My TLDR: 20 company stocks had new highs with this recent peak market performance. Basically a narrow slice of companies, majority AI related, are pushing the market to new highs. Many companies not doing so well while concentrated growth occurs indicates bubblish territory.
We've entered a new paradigm, fundamentals don't matter, don't ask questions just get in this gravy train, modern monetary theory and all (heard all this before, that bubble clap gonna be epic).
I'm not a pro, but here's where my mind goes every time I hear "it's a new paradigm, fundamentals don't matter"--that's not the case, fundamentals are always fundamentals, we're just finding out how far we can push the envelope before the fundamentals kick us in the ass again. That's my take, anyway, and I don't think it's that out there--I really don't know anyone who thinks this won't all come crashing down, or end with a soft landing.
Or how much money the government can print to prop things up, before fundamentals are pushed too far into ridiculous territory, but who knows that could be +100% from here...
I am not particularly disagreeing with what you are saying, but feel that view can be kind of shortsighted.
300 years ago the fundamentals of medicine were check their humors and leech em if their red humor was too high. 150 years ago we didn't know what germs were. 100 years ago we didn't know what viruses were.
That's not to say the earlier layers don't add to the later, but the study of public finance is what, 150 years old? Fundamentals can definitely change, to be replaced by new fundamentals though.
There are however 2 large differences between medicine (or any other strict science) and macroeconomics when it comes to establishing fundamental knowledge.
First, medicine can have empirical test of given theory compararively easily. I'm not saying it's necessarily easy in a given example, just that in general it's doable. With macroeconomics, you are always battling with extremely large and complex system and getting lost in interdependencies and causality chains, with one of the major problems being even identifying the interdependencies.
Second, in medicine you are unlikely to have a large part of society incentivised for something new become fundamental knowledge, replacing the old one. At least not to the extent of incentivisation that 'new fundamentals are that stocks always go up' can bring. That is an extremely powerful incentivisation. And direct cross into social aspect of economics. Or, potential bubbles formation. For that matter.
I agree, this can be a shortsighted take. At one point that's just bound not to be the case. But the odds here are that equating 'this is a new era' in this context with 'oh dear theres a bubble' is very very likely.
I'm not disagreeing with you either, lol. There are "sea changes" that happen, where our understanding of everythign is rewritten. But I honestly don't see it right now--it just looks like plain-old overvalued companies that will not deliver on hopes. I could be wrong! And--as you say--I'm sure, eventually I will be, given a long-enough timespan. I just don't see it happening now and with the market that we're talking about.
I enjoy reading these articles and thinking about if they make sense to me. I’m also curious what’ll eventually be the final pin that bursts the balloon.
For years there have been different predictions and they become harder to take seriously with so many not seeming to matter. Which I guess may be yet another sign of a bubble.
I’m hearing about interest rate inversion. High PE’s. Circular accounting. Chinese advancements. Some companies cutting back AI spending. US political instability. I guess it’ll likely be a combination of factors that all add up. So far there seems to be some hand waving for about all the reasons.
I think the pin that will burst the AI bubble is advertising.
On paper, most of the companies funding the AI companies are profitable because of ad revenue. It’s easy to say Google or Meta or Amazon can continue to spend what they’ve been spending on datacenter buildout or chips because they’re taking in so much in ad revenue that they’re still profitable. However, with white collar layoffs happening, the workforce is experiencing recession level hiring and wage stagnation, and it’s trickling up. Once it gets to a critical threshold, consumer goods will suffer, then advertising for those goods, and the amount Google or Facebook can charge for ads drop as demand craters, making their data center spend no longer money they can afford to spend without taking out loans. Banks and private credit are concerned about their exposure to AI companies due to the high level of financing OpenAI and others are doing, so they won’t take on more loans once advertising stops paying for it, and the music stops.
Yeah, that's another fun hypothesis, and it makes sense as well. Doritos lowered their prices because sales were slowing enough to decrease earnings. That makes sense slowing consumer spending could result in a popping the bubble through the chain you describe. I'm kind of thinking it'll be a combination of things, with yours probably contributing.
Well an also I just don't think that advertising will achieve the same impact in AI and chat products that it had in search. Ad worked as a product in search because we were actively looking for info there. it worked in scroll (instagram) cause it was an image and we were looking for cool images. I personally just don't know if it's going to work in AI. The lack of control of the ad experience (which advertisers care about), and the intrusion into chat (which is something that users might not like) make me wonder if ad revenue will continue.
I’ve had ChatGPT for a while now and refuse to pay for it. They’ve recently started showing adds and it’s not even related to anything and kind of creepy. I’m not here for the adds. I’m here to answer questions. I agree with you, the infrastructure is not the same and I doubt it takes off. I see this bubble bursting by the end of the year when the last bit of our oil reserves start to dry up and gas starts to creep over $6 a gallon. That will grind almost everything to a halt especially when you factor it into the cost of goods sold, not just people traveling for work or pleasure. That will drive the economy into a tailspin the ai bubble (which is propping everything up on hopes and dreams of an 80% reduction in labor) won’t be able to overcome or compensate for especially since we really haven’t seen much of a return lately, i.e. massive reduction in cost or massive increases in new “AI generated” products. If we hadn’t hit Iran with a baseball bat, maybe the ai bubble could have compensated and deflated slowly as new products or technologies came out of it but with gas about to retardmaxx, I think the advertising angle is the pin that pops the bubble.
Oh I thought you were going the route of Yahoo chat rooms. At the end, bots were talking to one another and real humans few and far between. I can imagine ad impressions on web sites will plummet when no one visits them anymore because AI answers all the questions rather than pointing users at websites. Then they'll inject ads into the AI platforms even if you pay! Fun!
This is likely the most likely answer. It’s going to be cause by the system stalling and someone being caught with their pants down. It’s always the banality that gets you.
I was going to say an externality could cause it, but the market is showing resilience to them lately. It’s not that these events don’t carry significant consequences, it’s just that without the shock, we only really have the latency to wait on. So surmising that ad revenues are what takes this whole thing down is as solid as it gets.
Real Estate and auto’s will also begin to add downward pressure on lending and financing too. Banks are going to be getting very cagey.
It will be when the signs are clear the Republicans will be out of power, just like 07-08 when public sentiment regarding Bush and Iraq had the writing on the wall for the next election.
It’s what happened 19 years ago. Republicans spent like drunken sailors and then cared about the budgets they blew up when they were going to be out of power. Markets react to forecast austerity, margins called, and bubble bursts. They had already gotten hammered in the midterm elections before so the writing was on the wall for the ‘08 presidential election.
Thanks. Kind of an interesting hypothesis I haven't thought of before, that a party may try to sabotage things on their way out to spite the next party, no matter the expense to the country.
I keep thinking about this too. You have 3 separate things going on:
AI black hole of finance. Hundreds of billions have been spent (financed primarily through debt with double-digit interest) with very little resulting income to show for it. The banking and shadow banking sectors have committed to providing hundreds of billions more of credit in the next few years.
However, consumer confidence is dropping. Funds that have heavily invested in AI are finding their investors want out and are having to freeze or limit what they can take. Also, credit is tightening up now. Last year credit card companies started lowering credit limits out of nowhere.
AI is now having to go on the stock market to raise capital and raising prices just to keep steady but that won’t provide the hundreds of billions a year that their present business model requires.
When they run out of working cash (which will happen within the next year if only because companies are turning away from AI now that it is costing more than having workers) the ‘bubble’ will pop.
Housing market bubble. To keep housing prices going up indefinitely, greater and greater amounts of credit was offered up to enable people to pay higher prices. This also provided banks with reliable income from mortgage payments.
As they wanted more and more, they started going down the subprime route again and then, when the risk got worrisome, went down the Credit Default Swap route again (which both spreads and magnifies the risk) using the CDX marketplace.
Now, banks have given out far too much credit that isn’t being paid back (see the AI black hole above) and they need more income fast. Consequently, they are raising mortgage interest rates higher than the FED/bank of England etc.
However, people often got the mortgages when interest rates were low and they cannot pay those higher rates. They then have to sell the house (or it is foreclosed on) but the housing market won’t let them sell it without dropping the price massively. That means that banks won’t get paid back enough to offset the credit they gave.
This is worsened by the banks present credit crisis, which is seeing people being offered a specific mortgage in January and then the terms have completely changed (higher interest rate, lower total amount offered) by April when they finally find somewhere to buy. They can’t afford it so no sale.
The rise in foreclosures and the increase in properties going onto the market (partially fuelled by changes to landlord rules and higher costs) shows this is already happening. However, those that can afford to drop their prices are doing so and gradually that will build up - causing house prices to drop in general.
The banks’ losses from the failed mortgages will build up and the CDXs will kick in (spreading the damage far and wide). Once one big insurance company goes down because it can’t handle the number of defaults (think AIG in 2008) things will happen fast. Governments will step in and we find out what the new ‘bail-in’ system looks like. Of course, that pulls down the AI tower of cards if it happens before the AI bubble pops.
I’m seeing a lot of people who are pushed to their limits already (due to the cost of living crisis), including one who is already defaulting on her mortgage, so I think the defaults are likely already building up.
However, 2008 showed us that banks can keep this kind of thing under wraps for a while so I expect that to hit within the next 6 months (as the strain started about 6 months ago).
