5 ms·

If this is a bubble... The pop stage will be devastating...

by Xunjin 4mo ago

JumpCrisscross 4mo ago
> If this is a bubble... The pop stage will be devastating... Why? It could be sudden. It could be slow and gradual. I've seen no reason it needs to be one versus the other.
- tomrod 4mo ago
  Because it is deliberately extracting cash from Mom and Pop into the robber baron's wallets?
  - dragontamer 4mo ago
    Why would that pop the bubble? Robber Barrons existed from like 1860 through 1915 and extracted the wealth of many people, including Native American tribe lands. Like this shit can keep going until we decide enough is enough and actually change our society.
    - tmp10423288442 4mo ago
      Not related - many robber barons went bankrupt in the severe economic crashes of the time, such as the Panics of 1873 and 1893. The Gilded Age continued despite bubbles popping.
  - JumpCrisscross 4mo ago
    Okay? Why does that mean a devastating pop?
    - vermilingua 4mo ago
      Where were you in 2008?
      - JumpCrisscross 4mo ago
        It would be karmic if fleecing led to financial crises. It doesn’t. You’ve taken N = 1 and extrapolated it wildly.
    - michaelmrose 4mo ago
      Because traditionally the pop is delayed while those who realized most of the gains attempt to offload the risk to other parties. Whether this works or not at some point it becomes an inevitable and self reenforcing feedback loop. Just investing less in risky things on the run up means you personally perform worse so even in known bubbles you don't see reasonable slow downs instead of disastrous pops.
      - JumpCrisscross 4mo ago
        > traditionally the pop is delayed while those who realized most of the gains attempt to offload the risk to other parties What? Source? Plenty of investment bubbles pop before the bag is passed. This thread involves a lot of people looking at something they don't like and presuming karmic forces will give them what they deserve. There is no reason these companies, even if massively overvalued, have to "pop." That's fundamentally different from e.g. the financial crisis, or the 2023 bank collapses, or even the dot-com bubble. Those did not have the ability to self correct. There was no slow deflation other than through a bailout.
        marcus_holmes 4mo ago
        I'm genuinely curious why you say this is different from the dot-com bubble? As I see it, this is the exact same situation - wildly overvalued companies based on investor exuberance, the underlying business is not capable of supporting this kind of valuation. IPO tends to be the crunch point at which this overvaluation is exposed. Once exposed, the valuation correction spreads to other similar businesses quickly and the bubble pops. What's the self-correction ability that AI companies have?
        JumpCrisscross 4mo ago
        > genuinely curious why you say this is different from the dot-com bubble? A lot more revenue. Dot coms were going public pre revenue. And Anthropic is profitable. Both it and SpaceX wouldn’t be dependent on further stock sales to stay alive—that lets them weather a downturn.
    - csomar 4mo ago
      Once the liquidity is transferred, that's it? There is nothing there (datacenter in space, that dude is really smoking some serious stuff), so the money will be spent/transferred and then there is no revenue/new sources of money. It's the same scenario of a ponzi scheme. Everything looks fresh and fine until everyone realizes there is nothing in there.
- burnte 4mo ago
  Irrational exuberance rarely transitions to a rational drawn down. The minute the first selfish-actor flood-liquidates, everyone else will too. That's now runs work.
  - JumpCrisscross 4mo ago
    [dead]
  - chrisweekly 4mo ago
    but this isn't "irrational exuberance", literally everyone I know paying and kind of attention has "rational dread".
    - burnte 4mo ago
      In my opinion the amount of money poured into these companies is the definition of irrational exuberance. And even if you want to call it dread, once they start to deflate people will panic and flee.
      - chrisweekly 4mo ago
        Hmm. With respect, I disagree. When the term was first coined, the broader context was "Main St" (ie, retail) investors acting with apparently excessive optimism. Whereas the unfathomable sums being poured into AI by "Wall St" arguably stem from profound but simple greed, a scheme in which the uber-rich are forcing AI and the concomitant bubble risk down the throats of the general public. "Exuberance" has a significantly positive connotation, which in this case I find completely absent.
  - hattmall 4mo ago
    But where else will people put their money?
    - thfuran 4mo ago
      I heard daffodils are where it's at.
- bawolff 4mo ago
  I mean, isn't the definition of a bubble that it pops quickly? If it slowly loses value over time, its not really a bubble.
  - JumpCrisscross 4mo ago
    > isn't the definition of a bubble that it pops quickly? There is no consistent definition of a bubble. We have no fundamental reason current valuations have to collapse suddenly.
    - bawolff 4mo ago
      Is there any definition of bubble that doesn't involve popping? That's literally the metaphor. > We have no fundamental reason current valuations have to collapse suddenly. I would agree, but i think that is just saying that the current situation is potentially not a bubble. Which may be true. We will only find out after the fact.
      - deleted 4mo ago
        [deleted]
      - JumpCrisscross 4mo ago
        > Is there any definition of bubble that doesn't involve popping? I’ve seen it commonly used to refer to any period of high multiples.
HerbManic 4mo ago
[flagged]
- applfanboysbgon 4mo ago
  There is literally nothing creative about circumventing existing regulations. By definition of there already being rules in place to prevent them, the pump methods being used are already a known quantity. That those safeguards are being bypassed is just boring old corruption.
