapse as well? USD devalued ~10% last year, so some of the losses are already priced into the DJI. When you account for that and sprinkle in ~3% inflation, it has lost value despite being up ~11% in the last year.

renegade-otter 8mo ago

Anecdotally, read somewhere that delivery people are going idle. The Orange One wrecked everything with tariffs, and the ripple of destruction is slowly taking its course. That's before we take into account massive outflows of cheap labor and fired government workers.

DaedalusII 8mo ago

wall street analysts are starting to realise that software companies shouldnt trade on a P/E of 300. DocuSign is currently valued at 30 times its annual earnings. Adobe is currently 16. Amazon is 28 -- has been as high as 50 recently. NVDA is 44. Investors are basically starting to realise that enterprise are not going to subscribe to software like DocuSign for 50 years. They'll probably just move to odoo or zohosign or something and save a lot of money. So its probably a better bet to put that capital into something like Nvidia or Tesla or whatever. it also looks like the US Fed isn't going to cut rates, so capital is getting more expensive. Of course, if you are a CEO its great to blame all this on AI and then tell your investors you are increasing AI in your business (see: salesforce whose stock price is down 42% in a year and is now trading at 25x earnings)

bhouston 8mo ago
> software companies shouldnt trade on a P/E of 300 You are playing pretty fast and loose with your definition of a "software company" when you include Amazon and NVIDIA in your list. Amazon is many things but it is not a "software company" and neither is "NVIDIA".
- ecshafer 8mo ago
  50% of amazon operating profit is from AWS. NVIDIA's GPUs aren't really that much better than AMD if it weren't for CUDA. Software company is a pretty good description for both.
  - dd8601fn 8mo ago
    I’ve heard the same about Nvidia, quite a few times, but have never really understood it. I don’t suppose you know a good “for dummies” explanation of why CUDA is such an insurmountable moat for them? Like, what is it about that software that AMD can’t produce for their own hardware, or for a most important subset, with these $1T market stakes?
    - surgical_fire 8mo ago

softwaredoug 8mo ago

Every tech company assumed they would be the benefactors, not victims, of AI. And investors now see that without the alleged AI growth, these companies at best look like stable utilities, not high growth stocks. At worse companies look like they make highly replaceable software as software stops being a moat. Moreover they look like large, inefficient organizations with a lot of human veto points that prevent innovation (requiring more human coordination is an anti moat now)

symfrog 8mo ago
Was software ever a moat? Software typically only gave companies a small window of opportunity to turn a fleeting software advantage into a more resilient moat (network effects, switching costs etc.)
- softwaredoug 8mo ago
  Yes, I would argue good (stable, fast, easy to use) software was somewhat of a moat and much harder before coding agents. Stripe, Square, Shopify, Google, all thrived in some part because their services take a hard problem and make it easier to use. Now more people can take a hard problem and make it easier to use. All you have to do is look around (esp 5+ years ago) and see the many many BAD, unstable, hard to use, slow, etc versions of these companies
- tonyedgecombe 8mo ago
  Windows was a moat but it looks more like an anchor now.
  - symfrog 8mo ago
    Windows' moat was not the operating system code, but that they were able to get distribution via IBM, and then grow an ecosystem of applications that were targeted at Windows, which created a snowball effect for further applications.
    - 8mo ago