The fuel supply crisis. Businesses and people will need a lot more credit in the coming months to get them through the fuel crisis. They won’t get it as the banks have been pushed to their absolute limits.
That means that businesses will go under (especially those owned by private equity which is a lot of high street shops where I am) and a lot of people who could have just about gotten by will start defaulting.
This will bring to light the credit crisis that banks have been trying to hide. Governments will go to the banks and tell them to sort it out but there is no largely untapped shadow banking system to save us like they did in 2008 when they bought up the cheap housing stock. ‘Bail-ins’ won’t help (I don’t know how they are expected to bring in the kind of money needed to dig us out of this but I doubt the regulators expected the industry to recreate 3 financial disasters at the same time).
So governments will bail out the entire banking and shadow banking industries (and most likely the single biggest AI company as they can’t let it all disappear). Bond yields will soar as governments don’t have trillions just lying about.
All the dominoes are presently teetering, any of them could fall at any moment and start all the others.
Add to that, in the UK, we have problems with our Prime Minister and people wanting a change (with the present front runner to replace him being someone who has no respect for the bond markets). That alone may be enough to spook the markets, encouraging a tightening of credit and topple the first domino.
That's an extensive write up, thanks! These three make me think of another thing which is that a number of folks have been saying a lot of money is on the sidelines. If it's invested into AI it seems like it'll be burned up that way due to what seems like a lot of unrecoverable costs through energy use and investments that have relatively short life cycles (chips). That may use up that money that has been on the sidelines.
Yeah, money seems tight, and higher costs seems like it'll spread detrimentally across the economy.
Melody Wright has been talking pretty consistently about the US housing market and seems to have similar views. And also is comparing government backed loans to subprime loans of the last housing downturn. It appears many folks with those loans are underwater with little down, and can walk away. And these numbers are apparently at similar levels as 2008. She's more recently predicting a notable increase in foreclosures by the end of the first half of the year (now), and a continued increase in them going forward. And without heavy government intervention thinks it'll increasingly negatively impact the housing market.
I think the money on the sidelines is being held back by those who intend to jump back into the stock market once the crash has taken it as low as it will go (Buffet is holding hundreds of billions).
I doubt its use will benefit the average person and the sheer amount of debt this time around is unthinkable (and certainly unknowable as tech, at least, are using ‘Special Purpose Vehicles’ and ‘Payment-In-Kind’ financial tools to keep their accounts looking sound and banks have a whole different set of tools to hide their losses).
Actually it seems like i was wrong, thanks for the receipts bro
Why tf are they grabbing bridge loans tho that seems insane
Edit* also considering mag7 capex being 700b, arent these bridge loans just to secure funding while the datacenter is being built and not operative yet?
I've been sitting and wondering what could pop the balloon too. We all know the accounting is fake, we all know the USD is manipulated harder than ever. But this stuff keeps going up.
Something will pop it. My guess: if the fed raises rates, it triggers investments to redirect to bonds slowly (but how can they raise rates without wrecking the USD due to the deficit?? No idea, maybe money printer?). This combined with AI being "a hallucination engine that is often correct" being a major problem for most businesses, reveals lower demand than these AI circle jerkers anticipated.
These combined factors result in fewer chip orders, which shows the world it's all a scam, and crunch go the PE ratios.
But that's my guess and I have no idea wtf I'm talking about.
At the rate guesses are going, seems as good as any!
I’ve got a somewhat longer term hypothesis that taxes are near the bottom and will start increasing due to public pressure and budgetary demands and is likely to change valuations. But I don’t know how to trade on that guess.
Yeah, at least it'll confidently tell me SOMETHING! Lol. In my head AI is like Siri or the apple image generator thing, kind of weak. And in my work I don't have a use for it, so have only really tried one this year for a personal project of making a spreadsheet from a picture of movies to track them. It wasn't very effective and my AI doubts remain. I think it's here to stay, but the impact seem very optimistic (or pessimistic perhaps).
I think people are overly pessimistic as a kind of... IDK coping factor, or like people saying electricity is just a fad.
It is like... a really good google search. If you try to use google search to finish your homework, It's not really going to be able to help you.
But if you say "Help me find sources to learn this topic," you will mostly learn what you need to know. Mine is pretty well trained though to only bring back peer reviewed, government publication or other academic level works.
And surprisingly, it's pretty good at filling out accounting info too. As long as you feed it direct numbers and not "10% of this is X, 25% being stockholder retained earnings..." kind of deal.
I can see it getting even more accurate and efficient, but I don't see it replacing workers soon.
Thanks. My buddy is a strong advocate of it and uses it daily in his programming work. I guess for me I haven't yet seen the value in my life, but probably will dabble sometimes.
I certainly agree with you that it'll get more accurate and efficient and better and better. My prediction is that instead of replacing workers en masse, it'll make folks more efficient and people will find something else to do, or what they are working on becomes less expensive so more people can pay to have it done. I don't have a guess what that something else is though. Maybe more sole proprietorships or something where human interactions are valued if starting and running a business becomes super easy.
Honestly, in my experience with college, it might make the people who actually know their shit have better job opportunities… if qualifications are not taken at face value.
You must be out of date on using Google searches to finish your homework. That shit will give you the answer nowadays… you just have to pay (unless you use one of several workarounds)
I only really use the Google search ai. I often don’t have a use for it, except if I want some very random statistic that I cannot be bothered to calculate (ie: standard price range for a stainless steel water bottle). But if some Google search is so choked with ads, I will run it through the ai for links. But almost everything is verified, especially if it’s actually important.
That being said, I have a way with numbers so good that one time I bet on the Kentucky derby standings and won… but also lost because the winning horse was disqualified for PEDS (I knew that
was going to happen based on the data). I also won a side bet I had where I predicted that two specific horses would finish right next to each other in a specific order- which they did not even have odds for at the time.
Yeah, that would be one way for sure. Then I guess I could dig through companies and try to find some. But I don't know what characteristics to even look for. Possibly lower profitability companies with lower debt could do better as they wouldn't pay as much taxes in the first place, and could be less impacted by what seems like a likely interest rate increase.
There are 7 voting members of the Board of Governors.
Trump has appointed 3 without including Powell.
The other 5 is a rotating Hodge podge of bankers and economists.
Warsh, the new head, wants to change how inflation is measured/assessed which at a glance would basically slash 1/3 of the inflation rate off.
Where currently at like 3.3% but if he changes it we would be closer to 2%. The closer we are to 2% the easier it is to justify a rate cut and try to strong arm the other members to get on board. Oh and there's that other little vector of trying to fire board members that don't want to cut rates.
> Warsh was picked to lower interest rates. He really has no choice in the matter.
People on reddit keep saying this, but if you've been paying attention you know institutional money started pricing in hikes post Warsh confirmation, not cuts.
So either reddit is reading a lot that's not necessarily apparent, in a complex nuanced discussion. Or almost every financial institution in the world is just losing money for fun on fed funds futures.
Cook is still on the board, her court case failed at every turn except final formalities.
>I think SCOTUS will rule Trump has the ability to remove Fed Governors.
They've quite literally ruled the exact opposite, in multiple instances, they've also taken the time to write in to unrelated opinions that their rulings on the ability to fire various agency personnel in no way translate to the Federal Reserve.
IDK, people on reddit seem to invent a reality they like then believe in that at all costs, but man your sentiment is so completely opposed to every single action the supreme court has taken, and every single word they've uttered on this topic.
I track correlation between RSP (equal weighted S&P 500 index) and TLT (20 year treasuries). It's at .58 with a 252 day z score of 2.69. When asset classes start moving together like that, when the fall comes people are going to have nowhere to go.
Probably the most alarming take that's circulating on Reddit currently is 'stocks are pricing in inflation!' or 'high inflation is good for stocks, akchually'.
Like yeah, stocks generally keep up with inflation, and a small amount of inflation (>2%) is healthy and better than deflation. But high inflation doesn't stay contained, it fucks up supply chains and consumer spending, slowly shows up in earnings, and results in rate hikes if the labour market stays strong.
Ah yes the most accurate calculation, hypothetical earnings based on the AI circlejerk.
A leap from 40 to 10 shows such growth that I can think of like three companies that ever did this. Actually I'm trying to think of it now and I can't. Maybe apple? But micron is surely it too!
Stocks are always priced on their expected FUTURE earning over the next 10-15-20 years.
This is because investors profit from future earning only - not the last quarter, or the last 4 quarters, or the last 4 years.
You can use the last 4 quarters as guidance for future performance, but don't make the mistake of thinking that it's the determining factor in the stock price.
Forward PE in meme stocks, which is what these are, is a joke. If we were talking about a mature company with established demand, product lifecycles, etc, it's one thing. 40->10 crunch in PE is simply PE volatility. It demonstrates nothing of 10 years, or even 5 years.
I took a bit of time to look at companies that succeeded in matching their 40-10 or greater PE jumps q/q, omitting the last 5 years of AI memes.
I literally just see apple, maybe some steel companies in the 70s but it's really hard to see those PE numbers and they all failed in the end anyway. Can't find another example.
Right, Micron and companies like that are selling the shovels in this gold rush. Sales are through the roof, they literally can't keep up with demand, and bringing new chip making capacity online takes years. Will demand come back down? Probably, but this is very much not the same as dot com companies that had no actual sales.