- overfeed 4mo ago
  The wrong lessons were were learnt in 2008 after no individual suffered any negative consequences for their part in causing horrible losses for a lot of people.
IAmGraydon 4mo ago
It’s never going to happen because too many people want it to happen.
01100011 4mo ago
We don't let bubbles pop anymore. We print money and borrow from the future so that no one loses money on their homes and retirement accounts. The GFC changed the rules.
- calvinmorrison 4mo ago
  except the last bubble pop hit fast and hard with post covid inflation.
  - BobbyJo 4mo ago
    It worked. The only people upset about it are young people who don't vote. If young people don't want a continual wealth transfer from them to the old, they need to start voting. That's been the case since 2008, and here we are a generation later.
    - HDBaseT 4mo ago
      You mean the young people who cannot (or could not) vote because they are under 18? Also very bold of you to assume voting does much. (coming from a 22 year old who votes at every federal, state and local election).
      - layer8 4mo ago
        The way people voted in the last federal election did a whole lot. Granted, it’s effectively limited to people in swing states.
      - BobbyJo 4mo ago
        People under 40 have much lower voter turnout than people over 40. 75% of 65+ year olds vote. Less than 50% of 18-25 year olds vote. I wasn't referring to children.
    - dranudin 4mo ago
      Old people will be the majority for the foreseeable future, though. To be honest, the only strategy that I currently see for young people is waiting and growing old, unfortunately..
deadbabe 4mo ago
One thing I have come to realize, is that worrying about bubbles will keep you poor. If everyone is in the bubble and it pops, everyone is in the same boat, so you’re not really going to be poorer than your peers by comparison. If it’s not a bubble and you are wrong, you will fall way behind everyone else and just watch people get richer and richer doing the exact same thing you should have done. Also, just because something is a bubble doesn’t mean it has to end in a devastating pop. Sometimes bubbles expand and then just get diffused. The exponential rise stops and prices plateau, but it just becomes a new normal and things stagnate for a while before resuming normal upward growth.
- deleted 4mo ago
  [deleted]
- coliveira 4mo ago
  Ask Warren Buffet how concerned he was of "missing" on bubbles... He got richer than pretty much everybody else by just avoiding bubbles and then buying assets at fire sale prices when they inevitably popped.
  - deadbabe 4mo ago
    No, Warren Buffet became so rich because he was making deals to pick up stock at favorable prices the public didn’t have access to. You will not be Warren Buffet just by buying after stocks crash.
  - Npovview 4mo ago
    https://x.com/Mr_Derivatives/status/2022796755621060695 https://x.com/Mr_Derivatives/status/2022796755621060695 Chamath says Warren Buffett outperformed the $SPX by 2 times pre-2000’s because he used "insider info". Berkshire Hathaway completely exited its investment in Paytm (One97 Communications) in November 2023. This divestment occurred just two months prior to the Reserve Bank of India (RBI) initiating its strict regulatory and KYC-related crackdowns on Paytm Payments Bank in early 2024. I think Warren has been doing insider trading.
- csomar 4mo ago
nelox 4mo ago
Listen to the author of “A Brief History of Financial Bubbles” argue why it probably isn’t a bubble: https://api.substack.com/feed/podcast/260347/s/233172.rss https://api.substack.com/feed/podcast/260347/s/233172.rss https://podcasts.apple.com/us/podcast/conversations-with-coleman/id1716338488 https://podcasts.apple.com/us/podcast/conversations-with-col... https://open.spotify.com/show/0Cj2lIpGxkrw1RFVIPTa6a?si=f41c6659d5ad428e https://open.spotify.com/show/0Cj2lIpGxkrw1RFVIPTa6a?si=f41c...
- OccamsMirror 4mo ago
  Can you please summarize his argument?
  - riffraff 4mo ago
    The argument is, as I understand it: * Valuation of the sp500, the hyperscalers and Nvidia is (mostly) reasonable based on earnings * Build out of infrastructure is demand-driven, hyperscalers are not building just for future demand that would not materialize * OpenAI, anthropic & co can be overvalued but that does not mean there's a systemic bubble I think this underestimates contagion effects and the fact that demand appears to be subsidized and may disappear quickly, but it's just MHO.
    - Aerolfos 4mo ago
      > * Valuation of the sp500, the hyperscalers and Nvidia is (mostly) reasonable based on earnings That is a hell of a statement to make (their earnings are mostly negative, after all, except nvidia). Would require exceptional evidence, which doesn't seem to be there. > * Build out of infrastructure is demand-driven, hyperscalers are not building just for future demand that would not materialize This does not reconcile with the large amount of empty datacenters and GPUs which have not been installed: https://www.wheresyoured.at/ais-economics-dont-make-sense-ad-free/#ai-data-centers-are-expensive-to-build-expensive-to-run-and-make-very-little-actual-revenue https://www.wheresyoured.at/ais-economics-dont-make-sense-ad... > * OpenAI, anthropic & co can be overvalued but that does not mean there's a systemic bubble OK? It could also mean there is. > I think this underestimates contagion effects and the fact that demand appears to be subsidized and may disappear quickly, but it's just MHO. Even with subsidized demand Microsoft still ended up cancelling over a gigawatt(!) of planned datacenters already back in 2024. But yeah, their arguments are missing a lot.
dominotw 4mo ago
oh yea good way to stay out of market and retire like a poor person.