Market makers use their unique legal exemptions which allow them to heavily distort and delay price discovery by injecting synthetic supply or demand. They can create synthetic shares out of thin air to absorb buying surges, which temporarily caps upward price momentum and dampens organic market forces.
Market makers abuse their position in market plumbing; By providing continuous trading and tight spread, they create an illusion of safety, and that masks real-time risk and encourages investors to take on aggressive speculative positions. Because everything appears fine, banks continue to lend and fuel their bubble.
This is why Wall Street never loses; they time these catastrophic corrections because they engineer them.
My point is just yeah, it’s an estimated thing based on consensus. All forward looking metrics have to be based on speculation. The market also determines prices based on speculation.
I've been thinking about how in the big short movie, Michael Burry says something like "you have to believe we live in a completely fraudulent system" for the crash not to occur.
Do you think we live in a completely fraudulent system? Will the powers that be actually allow a crash to happen?
The SpaceX IPO is where I get off this ride personally
Broadcom is at 90 P/E? Brother, Tesla trades at 385, Palantir at 182, CAVA (a salad restaurant) is at freaking 143.
And even Alphabet, Amazon and Microsoft are not as cheap as they would appear. Last quarterly earnings of Alphabet showed that they had just 39 billions of pre-tax operating income, nearly half of their earnings (37 billion) was just equity gains of Anthropic. Their main business now is just throwing cash at an unprofitable company that expects to burn 11 billion this year.
Thats the story of every bubble and crash in market history
When this one pops its going to be really ugly too, because of everything else economically going on, not least of which are the high oil prices which effect a ridiculous amount of inputs and overhead costs, and there is a looming, major shortage coming in a few weeks that next to no one is taking seriously because of dumbfucks iran war
now that AI companies seem to be pushing harder for profitability, it’ll be interesting to see how that plays out. Do companies fall inline and pay the newer insane costs or cut costs by using the bare minimum?
Yeah, I agree. Then some articles are saying that hiring people is less expensive. But, it's also news and it could be people sharing those things more as a hope for their job or something.
Higher prices could also push people and companies to use open source and locally hosted programs.
i think those articles are just chasing headlines. Most of the time they don’t even make sense. Like, who cares if AI is 2x as expensive as an employee if it makes the employee 20x more productive (pulled those numbers from my ass). And they often fail to consider where AI could be in the future.
I think you’re right that people quoting those articles are mostly getting high on hopium their job won’t be impacted
For copilot, I’ve seen more like 6x from base costs and 27x from a current 7.5x cost model (this is assuming equivalent use post price-updates). So much larger than 2x costs, and I haven’t seen anyone come close to 20x productivity. Frankly I haven’t even seen anyone 2x at my company, esp once externalities are considered
You can look ay market breadth by looking at how many xompanies are above 40 day move average 50 day 100 day etc. This is easily accessible its actually not that bad.
Good luck fighting sweaty dudes over them - gaming collectors are hot and heavy for them shits. It’s the only thing that matches the fuckass frame rate and rendering attenuation produced by 40 year old gaming consoles and computer towers.
Not true the monitors atleast are capable of very high motion resolution that only recently modern stuff started to be close. Very noticeable if you play video games but even video it is noticeable. Now is it worth the trade off of small size, lower static resolution and worse contrast? In some instances, yes but others no.
all my co-workers ended up with Herman Miller chairs, projectors the size of a boot-box and whatever laptop they happened to have at the time - in exchange for the company looting the 401K and not paying healthcare premiums. Not a good exchange, imho. I left three months earlier.
They used to. I worked in a dot com environment in 2000. After the first round of layoffs, surviving employees acquired Arron chairs from the recently terminated, if they didn’t have fancy chairs already.
During subsequent layoffs, people just started taking chairs and equipment home—stealing them, you could say, but the dot com implosion was so massive and so quick, no one was paying attention to that kind of thing. And heck, your boss and boss’ boss probably got laid off too. No one was in charge and offices became ghost towns really fast.
Not true. Our country learned a ton. We set everything up to prevent another crash. Created accountability. Jailed people. Rebalanced power.
Unfortunately we have been getting rid of everything that was set up. Especially in the last 2 years. Every time a crash is imminent, we remove another barrier we set up after 2008. Making the inevitable 50x worse.
The people doing all this learned a lot. They know what will happen. But they weren't 80 years old in 2008. Now they are. Why not have some fun on your way out?
Thats a myopic trend, around a 1000 people were convicted in the 1980s crash, only few dozens in dot com crash (if you consider enron), and virtually zero convictions in 2007.
I mean, there just wasn't really much fraud involved there outside of Enron or Worldcom.
People don't go to jail simply because something was overvalued then became undervalued. Fraud is required, most of the dotcom crash was just people coming to terms with revenues not meeting expectations, and the realization that they weren't really going to.
Also, a lot of people talk about the crash as if it was some binary hard crash post 2000, it really wasn't. Markets declined at a pace of around 20% annually for ~3 years. There wasn't some massive even that spurred a crash, just a long period of shares falling and companies failing after previously having expectations well beyond reality.
The market going from over 1,500 to ~830 took from the Fall of 2000 to the early winter of 03, in comparison it went from 830 in mid 1997 to 1,500 around the aforementioned fall of 00.
If today looked like 2000, and I don't expect that to happen for a myriad of fundamental reasons, we'd see a drop as eventual as the rally - one that would see consistent sliding of equity values from now until almost 2030 or so.
I’m not sure what you’re talking about here? Options aren’t liabilities for a corporation? They’re derivatives, they’d be a liability for whomever is trading them, but not for the company.
Maybe. Equally, one can argue - while excess is evident - it is also proof we are still the most progressive economy in the world. We can take massive risk, create massive change and progress, but we will overdue it and pay a price. But overall still massive progress. Standard Oil. Railroads. Automotive when it began. Phones. Computers. Internet. Cloud. Now, AI. the 'get rich quick' of America causes pain but it sure does advance and progress. And, yea, even the Billionaire story isn't new. We kill taxes on the rich. We overshoot. Then we pull it back and society benefits. I'm an optimist. History in America is my guide.
I’d argue we learned lowered interest rates can keep you in “growth mode” forever while wealthier people accumulate hard assets from speculative wealth and the poor get crushed by inflation.
Second this. If there's another big crash, we need to put the CEOs in pound-me-in-the-ass prison instead of letting them escape with golden parachutes.
We learned that just doing something "on the internet" isn't a business plan. But who knows, maybe doing something "with AI" will prove to be a winner, or it's most recent predecessor, doing something "on the blockchain". That's totally different, right?
What are the lessons here? Don't invest in new technologies that seem to be useful but immature? That's not a good lesson to learn. Recessions and bubbles are a totally normal and expected outcome here. Especially technologically based bubbles are a sign of strong entrepreneurship, strong capital markets and science. I wouldn't complain to much. USA led the internet age and is now leading the AI age. Americans should be grateful for this.
The “something” is narrow breadth. Only 20 companies are at ATH, when the index is at ATH. Just so you don’t have to click through to cnbc and reward a low-effort article.
No. Those 20 companies hitting record highs include banks and investment firms that are loaning tons of money to the AI sector.
If financial companies like Morgan Stanley and Goldman Sachs "pop," the whole economy will feel it.
We'll be back to what things were like at the end of 2008, when none of the banks would lend each other money, because they didn't trust the books and auditing at other banks.
Indexes and mutual funds will have to sell all stocks within them, not just the highest 20. If they are margin or leveraged, investors will have to sell good stocks to cover bad. Because of overall market sentiment, less risky stocks can become valued lower as well. Credit and liquidity can dry up, causing less cash available to invest. The same may be true for stakeholders in other companies who just watched 20% of their wealth vanish.
You can hedge with options and puts, but I am not really qualified to talk about them and this isn't really the forum.
Index is in for some chops. That said I remember the market almost rolling over to biotech in post dotcom crash. It wasn’t ready though. Tech wasn’t mature enoug, nor was the biotech. Pfizer dick pills on the other hand…pharmacy had a hay day.
"just 20 of the index members hit a record. Of those 20, just seven were not directly related to artificial intelligence."
It's actually 5 if you consider that Morgan Stanley and Goldman Sachs are going to make out like bandits on the SpaceX IPO, which is entirely based on AI dreams.
Nasdaq 100 at 30x P/E compared to 200x at dot com pop. But nasdaq being carried by ai companies is still a thing. All the company money circles will bite them
We have been calling the top and bust for 3 years now. Someone will eventually be right but you would have lost out on like 40-50% returns and more while waiting.
The lack of market breadth is what’s terrifying here. When the S&P 500 hits records but it's driven entirely by just 20 mega-cap AI and chip stocks while the other 480 companies are flatlining, it’s a house of cards.
It means the index isn't reflecting a healthy, growing economy—it’s just reflecting an extreme concentration of FOMO capital. Once central banks tighten liquidity or tech earnings miss by even a fraction, the spillover effect will drag everything down.
Pretty much. The bar has been set so high that "good" is no longer good enough. If a company doesn't crush expectations, the market acts like something went wrong.
The emdash is a tell as much as the structure. It's all very formulaic. There are also no real numbers, data, or analysis besides 20/480 which is the primary data point of the article.