If this is a bubble... The pop stage will be devastating...

by Xunjin 4mo ago

If this is a bubble... The pop stage will be devastating...

> If this is a bubble... The pop stage will be devastating... Why? It could be sudden. It could be slow and gradual. I've seen no reason it needs to be one versus the other.

tomrod 4mo ago
Because it is deliberately extracting cash from Mom and Pop into the robber baron's wallets?
- dragontamer 4mo ago
  Why would that pop the bubble? Robber Barrons existed from like 1860 through 1915 and extracted the wealth of many people, including Native American tribe lands. Like this shit can keep going until we decide enough is enough and actually change our society.
  - tmp10423288442 4mo ago
    Not related - many robber barons went bankrupt in the severe economic crashes of the time, such as the Panics of 1873 and 1893. The Gilded Age continued despite bubbles popping.
- JumpCrisscross 4mo ago
  Okay? Why does that mean a devastating pop?
  - vermilingua 4mo ago
    Where were you in 2008?
    - JumpCrisscross 4mo ago
      It would be karmic if fleecing led to financial crises. It doesn’t. You’ve taken N = 1 and extrapolated it wildly.
  - michaelmrose 4mo ago
    Because traditionally the pop is delayed while those who realized most of the gains attempt to offload the risk to other parties. Whether this works or not at some point it becomes an inevitable and self reenforcing feedback loop. Just investing less in risky things on the run up means you personally perform worse so even in known bubbles you don't see reasonable slow downs instead of disastrous pops.
    - JumpCrisscross 4mo ago
      > traditionally the pop is delayed while those who realized most of the gains attempt to offload the risk to other parties What? Source? Plenty of investment bubbles pop before the bag is passed. This thread involves a lot of people looking at something they don't like and presuming karmic forces will give them what they deserve. There is no reason these companies, even if massively overvalued, have to "pop." That's fundamentally different from e.g. the financial crisis, or the 2023 bank collapses, or even the dot-com bubble. Those did not have the ability to self correct. There was no slow deflation other than through a bailout.
      - marcus_holmes 4mo ago
        I'm genuinely curious why you say this is different from the dot-com bubble? As I see it, this is the exact same situation - wildly overvalued companies based on investor exuberance, the underlying business is not capable of supporting this kind of valuation. IPO tends to be the crunch point at which this overvaluation is exposed. Once exposed, the valuation correction spreads to other similar businesses quickly and the bubble pops. What's the self-correction ability that AI companies have?
        JumpCrisscross 4mo ago
        > genuinely curious why you say this is different from the dot-com bubble? A lot more revenue. Dot coms were going public pre revenue. And Anthropic is profitable. Both it and SpaceX wouldn’t be dependent on further stock sales to stay alive—that lets them weather a downturn.
  - csomar 4mo ago
    Once the liquidity is transferred, that's it? There is nothing there (datacenter in space, that dude is really smoking some serious stuff), so the money will be spent/transferred and then there is no revenue/new sources of money. It's the same scenario of a ponzi scheme. Everything looks fresh and fine until everyone realizes there is nothing in there.
burnte 4mo ago
Irrational exuberance rarely transitions to a rational drawn down. The minute the first selfish-actor flood-liquidates, everyone else will too. That's now runs work.
- JumpCrisscross 4mo ago
  [dead]
- chrisweekly 4mo ago