The Herfindahl-Hirschman Index (HHI) is the stock market equivalent of the Gini inequality indicator (where high values indicate that most of the wealth is concentrated in a small proportion of the population), and although it is historically high before market crashes, it is not useful as an indicator of crash timing. For that you need the Hindenburg Omen.
"this time is different" and 'when a company announces new integration and the reception is negative' are real signs and statements of the bubble. I haven't heard "this time is different" yet but I have seen negative reception to AI integration.
I suppose I'll wait for a shoe shiner to give me investing advice before I back out?
Narrow breadth is a warning sign but it's not a timing tool , issue is more whether AI remains a story about a handful of companies selling picks or if it becomes a productivity story for the entire economy
reidmrdotcom | a day ago
My TLDR: 20 company stocks had new highs with this recent peak market performance. Basically a narrow slice of companies, majority AI related, are pushing the market to new highs. Many companies not doing so well while concentrated growth occurs indicates bubblish territory.
Any-Tennis4658 | a day ago
Broadcom is at like 90 PE
Micron at like 40+
We've entered a new paradigm, fundamentals don't matter, don't ask questions just get in this gravy train, modern monetary theory and all (heard all this before, that bubble clap gonna be epic).
Message_10 | a day ago
I'm not a pro, but here's where my mind goes every time I hear "it's a new paradigm, fundamentals don't matter"--that's not the case, fundamentals are always fundamentals, we're just finding out how far we can push the envelope before the fundamentals kick us in the ass again. That's my take, anyway, and I don't think it's that out there--I really don't know anyone who thinks this won't all come crashing down, or end with a soft landing.
No_Teaching_8828 | 23 hours ago
Or how much money the government can print to prop things up, before fundamentals are pushed too far into ridiculous territory, but who knows that could be +100% from here...
GhostofBeowulf | 23 hours ago
I am not particularly disagreeing with what you are saying, but feel that view can be kind of shortsighted.
300 years ago the fundamentals of medicine were check their humors and leech em if their red humor was too high. 150 years ago we didn't know what germs were. 100 years ago we didn't know what viruses were.
That's not to say the earlier layers don't add to the later, but the study of public finance is what, 150 years old? Fundamentals can definitely change, to be replaced by new fundamentals though.
wookiecfk11 | 21 hours ago
It's true.
There are however 2 large differences between medicine (or any other strict science) and macroeconomics when it comes to establishing fundamental knowledge.
First, medicine can have empirical test of given theory compararively easily. I'm not saying it's necessarily easy in a given example, just that in general it's doable. With macroeconomics, you are always battling with extremely large and complex system and getting lost in interdependencies and causality chains, with one of the major problems being even identifying the interdependencies.
Second, in medicine you are unlikely to have a large part of society incentivised for something new become fundamental knowledge, replacing the old one. At least not to the extent of incentivisation that 'new fundamentals are that stocks always go up' can bring. That is an extremely powerful incentivisation. And direct cross into social aspect of economics. Or, potential bubbles formation. For that matter.
I agree, this can be a shortsighted take. At one point that's just bound not to be the case. But the odds here are that equating 'this is a new era' in this context with 'oh dear theres a bubble' is very very likely.
Message_10 | 23 hours ago
I'm not disagreeing with you either, lol. There are "sea changes" that happen, where our understanding of everythign is rewritten. But I honestly don't see it right now--it just looks like plain-old overvalued companies that will not deliver on hopes. I could be wrong! And--as you say--I'm sure, eventually I will be, given a long-enough timespan. I just don't see it happening now and with the market that we're talking about.
reidmrdotcom | a day ago
I enjoy reading these articles and thinking about if they make sense to me. I’m also curious what’ll eventually be the final pin that bursts the balloon.
For years there have been different predictions and they become harder to take seriously with so many not seeming to matter. Which I guess may be yet another sign of a bubble.
I’m hearing about interest rate inversion. High PE’s. Circular accounting. Chinese advancements. Some companies cutting back AI spending. US political instability. I guess it’ll likely be a combination of factors that all add up. So far there seems to be some hand waving for about all the reasons.
plaid_piper34 | a day ago
I think the pin that will burst the AI bubble is advertising.
On paper, most of the companies funding the AI companies are profitable because of ad revenue. It’s easy to say Google or Meta or Amazon can continue to spend what they’ve been spending on datacenter buildout or chips because they’re taking in so much in ad revenue that they’re still profitable. However, with white collar layoffs happening, the workforce is experiencing recession level hiring and wage stagnation, and it’s trickling up. Once it gets to a critical threshold, consumer goods will suffer, then advertising for those goods, and the amount Google or Facebook can charge for ads drop as demand craters, making their data center spend no longer money they can afford to spend without taking out loans. Banks and private credit are concerned about their exposure to AI companies due to the high level of financing OpenAI and others are doing, so they won’t take on more loans once advertising stops paying for it, and the music stops.
reidmrdotcom | a day ago
Yeah, that's another fun hypothesis, and it makes sense as well. Doritos lowered their prices because sales were slowing enough to decrease earnings. That makes sense slowing consumer spending could result in a popping the bubble through the chain you describe. I'm kind of thinking it'll be a combination of things, with yours probably contributing.
tequestaalquizar | 21 hours ago
Well an also I just don't think that advertising will achieve the same impact in AI and chat products that it had in search. Ad worked as a product in search because we were actively looking for info there. it worked in scroll (instagram) cause it was an image and we were looking for cool images. I personally just don't know if it's going to work in AI. The lack of control of the ad experience (which advertisers care about), and the intrusion into chat (which is something that users might not like) make me wonder if ad revenue will continue.
Ok_Gift_9264 | 4 hours ago
Can you imagine the outcry when precious tokens are used to serve ads for viagra and GLP-1 drugs in the office?
Just think, digital archaeologists going through old code finding commented ads for dick pills.
Phenganax | 17 hours ago
I’ve had ChatGPT for a while now and refuse to pay for it. They’ve recently started showing adds and it’s not even related to anything and kind of creepy. I’m not here for the adds. I’m here to answer questions. I agree with you, the infrastructure is not the same and I doubt it takes off. I see this bubble bursting by the end of the year when the last bit of our oil reserves start to dry up and gas starts to creep over $6 a gallon. That will grind almost everything to a halt especially when you factor it into the cost of goods sold, not just people traveling for work or pleasure. That will drive the economy into a tailspin the ai bubble (which is propping everything up on hopes and dreams of an 80% reduction in labor) won’t be able to overcome or compensate for especially since we really haven’t seen much of a return lately, i.e. massive reduction in cost or massive increases in new “AI generated” products. If we hadn’t hit Iran with a baseball bat, maybe the ai bubble could have compensated and deflated slowly as new products or technologies came out of it but with gas about to retardmaxx, I think the advertising angle is the pin that pops the bubble.
soherewearent | 15 hours ago
Oh I thought you were going the route of Yahoo chat rooms. At the end, bots were talking to one another and real humans few and far between. I can imagine ad impressions on web sites will plummet when no one visits them anymore because AI answers all the questions rather than pointing users at websites. Then they'll inject ads into the AI platforms even if you pay! Fun!
Bogdanovist_Rebel | 10 hours ago
This is likely the most likely answer. It’s going to be cause by the system stalling and someone being caught with their pants down. It’s always the banality that gets you.
I was going to say an externality could cause it, but the market is showing resilience to them lately. It’s not that these events don’t carry significant consequences, it’s just that without the shock, we only really have the latency to wait on. So surmising that ad revenues are what takes this whole thing down is as solid as it gets.
Real Estate and auto’s will also begin to add downward pressure on lending and financing too. Banks are going to be getting very cagey.
subhavoc42 | 23 hours ago
It will be when the signs are clear the Republicans will be out of power, just like 07-08 when public sentiment regarding Bush and Iraq had the writing on the wall for the next election.
reidmrdotcom | 23 hours ago
Do you have a hypothesis on why that would be the case? Spending decreases? Tighter budgets?
subhavoc42 | 21 hours ago
It’s what happened 19 years ago. Republicans spent like drunken sailors and then cared about the budgets they blew up when they were going to be out of power. Markets react to forecast austerity, margins called, and bubble bursts. They had already gotten hammered in the midterm elections before so the writing was on the wall for the ‘08 presidential election.
reidmrdotcom | 15 hours ago
Thanks. Kind of an interesting hypothesis I haven't thought of before, that a party may try to sabotage things on their way out to spite the next party, no matter the expense to the country.
The_10th_Woman | 23 hours ago
I keep thinking about this too. You have 3 separate things going on:
However, consumer confidence is dropping. Funds that have heavily invested in AI are finding their investors want out and are having to freeze or limit what they can take. Also, credit is tightening up now. Last year credit card companies started lowering credit limits out of nowhere.
AI is now having to go on the stock market to raise capital and raising prices just to keep steady but that won’t provide the hundreds of billions a year that their present business model requires.
When they run out of working cash (which will happen within the next year if only because companies are turning away from AI now that it is costing more than having workers) the ‘bubble’ will pop.
As they wanted more and more, they started going down the subprime route again and then, when the risk got worrisome, went down the Credit Default Swap route again (which both spreads and magnifies the risk) using the CDX marketplace.
Now, banks have given out far too much credit that isn’t being paid back (see the AI black hole above) and they need more income fast. Consequently, they are raising mortgage interest rates higher than the FED/bank of England etc.
However, people often got the mortgages when interest rates were low and they cannot pay those higher rates. They then have to sell the house (or it is foreclosed on) but the housing market won’t let them sell it without dropping the price massively. That means that banks won’t get paid back enough to offset the credit they gave.
This is worsened by the banks present credit crisis, which is seeing people being offered a specific mortgage in January and then the terms have completely changed (higher interest rate, lower total amount offered) by April when they finally find somewhere to buy. They can’t afford it so no sale.
The rise in foreclosures and the increase in properties going onto the market (partially fuelled by changes to landlord rules and higher costs) shows this is already happening. However, those that can afford to drop their prices are doing so and gradually that will build up - causing house prices to drop in general.
The banks’ losses from the failed mortgages will build up and the CDXs will kick in (spreading the damage far and wide). Once one big insurance company goes down because it can’t handle the number of defaults (think AIG in 2008) things will happen fast. Governments will step in and we find out what the new ‘bail-in’ system looks like. Of course, that pulls down the AI tower of cards if it happens before the AI bubble pops.
I’m seeing a lot of people who are pushed to their limits already (due to the cost of living crisis), including one who is already defaulting on her mortgage, so I think the defaults are likely already building up.
However, 2008 showed us that banks can keep this kind of thing under wraps for a while so I expect that to hit within the next 6 months (as the strain started about 6 months ago).
That means that businesses will go under (especially those owned by private equity which is a lot of high street shops where I am) and a lot of people who could have just about gotten by will start defaulting.
This will bring to light the credit crisis that banks have been trying to hide. Governments will go to the banks and tell them to sort it out but there is no largely untapped shadow banking system to save us like they did in 2008 when they bought up the cheap housing stock. ‘Bail-ins’ won’t help (I don’t know how they are expected to bring in the kind of money needed to dig us out of this but I doubt the regulators expected the industry to recreate 3 financial disasters at the same time).
So governments will bail out the entire banking and shadow banking industries (and most likely the single biggest AI company as they can’t let it all disappear). Bond yields will soar as governments don’t have trillions just lying about.
All the dominoes are presently teetering, any of them could fall at any moment and start all the others.
Add to that, in the UK, we have problems with our Prime Minister and people wanting a change (with the present front runner to replace him being someone who has no respect for the bond markets). That alone may be enough to spook the markets, encouraging a tightening of credit and topple the first domino.
reidmrdotcom | 23 hours ago
That's an extensive write up, thanks! These three make me think of another thing which is that a number of folks have been saying a lot of money is on the sidelines. If it's invested into AI it seems like it'll be burned up that way due to what seems like a lot of unrecoverable costs through energy use and investments that have relatively short life cycles (chips). That may use up that money that has been on the sidelines.
Yeah, money seems tight, and higher costs seems like it'll spread detrimentally across the economy.
Melody Wright has been talking pretty consistently about the US housing market and seems to have similar views. And also is comparing government backed loans to subprime loans of the last housing downturn. It appears many folks with those loans are underwater with little down, and can walk away. And these numbers are apparently at similar levels as 2008. She's more recently predicting a notable increase in foreclosures by the end of the first half of the year (now), and a continued increase in them going forward. And without heavy government intervention thinks it'll increasingly negatively impact the housing market.
The_10th_Woman | 23 hours ago
I think the money on the sidelines is being held back by those who intend to jump back into the stock market once the crash has taken it as low as it will go (Buffet is holding hundreds of billions).
I doubt its use will benefit the average person and the sheer amount of debt this time around is unthinkable (and certainly unknowable as tech, at least, are using ‘Special Purpose Vehicles’ and ‘Payment-In-Kind’ financial tools to keep their accounts looking sound and banks have a whole different set of tools to hide their losses).
PomegranateJuicer6 | 19 hours ago
Mate no company is borrowing against double digit interest rates in this economy LOL your first point instantly goes out fo the window
The_10th_Woman | 9 hours ago
Typical US bridge loan rates are 10-12% https://blog.vaster.com/bridge-loan-rates
Open AI’s $40 billion bridge loan https://www.reuters.com/business/media-telecom/softbank-secures-40-billion-loan-fund-further-openai-investment-2026-03-27/
More bridge loans used to support AI https://www.datacenterknowledge.com/investing/the-next-ai-crunch-isn-t-compute-it-s-capital
PomegranateJuicer6 | 6 hours ago
Actually it seems like i was wrong, thanks for the receipts bro
Why tf are they grabbing bridge loans tho that seems insane
Edit* also considering mag7 capex being 700b, arent these bridge loans just to secure funding while the datacenter is being built and not operative yet?
Any-Tennis4658 | a day ago
I've been sitting and wondering what could pop the balloon too. We all know the accounting is fake, we all know the USD is manipulated harder than ever. But this stuff keeps going up.
Something will pop it. My guess: if the fed raises rates, it triggers investments to redirect to bonds slowly (but how can they raise rates without wrecking the USD due to the deficit?? No idea, maybe money printer?). This combined with AI being "a hallucination engine that is often correct" being a major problem for most businesses, reveals lower demand than these AI circle jerkers anticipated.
These combined factors result in fewer chip orders, which shows the world it's all a scam, and crunch go the PE ratios.
But that's my guess and I have no idea wtf I'm talking about.
reidmrdotcom | a day ago
At the rate guesses are going, seems as good as any!
I’ve got a somewhat longer term hypothesis that taxes are near the bottom and will start increasing due to public pressure and budgetary demands and is likely to change valuations. But I don’t know how to trade on that guess.
Few-Sheepherder-1655 | a day ago
Ask ai- I’m sure it will tell you!
reidmrdotcom | a day ago
Yeah, at least it'll confidently tell me SOMETHING! Lol. In my head AI is like Siri or the apple image generator thing, kind of weak. And in my work I don't have a use for it, so have only really tried one this year for a personal project of making a spreadsheet from a picture of movies to track them. It wasn't very effective and my AI doubts remain. I think it's here to stay, but the impact seem very optimistic (or pessimistic perhaps).
GhostofBeowulf | 23 hours ago
I think people are overly pessimistic as a kind of... IDK coping factor, or like people saying electricity is just a fad.
It is like... a really good google search. If you try to use google search to finish your homework, It's not really going to be able to help you.
But if you say "Help me find sources to learn this topic," you will mostly learn what you need to know. Mine is pretty well trained though to only bring back peer reviewed, government publication or other academic level works.
And surprisingly, it's pretty good at filling out accounting info too. As long as you feed it direct numbers and not "10% of this is X, 25% being stockholder retained earnings..." kind of deal.
I can see it getting even more accurate and efficient, but I don't see it replacing workers soon.
reidmrdotcom | 23 hours ago
Thanks. My buddy is a strong advocate of it and uses it daily in his programming work. I guess for me I haven't yet seen the value in my life, but probably will dabble sometimes.
I certainly agree with you that it'll get more accurate and efficient and better and better. My prediction is that instead of replacing workers en masse, it'll make folks more efficient and people will find something else to do, or what they are working on becomes less expensive so more people can pay to have it done. I don't have a guess what that something else is though. Maybe more sole proprietorships or something where human interactions are valued if starting and running a business becomes super easy.
Few-Sheepherder-1655 | 21 hours ago
Honestly, in my experience with college, it might make the people who actually know their shit have better job opportunities… if qualifications are not taken at face value.
Few-Sheepherder-1655 | 21 hours ago
You must be out of date on using Google searches to finish your homework. That shit will give you the answer nowadays… you just have to pay (unless you use one of several workarounds)
Few-Sheepherder-1655 | 21 hours ago
I only really use the Google search ai. I often don’t have a use for it, except if I want some very random statistic that I cannot be bothered to calculate (ie: standard price range for a stainless steel water bottle). But if some Google search is so choked with ads, I will run it through the ai for links. But almost everything is verified, especially if it’s actually important.
That being said, I have a way with numbers so good that one time I bet on the Kentucky derby standings and won… but also lost because the winning horse was disqualified for PEDS (I knew that
was going to happen based on the data). I also won a side bet I had where I predicted that two specific horses would finish right next to each other in a specific order- which they did not even have odds for at the time.
Any-Tennis4658 | a day ago
Honestly I agree with the taxes going up as well. If you want to play that: make sure to fully fund roth accounts! (I already am, because I agree!)
reidmrdotcom | a day ago
Yeah, that would be one way for sure. Then I guess I could dig through companies and try to find some. But I don't know what characteristics to even look for. Possibly lower profitability companies with lower debt could do better as they wouldn't pay as much taxes in the first place, and could be less impacted by what seems like a likely interest rate increase.
Blue_Back_Jack | a day ago
Warsh was picked to lower interest rates. He really has no choice in the matter.
reidmrdotcom | a day ago
I thought there are 12 voting members and it’s majority rule, and he’s the mouthpiece of that collective decision.
Rising interest rates seem likely to put further downward pressure. Though if they artificially decrease rates yeah, could make it even more bubbly.
BigRed1541 | a day ago
There are 7 voting members of the Board of Governors. Trump has appointed 3 without including Powell. The other 5 is a rotating Hodge podge of bankers and economists.
Warsh, the new head, wants to change how inflation is measured/assessed which at a glance would basically slash 1/3 of the inflation rate off.