  but this isn't "irrational exuberance", literally everyone I know paying and kind of attention has "rational dread".
  - burnte 4mo ago
    In my opinion the amount of money poured into these companies is the definition of irrational exuberance. And even if you want to call it dread, once they start to deflate people will panic and flee.
    - chrisweekly 4mo ago
      Hmm. With respect, I disagree. When the term was first coined, the broader context was "Main St" (ie, retail) investors acting with apparently excessive optimism. Whereas the unfathomable sums being poured into AI by "Wall St" arguably stem from profound but simple greed, a scheme in which the uber-rich are forcing AI and the concomitant bubble risk down the throats of the general public. "Exuberance" has a significantly positive connotation, which in this case I find completely absent.
- hattmall 4mo ago
  But where else will people put their money?
  - thfuran 4mo ago
    I heard daffodils are where it's at.
bawolff 4mo ago
I mean, isn't the definition of a bubble that it pops quickly? If it slowly loses value over time, its not really a bubble.
- JumpCrisscross 4mo ago
  > isn't the definition of a bubble that it pops quickly? There is no consistent definition of a bubble. We have no fundamental reason current valuations have to collapse suddenly.
  - bawolff 4mo ago
    Is there any definition of bubble that doesn't involve popping? That's literally the metaphor. > We have no fundamental reason current valuations have to collapse suddenly. I would agree, but i think that is just saying that the current situation is potentially not a bubble. Which may be true. We will only find out after the fact.
    - deleted 4mo ago
      [deleted]
    - JumpCrisscross 4mo ago
      > Is there any definition of bubble that doesn't involve popping? I’ve seen it commonly used to refer to any period of high multiples.

HerbManic 4mo ago

[flagged]

applfanboysbgon 4mo ago
There is literally nothing creative about circumventing existing regulations. By definition of there already being rules in place to prevent them, the pump methods being used are already a known quantity. That those safeguards are being bypassed is just boring old corruption.
overfeed 4mo ago
The wrong lessons were were learnt in 2008 after no individual suffered any negative consequences for their part in causing horrible losses for a lot of people.

IAmGraydon 4mo ago

It’s never going to happen because too many people want it to happen.

01100011 4mo ago

We don't let bubbles pop anymore. We print money and borrow from the future so that no one loses money on their homes and retirement accounts. The GFC changed the rules.

calvinmorrison 4mo ago
except the last bubble pop hit fast and hard with post covid inflation.
- BobbyJo 4mo ago
  It worked. The only people upset about it are young people who don't vote. If young people don't want a continual wealth transfer from them to the old, they need to start voting. That's been the case since 2008, and here we are a generation later.
  - HDBaseT 4mo ago
    You mean the young people who cannot (or could not) vote because they are under 18? Also very bold of you to assume voting does much. (coming from a 22 year old who votes at every federal, state and local election).
    - layer8 4mo ago
      The way people voted in the last federal election did a whole lot. Granted, it’s effectively limited to people in swing states.
    - BobbyJo 4mo ago
      People under 40 have much lower voter turnout than people over 40. 75% of 65+ year olds vote. Less than 50% of 18-25 year olds vote. I wasn't referring to children.
  - dranudin 4mo ago
    Old people will be the majority for the foreseeable future, though. To be honest, the only strategy that I currently see for young people is waiting and growing old, unfortunately..