Where currently at like 3.3% but if he changes it we would be closer to 2%. The closer we are to 2% the easier it is to justify a rate cut and try to strong arm the other members to get on board. Oh and there's that other little vector of trying to fire board members that don't want to cut rates.
GhostofBeowulf | 23 hours ago
FOMC has 12 members who vote on interest rates, including the 7 governors, pres of NY fed and 4 other reserve presidents who rotate.
At least get the damn basics right on an economics sub.
RIP_Soulja_Slim | 23 hours ago
> Warsh was picked to lower interest rates. He really has no choice in the matter.
People on reddit keep saying this, but if you've been paying attention you know institutional money started pricing in hikes post Warsh confirmation, not cuts.
So either reddit is reading a lot that's not necessarily apparent, in a complex nuanced discussion. Or almost every financial institution in the world is just losing money for fun on fed funds futures.
Whomst to say amirite?
Blue_Back_Jack | 21 hours ago
It’s a much different world now under Trump.
If Warsh fails to cut interest rates, Trump will fire him like Lisa Cook. I think SCOTUS will rule Trump has the ability to remove Fed Governors.
RIP_Soulja_Slim | 21 hours ago
> Trump will fire him like Lisa Cook.
Cook is still on the board, her court case failed at every turn except final formalities.
>I think SCOTUS will rule Trump has the ability to remove Fed Governors.
They've quite literally ruled the exact opposite, in multiple instances, they've also taken the time to write in to unrelated opinions that their rulings on the ability to fire various agency personnel in no way translate to the Federal Reserve.
IDK, people on reddit seem to invent a reality they like then believe in that at all costs, but man your sentiment is so completely opposed to every single action the supreme court has taken, and every single word they've uttered on this topic.
mikestorm | 16 hours ago
TNX/SPY daily return correlation is -0.89. This market is super duper sensitive to rate increases right now.
mmmfritz | 18 hours ago
When they start to reduce earnings and your stock price plummets. That’s usually a good sign.
mikestorm | 16 hours ago
I track correlation between RSP (equal weighted S&P 500 index) and TLT (20 year treasuries). It's at .58 with a 252 day z score of 2.69. When asset classes start moving together like that, when the fall comes people are going to have nowhere to go.
reidmrdotcom | 15 hours ago
Basically once they have a weak correlation it indicates a future tightening?
Halbaras | 23 hours ago
Probably the most alarming take that's circulating on Reddit currently is 'stocks are pricing in inflation!' or 'high inflation is good for stocks, akchually'.
Like yeah, stocks generally keep up with inflation, and a small amount of inflation (>2%) is healthy and better than deflation. But high inflation doesn't stay contained, it fucks up supply chains and consumer spending, slowly shows up in earnings, and results in rate hikes if the labour market stays strong.
bluehat9 | a day ago
Micron forward PE is 9-10
hawkeye224 | a day ago
Yeah and if you jump off a building and extrapolate from initial conditions you will come to the conclusion that you will reach the speed of light
Few-Sheepherder-1655 | a day ago
I’m reporting you to my university for leaking physics 1 conceptual exam questions.
WisedKanny | a day ago
But R^2 >99.9%!
Why do I need a physics expert when data don’t lie?
Coz131 | a day ago
Only if Ponzi holds.
Any-Tennis4658 | a day ago
Ah yes the most accurate calculation, hypothetical earnings based on the AI circlejerk.
A leap from 40 to 10 shows such growth that I can think of like three companies that ever did this. Actually I'm trying to think of it now and I can't. Maybe apple? But micron is surely it too!
unia_7 | a day ago
Stocks are always priced on their expected FUTURE earning over the next 10-15-20 years.
This is because investors profit from future earning only - not the last quarter, or the last 4 quarters, or the last 4 years.
You can use the last 4 quarters as guidance for future performance, but don't make the mistake of thinking that it's the determining factor in the stock price.
Any-Tennis4658 | a day ago
Right, that's all fine and all
Forward PE in meme stocks, which is what these are, is a joke. If we were talking about a mature company with established demand, product lifecycles, etc, it's one thing. 40->10 crunch in PE is simply PE volatility. It demonstrates nothing of 10 years, or even 5 years.
I took a bit of time to look at companies that succeeded in matching their 40-10 or greater PE jumps q/q, omitting the last 5 years of AI memes.
I literally just see apple, maybe some steel companies in the 70s but it's really hard to see those PE numbers and they all failed in the end anyway. Can't find another example.
GhostofBeowulf | 23 hours ago
Let me guess, just took your first fin management class?
unia_7 | 22 hours ago
No, just explaining basics to reddit know-nothings.
CrisisAverted24 | a day ago
Right, Micron and companies like that are selling the shovels in this gold rush. Sales are through the roof, they literally can't keep up with demand, and bringing new chip making capacity online takes years. Will demand come back down? Probably, but this is very much not the same as dot com companies that had no actual sales.
ComingInSideways | a day ago
Forward PE is speculative.
bluehat9 | a day ago
The market attempts to price the future
Were_all_dead_anyhow | 5 hours ago
Theoretically and eventually.
Market makers use their unique legal exemptions which allow them to heavily distort and delay price discovery by injecting synthetic supply or demand. They can create synthetic shares out of thin air to absorb buying surges, which temporarily caps upward price momentum and dampens organic market forces.
Market makers abuse their position in market plumbing; By providing continuous trading and tight spread, they create an illusion of safety, and that masks real-time risk and encourages investors to take on aggressive speculative positions. Because everything appears fine, banks continue to lend and fuel their bubble.
This is why Wall Street never loses; they time these catastrophic corrections because they engineer them.
Moral hazard 101.
ComingInSideways | 22 hours ago
Sure, but if it was really accurate you would never need any other metric other than that and PE.
You’d just buy stocks that went from XXX PE to XX FPE. it does not work that way.
I challenge you to invest like that. Because it may or may not come true….
bluehat9 | 22 hours ago
Investing in stocks is speculative. What stock picking system do you have that always “comes true”?
ComingInSideways | 13 hours ago
Dude. None. What I am saying is that FPE is basing your speculation on other peoples speculation. It is a weak metric, and it is not even consistent.
Let’s make this simple for your ego.
OH MY GOD YOU ARE SO RIGHT IT‘S AWSOME!
bluehat9 | 13 hours ago
lol ok thanks!
My point is just yeah, it’s an estimated thing based on consensus. All forward looking metrics have to be based on speculation. The market also determines prices based on speculation.
Paradoxjjw | a day ago
Based on predictions and fanciful numbers so fantastical that i'd describe them as being fraud in all but name
FaptainChasma | 17 hours ago
I've been thinking about how in the big short movie, Michael Burry says something like "you have to believe we live in a completely fraudulent system" for the crash not to occur.
Do you think we live in a completely fraudulent system? Will the powers that be actually allow a crash to happen?
The SpaceX IPO is where I get off this ride personally
nochinzilch | 20 hours ago
Fundamentals do matter, just not to everyone.
mmmfritz | 18 hours ago
These things aren’t new. Today I found out I’m a micron customer from way back (lexar sd card user).
But how the hell do we value old tech at 40x earnings…
Comfortable_Sir_6104 | 6 hours ago
Broadcom is at 90 P/E? Brother, Tesla trades at 385, Palantir at 182, CAVA (a salad restaurant) is at freaking 143.
And even Alphabet, Amazon and Microsoft are not as cheap as they would appear. Last quarterly earnings of Alphabet showed that they had just 39 billions of pre-tax operating income, nearly half of their earnings (37 billion) was just equity gains of Anthropic. Their main business now is just throwing cash at an unprofitable company that expects to burn 11 billion this year.
padizzledonk | 17 minutes ago
Fundamentals dont matter
Until they do
Thats the story of every bubble and crash in market history
When this one pops its going to be really ugly too, because of everything else economically going on, not least of which are the high oil prices which effect a ridiculous amount of inputs and overhead costs, and there is a looming, major shortage coming in a few weeks that next to no one is taking seriously because of dumbfucks iran war
Xyrus2000 | a day ago
Welcome to "Who's Stock Market Is It Anyway?" where the prices are made up and the economics don't matter!
MyFeetLookLikeHands | a day ago
now that AI companies seem to be pushing harder for profitability, it’ll be interesting to see how that plays out. Do companies fall inline and pay the newer insane costs or cut costs by using the bare minimum?
reidmrdotcom | a day ago
Yeah, I agree. Then some articles are saying that hiring people is less expensive. But, it's also news and it could be people sharing those things more as a hope for their job or something.
Higher prices could also push people and companies to use open source and locally hosted programs.
MyFeetLookLikeHands | a day ago
i think those articles are just chasing headlines. Most of the time they don’t even make sense. Like, who cares if AI is 2x as expensive as an employee if it makes the employee 20x more productive (pulled those numbers from my ass). And they often fail to consider where AI could be in the future.
I think you’re right that people quoting those articles are mostly getting high on hopium their job won’t be impacted
pbfarmr | 21 hours ago
For copilot, I’ve seen more like 6x from base costs and 27x from a current 7.5x cost model (this is assuming equivalent use post price-updates). So much larger than 2x costs, and I haven’t seen anyone come close to 20x productivity. Frankly I haven’t even seen anyone 2x at my company, esp once externalities are considered
theozxc | 19 hours ago
You can look ay market breadth by looking at how many xompanies are above 40 day move average 50 day 100 day etc. This is easily accessible its actually not that bad.
RedNewzz | 16 hours ago
Thank you.
MiserableYou6506 | 22 hours ago
Wait till you find out that 40% of worlds helium is gone
oojacoboo | 14 hours ago
We were all talking about Helium 2 months ago. It’s not the secret you think it is.
MiserableYou6506 | 12 hours ago
Not a secret, just didn't see it noticed
supercyberlurker | a day ago
Let’s see if I remember the lessons everyone took from the .com crash…
I think it is only that you can pick up Aeron chairs and 21” CRTs for cheap after the startups crash.
Economically our country learned nothing.
bookwizard82 | a day ago
Oooo. I hope I can buy some RAM
breathing_normally | a day ago
No RAM, only CRT
Doggleganger | a day ago
Oh my, is this what the Republicans have been warning us about? They're forcing CRT on all of us!
absat41 | 20 hours ago
Yup. First it was oxygenated hydrogen; then vaccines; then masks now CRT; it's lowering sperm count people! Wake up!
KartoffelLoeffel | 17 hours ago
You’ll have no saturation and like it!
JellyfishNo3810 | a day ago
Good luck fighting sweaty dudes over them - gaming collectors are hot and heavy for them shits. It’s the only thing that matches the fuckass frame rate and rendering attenuation produced by 40 year old gaming consoles and computer towers.
delilahgrass | a day ago
My 30 in Trinitron people laughed at me keeping is now gold.
kingtacticool | 23 hours ago
Those old Trinitrons were and are the GOAT
BasvanS | 21 hours ago
I had one for way too long. It just nostalgia keeping them great, nothing intrinsic.
TRIPMINE_Guy | 20 hours ago
Not true the monitors atleast are capable of very high motion resolution that only recently modern stuff started to be close. Very noticeable if you play video games but even video it is noticeable. Now is it worth the trade off of small size, lower static resolution and worse contrast? In some instances, yes but others no.
See how blurry this is? UFO Test: Multiple Framerates This is not blurry at all on a crt monitor.
JellyfishNo3810 | a day ago
I deadass used my old CRTs as target practice
n0bel | a day ago
Tell me you’re a hillbilly without yadayada
Adderall_Rant | 14 hours ago
I fucked my sister
OutcomeDue2025 | 11 hours ago
was that before or after me?
BenjaminHamnett | 10 hours ago
After he fucked you
HorsieJuice | 17 hours ago
I can price any shitty crt at $50 and move it by the end of the day. It’s great.
100GHz | a day ago
This is the heavyweight economic analysis I frequent this sub for 😃
wintermute023 | a day ago
Don’t forget the shredders! Oh wait, that was Enron. Not even remotely similar.
kissmyash933 | 22 hours ago
Good news! 21” CRT’s are worth a fortune these days! Easily exchangeable for cash so you can buy RAM!
breathing_normally | 21 hours ago
Sorry, we’re fresh out of CRT’s! We do have some hardly used RAM. Would you like 2Mb, 4Mb or the heavy duty 8Mb sticks?
snowdrone | 16 hours ago
I'm looking for a 100 Meg zip drive
TheTrub | a day ago
I work in vision research and damn I wish I could get my hands on some new-stock flat panel CRTs.
Alucard661 | 14 hours ago
Only Khlav kalash
Psyclist80 | a day ago
What does Critical Race Theory have to do with this?
EmeraldMan25 | a day ago
I'd accept it
tikstar | a day ago
I'm ready to load up on cheap crts!
BlackSwampMage | 20 hours ago
CRT’s are pretty expensive collector’s items now so that’d be a win for some.
fireball_jones | 20 hours ago
As a retro gamer... that's fine.
snowdrone | 17 hours ago
And PS/2 Mouse on side, a little sticky
czj420 | 14 hours ago
I'd buy that shirt
InfiniteBlink | a day ago
I just want another 3090 that I don't pay 1500 for. I bought one last year for 1100... The fuck?
PatchyWhiskers | 23 hours ago
Probably only in weird shapes suitable for data center server racks.
Due-Technology5758 | 23 hours ago
Make sure your mobo is ECC compatible.
AndyTheSane | a day ago
.. entire Sun Microsystems servers..
lethal-liking | a day ago
Looks great next to my Silicon Graphics Iris Workstation.
LandoBlendo | a day ago
And my NeXT!
AndyTheSane | 23 hours ago
We had one of those in the lab. It could do 3D graphics!
timmy_the_large | 18 hours ago
I miss my Iris.
snowdrone | 16 hours ago
Damn those were cool, back in the day.
MaximumAd9779 | a day ago
My friends in Silicon Valley get sweet super discounted office furniture etc off the local Craigslist from start ups rising / falling.
so00ripped | a day ago
My dad came home one day with 3 massive flat panel CRTs one day. He worked for Sharp in Northern NJ and I used that monitor from 2001 to 2010.
They had to weigh 40lbs each. They were amazing, but because they were like 3 feet deep you couldnt fit them on a normal desk.
ZombieTestie | a day ago
Those startup nerds get herman miller?
bradatlarge | 21 hours ago
all my co-workers ended up with Herman Miller chairs, projectors the size of a boot-box and whatever laptop they happened to have at the time - in exchange for the company looting the 401K and not paying healthcare premiums. Not a good exchange, imho. I left three months earlier.
InfiniteBlink | a day ago
They're usually in conference rooms
flightless_mouse | 21 hours ago
They used to. I worked in a dot com environment in 2000. After the first round of layoffs, surviving employees acquired Arron chairs from the recently terminated, if they didn’t have fancy chairs already.
During subsequent layoffs, people just started taking chairs and equipment home—stealing them, you could say, but the dot com implosion was so massive and so quick, no one was paying attention to that kind of thing. And heck, your boss and boss’ boss probably got laid off too. No one was in charge and offices became ghost towns really fast.
chazzybeats | a day ago
I prefer Tecca chairs
tritisan | a day ago
The Chair Company? Man that was a wild show.
ShdwWzrdMnyGngg | a day ago
Not true. Our country learned a ton. We set everything up to prevent another crash. Created accountability. Jailed people. Rebalanced power.
Unfortunately we have been getting rid of everything that was set up. Especially in the last 2 years. Every time a crash is imminent, we remove another barrier we set up after 2008. Making the inevitable 50x worse.
The people doing all this learned a lot. They know what will happen. But they weren't 80 years old in 2008. Now they are. Why not have some fun on your way out?
SimilarLaw5172 | a day ago
Thats a myopic trend, around a 1000 people were convicted in the 1980s crash, only few dozens in dot com crash (if you consider enron), and virtually zero convictions in 2007.
RIP_Soulja_Slim | a day ago
> only few dozens in dot com crash
I mean, there just wasn't really much fraud involved there outside of Enron or Worldcom.
People don't go to jail simply because something was overvalued then became undervalued. Fraud is required, most of the dotcom crash was just people coming to terms with revenues not meeting expectations, and the realization that they weren't really going to.
Also, a lot of people talk about the crash as if it was some binary hard crash post 2000, it really wasn't. Markets declined at a pace of around 20% annually for ~3 years. There wasn't some massive even that spurred a crash, just a long period of shares falling and companies failing after previously having expectations well beyond reality.
The market going from over 1,500 to ~830 took from the Fall of 2000 to the early winter of 03, in comparison it went from 830 in mid 1997 to 1,500 around the aforementioned fall of 00.
If today looked like 2000, and I don't expect that to happen for a myriad of fundamental reasons, we'd see a drop as eventual as the rally - one that would see consistent sliding of equity values from now until almost 2030 or so.
HumorAccomplished611 | 15 hours ago
Also the way companies are valued changed. For example stock options werent considered a liability on companies dime. Now they are
RIP_Soulja_Slim | 5 hours ago
I’m not sure what you’re talking about here? Options aren’t liabilities for a corporation? They’re derivatives, they’d be a liability for whomever is trading them, but not for the company.
HumorAccomplished611 | 25 minutes ago
Yes but the way companies are evaluated this now a debt that company issues vs before it wasnt represented on balance sheets
RIP_Soulja_Slim | 12 minutes ago
Can you provide an example? We're talking about traded options now, correct?
ComprehensiveFox3268 | a day ago
Nobody needed to go to jail for .com crash. There wasn't any obvious illegal activity going on, just people going through regular old tulip mania.
HumorAccomplished611 | 15 hours ago
Funny how pets.com exist as chewy.com now
Happy_Confection90 | a day ago
Jailed who? Or are you not talking about the US in 2007?
ensui67 | a day ago
People also don’t remember how far up the market ran. Probably has a few more years of pumping to go. Will be great.
Old_Culture_3825 | 23 hours ago
Maybe. Equally, one can argue - while excess is evident - it is also proof we are still the most progressive economy in the world. We can take massive risk, create massive change and progress, but we will overdue it and pay a price. But overall still massive progress. Standard Oil. Railroads. Automotive when it began. Phones. Computers. Internet. Cloud. Now, AI. the 'get rich quick' of America causes pain but it sure does advance and progress. And, yea, even the Billionaire story isn't new. We kill taxes on the rich. We overshoot. Then we pull it back and society benefits. I'm an optimist. History in America is my guide.