deadbabe 4mo ago

One thing I have come to realize, is that worrying about bubbles will keep you poor. If everyone is in the bubble and it pops, everyone is in the same boat, so you’re not really going to be poorer than your peers by comparison. If it’s not a bubble and you are wrong, you will fall way behind everyone else and just watch people get richer and richer doing the exact same thing you should have done. Also, just because something is a bubble doesn’t mean it has to end in a devastating pop. Sometimes bubbles expand and then just get diffused. The exponential rise stops and prices plateau, but it just becomes a new normal and things stagnate for a while before resuming normal upward growth.

deleted 4mo ago
[deleted]
coliveira 4mo ago
Ask Warren Buffet how concerned he was of "missing" on bubbles... He got richer than pretty much everybody else by just avoiding bubbles and then buying assets at fire sale prices when they inevitably popped.
- deadbabe 4mo ago
  No, Warren Buffet became so rich because he was making deals to pick up stock at favorable prices the public didn’t have access to. You will not be Warren Buffet just by buying after stocks crash.
- Npovview 4mo ago
  https://x.com/Mr_Derivatives/status/2022796755621060695 https://x.com/Mr_Derivatives/status/2022796755621060695 Chamath says Warren Buffett outperformed the $SPX by 2 times pre-2000’s because he used "insider info". Berkshire Hathaway completely exited its investment in Paytm (One97 Communications) in November 2023. This divestment occurred just two months prior to the Reserve Bank of India (RBI) initiating its strict regulatory and KYC-related crackdowns on Paytm Payments Bank in early 2024. I think Warren has been doing insider trading.
csomar 4mo ago

nelox 4mo ago

Listen to the author of “A Brief History of Financial Bubbles” argue why it probably isn’t a bubble: https://api.substack.com/feed/podcast/260347/s/233172.rss https://api.substack.com/feed/podcast/260347/s/233172.rss https://podcasts.apple.com/us/podcast/conversations-with-coleman/id1716338488 https://podcasts.apple.com/us/podcast/conversations-with-col... https://open.spotify.com/show/0Cj2lIpGxkrw1RFVIPTa6a?si=f41c6659d5ad428e https://open.spotify.com/show/0Cj2lIpGxkrw1RFVIPTa6a?si=f41c...

OccamsMirror 4mo ago
Can you please summarize his argument?
- riffraff 4mo ago
  The argument is, as I understand it: * Valuation of the sp500, the hyperscalers and Nvidia is (mostly) reasonable based on earnings * Build out of infrastructure is demand-driven, hyperscalers are not building just for future demand that would not materialize * OpenAI, anthropic & co can be overvalued but that does not mean there's a systemic bubble I think this underestimates contagion effects and the fact that demand appears to be subsidized and may disappear quickly, but it's just MHO.
  - Aerolfos 4mo ago
    > * Valuation of the sp500, the hyperscalers and Nvidia is (mostly) reasonable based on earnings That is a hell of a statement to make (their earnings are mostly negative, after all, except nvidia). Would require exceptional evidence, which doesn't seem to be there. > * Build out of infrastructure is demand-driven, hyperscalers are not building just for future demand that would not materialize This does not reconcile with the large amount of empty datacenters and GPUs which have not been installed: https://www.wheresyoured.at/ais-economics-dont-make-sense-ad-free/#ai-data-centers-are-expensive-to-build-expensive-to-run-and-make-very-little-actual-revenue https://www.wheresyoured.at/ais-economics-dont-make-sense-ad... > * OpenAI, anthropic & co can be overvalued but that does not mean there's a systemic bubble OK? It could also mean there is. > I think this underestimates contagion effects and the fact that demand appears to be subsidized and may disappear quickly, but it's just MHO. Even with subsidized demand Microsoft still ended up cancelling over a gigawatt(!) of planned datacenters already back in 2024. But yeah, their arguments are missing a lot.

dominotw 4mo ago

oh yea good way to stay out of market and retire like a poor person.