HeKnee | 20 hours ago
But how long do great empires usually last? And what usually brings them down? Are we seeing similar conditions today? Just historically speaking…
Econmajorhere | 21 hours ago
I’d argue we learned lowered interest rates can keep you in “growth mode” forever while wealthier people accumulate hard assets from speculative wealth and the poor get crushed by inflation.
ChemistryOk9353 | a day ago
Well I wouldn’t buy getting one of those chairs at a deep discount
Yvaelle | 23 hours ago
I still use my Dotcom crash Aeron! I could use a new one though, this crash is well timed!
goddamn2fa | a day ago
The armrests always break.
throwaway00119 | 22 hours ago
I'm sitting here with my Aeron's left armrest broken.
grassvegas | a day ago
And Porsche Boxsters
catzarrjerkz | 23 hours ago
Same people are in charge so what do you expect
Wurm42 | 23 hours ago
Second this. If there's another big crash, we need to put the CEOs in pound-me-in-the-ass prison instead of letting them escape with golden parachutes.
BadAtExisting | a day ago
I’m here for the cheap Aeron* chairs. I had one at a job 10-15 years ago and have missed it every day since I left that job
catzarrjerkz | 23 hours ago
Same people are in charge so what do you expect
MaxHeadroom1986 | 21 hours ago
I’m buying single moms and tech stock immediately after
cheekytikiroom | 20 hours ago
Free cubicles. Must disassemble.
cbih | 18 hours ago
I could use a good CRT
Bulky-Shoulder-8082 | 15 hours ago
Except this time it will be RAM and components from data centers. Storage and memory are gonna become dirt cheap.
humanreporting4duty | 13 hours ago
Thought that said “ergonomically our country learned nothing.”
ringobob | 12 hours ago
We learned that just doing something "on the internet" isn't a business plan. But who knows, maybe doing something "with AI" will prove to be a winner, or it's most recent predecessor, doing something "on the blockchain". That's totally different, right?
Neither-Brick-6391 | 6 hours ago
Why would it. The market got bailed out.
CriticalEngineering | 22 hours ago
We walked those chairs out for free! What was gonna happen, they’d already laid off security.
Mr_Axelg | 18 hours ago
What are the lessons here? Don't invest in new technologies that seem to be useful but immature? That's not a good lesson to learn. Recessions and bubbles are a totally normal and expected outcome here. Especially technologically based bubbles are a sign of strong entrepreneurship, strong capital markets and science. I wouldn't complain to much. USA led the internet age and is now leading the AI age. Americans should be grateful for this.
MrZwink | a day ago
dude most of the people investing now were 4 in 2001 xD
farfromjordan | a day ago
Lol you think boomers don't invest. Who do you think watches CNBC all day?
Consistent-Fig7484 | a day ago
This is not true. Most people in that age group don’t have any money.
Digital_Artifice | a day ago
lol, Boomers are still have the highest total volume of overall assets, you don't know what you're talking about
SkepMod | a day ago
The “something” is narrow breadth. Only 20 companies are at ATH, when the index is at ATH. Just so you don’t have to click through to cnbc and reward a low-effort article.
Alabatman | a day ago
Doesn't that imply the pop will be large, but focused and have minimal spillover to other segments?
Wurm42 | 23 hours ago
No. Those 20 companies hitting record highs include banks and investment firms that are loaning tons of money to the AI sector.
If financial companies like Morgan Stanley and Goldman Sachs "pop," the whole economy will feel it.
We'll be back to what things were like at the end of 2008, when none of the banks would lend each other money, because they didn't trust the books and auditing at other banks.
ButtonExposure | 22 hours ago
>the whole economy will feel it.
Not to mention when all these private entities will be bailed out with taxpayer money.
akie | 22 hours ago
Well either that or guillotines, historically speaking
Phenganax | 17 hours ago
The later is more likely this time, I do t think you’re going to get any sympathy from the American people this go around…
SongBirdplace | 21 hours ago
Maybe maybe not. Last time the bailouts were to prevent a full freeze and to not let the automotive sector fall apart.
Banks have stronger regulations now and tech doesn’t have a thousand little suppliers that will cause a gigantic ripple out.
digitalblemish | 10 hours ago
It's going to be orders of magnitude worse than 2008 if it happens.
GhostofBeowulf | 23 hours ago
Depends.
Indexes and mutual funds will have to sell all stocks within them, not just the highest 20. If they are margin or leveraged, investors will have to sell good stocks to cover bad. Because of overall market sentiment, less risky stocks can become valued lower as well. Credit and liquidity can dry up, causing less cash available to invest. The same may be true for stakeholders in other companies who just watched 20% of their wealth vanish.
You can hedge with options and puts, but I am not really qualified to talk about them and this isn't really the forum.
shoulda-known-better | 22 hours ago
It effects everything that got invested into the bullshit including banks, investment firms, stocks
Gloomy-Arm-6262 | 22 hours ago
Index is in for some chops. That said I remember the market almost rolling over to biotech in post dotcom crash. It wasn’t ready though. Tech wasn’t mature enoug, nor was the biotech. Pfizer dick pills on the other hand…pharmacy had a hay day.
Biotech is different now. Might happen.
yycTechGuy | 21 hours ago
"just 20 of the index members hit a record. Of those 20, just seven were not directly related to artificial intelligence."
It's actually 5 if you consider that Morgan Stanley and Goldman Sachs are going to make out like bandits on the SpaceX IPO, which is entirely based on AI dreams.
mmmfritz | 18 hours ago
Spacex is AI?
I guess we’re all just made of AI at this point.
yycTechGuy | 18 hours ago
Read the IPO document.
WorldlinessLive5932 | 12 hours ago
If allbirds is AI now then yeah everything is AI.
I can see it now in 5 years that allbirds pivoting to AI is going to be where we say "we should've known it was a bubble"
Comfortable_Sir_6104 | 5 hours ago
They bough xAI and Shitter (previously Twitter) for 250 billion.
Sevastous-of-Caria | a day ago
Nasdaq 100 at 30x P/E compared to 200x at dot com pop. But nasdaq being carried by ai companies is still a thing. All the company money circles will bite them
Were_all_dead_anyhow | 6 hours ago
Not before early, pre-IPO investors use IRA/401Ks as exit liquidity via fast-tracking them onto the indices.
jayr114 | 17 hours ago
We have been calling the top and bust for 3 years now. Someone will eventually be right but you would have lost out on like 40-50% returns and more while waiting.
Damned if you do and damned if you don’t.
ClearAndPure | 15 hours ago
Time in the market beats timing the market. I do feel like it has to burst soon, though.
BehindBillionStories | 23 hours ago
The lack of market breadth is what’s terrifying here. When the S&P 500 hits records but it's driven entirely by just 20 mega-cap AI and chip stocks while the other 480 companies are flatlining, it’s a house of cards.
It means the index isn't reflecting a healthy, growing economy—it’s just reflecting an extreme concentration of FOMO capital. Once central banks tighten liquidity or tech earnings miss by even a fraction, the spillover effect will drag everything down.
Captobvious75 | 23 hours ago
Miss? I think a strict meet without a massive beat will start the downfall
BehindBillionStories | 21 hours ago
Pretty much. The bar has been set so high that "good" is no longer good enough. If a company doesn't crush expectations, the market acts like something went wrong.
_nathan67 | 22 hours ago
AI comment
BehindBillionStories | 21 hours ago
Funny how every comment with numbers, data, or actual analysis gets called AI these days.
twenty_three_three | 20 hours ago
It's the sentence structure.
> [Charged emotional statement]. [When X conditional], it's [metaphor].
> [Simple explanatory statement] — [Contrasting refinement].
The emdash is a tell as much as the structure. It's all very formulaic. There are also no real numbers, data, or analysis besides 20/480 which is the primary data point of the article.
_nathan67 | 20 hours ago
Your second paragraph reads exactly like LLM
ballistic762 | 19 hours ago
Why does AI love that structure? I see that shit all the time. Em-dash and “it’s not X - it’s Y”
The training data must be heavily weighted for those two things
Soft_Walrus_3605 | 18 hours ago
Dude, your comment history is replete with AI-isms just like this.
Bloodyfinger | 17 hours ago
Economists have predicted 15 of the last 3 stock market crashes.
Which is to say, obviously there is a crash coming. Eventually. History doesn't repeat, but it sure as fuck rhymes.
But no one knows when it's coming, or how large it's going to be.
MAitkenhead | 23 hours ago
The Herfindahl-Hirschman Index (HHI) is the stock market equivalent of the Gini inequality indicator (where high values indicate that most of the wealth is concentrated in a small proportion of the population), and although it is historically high before market crashes, it is not useful as an indicator of crash timing. For that you need the Hindenburg Omen.
longswordsuperfuck | 21 hours ago
"this time is different" and 'when a company announces new integration and the reception is negative' are real signs and statements of the bubble. I haven't heard "this time is different" yet but I have seen negative reception to AI integration.
I suppose I'll wait for a shoe shiner to give me investing advice before I back out?
snowdrone | 16 hours ago
The shoe shiner isn't giving investing advice but is saying increasingly nutty things about AI.
Ok-Indication-6241 | 18 hours ago
[ Removed by Reddit ]
Low_Ability4450 | 8 hours ago
Narrow breadth is a warning sign but it's not a timing tool , issue is more whether AI remains a story about a handful of companies selling picks or if it becomes a productivity story for the entire economy