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heelinhell said:
Remember Michael Burry in "The Big Short" ? He was the guy who saw the housing bubble in 2008 and bet against it despite the market enthusiasm before the great recession.

I see he is now betting against the AI bubble. His call in 2008 was laughed at. I imagine this call will be laughed at again.
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The speculative exuberance for AI has outpaced its application by multiples. And this is during a period when “Real” Americans are tightening their belts.
 
pspsps said:
The speculative exuberance for AI has outpaced its application by multiples. And this is during a period when “Real” Americans are tightening their belts.
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I'm not sure how anyone could know this yet. The housing bubble was different. We have a lot of experience in how real estate valuation works. I don't think we have any clue how AI will disrupt the economy (for good or bad), whether and which of the current players will benefit from it, or how future regulation might impact it. I completely agree the valuation of AI companies is largely speculative. Putting a ton of money in those companies is risky as hell. But I don't think we have any way of knowing if those companies are overvalued, undervalued, or if the markets have it right on the nose.
 
lawtig02 said:
I'm not sure how anyone could know this yet. The housing bubble was different. We have a lot of experience in how real estate valuation works. I don't think we have any clue how AI will disrupt the economy (for good or bad), whether and which of the current players will benefit from it, or how future regulation might impact it. I completely agree the valuation of AI companies is largely speculative. Putting a ton of money in those companies is risky as hell. But I don't think we have any way of knowing if those companies are overvalued, undervalued, or if the markets have it right on the nose.
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I don't know anything about economics... but I'll say this. I lived in SF and worked in the internet sector in the late 90s. It was fun, but these guys had no good plan about how to actually make money. They were like "let's get eyeballs and pageviews first and then monetize it"... and the bubble rightfully burst at some point. The AI situation feels very similar to me. At some point the chickens come home to roost -- if there is no profit, there is no stock value.
 
lawtig02 said:
I'm not sure how anyone could know this yet. The housing bubble was different. We have a lot of experience in how real estate valuation works. I don't think we have any clue how AI will disrupt the economy (for good or bad), whether and which of the current players will benefit from it, or how future regulation might impact it. I completely agree the valuation of AI companies is largely speculative. Putting a ton of money in those companies is risky as hell. But I don't think we have any way of knowing if those companies are overvalued, undervalued, or if the markets have it right on the nose.
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Did we know during dot.com?
 
pspsps said:
Did we know during dot.com?
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No, and that's kind of my point. Dot com bubbled, then popped, then grew to something that dwarfs the bubble. If you had invested in Netscape or Intel in 2006, you'd have taken a bath. If you had invested in Apple or Amazon and held through the crash, you'd be living on a beach today. I don't think it would be accurate to say that in 2006, the speculative exuberance for dot coms had outpaced their application. It was just really hard to pick the winners and losers, as it is now for AI companies.
 
lawtig02 said:
No, and that's kind of my point. Dot com bubbled, then popped, then grew to something that dwarfs the bubble. If you had invested in Netscape or Intel in 2006, you'd have taken a bath. If you had invested in Apple or Amazon and held through the crash, you'd be living on a beach today. I don't think it would be accurate to say that in 2006, the speculative exuberance for dot coms had outpaced their application. It was just really hard to pick the winners and losers, as it is now for AI companies.
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I agree with this and was more commenting of the unchecked stock market rise, and not the ultimate utility and monetization of AI applications.
 
heelinhell said:
Remember Michael Burry in "The Big Short" ? He was the guy who saw the housing bubble in 2008 and bet against it despite the market enthusiasm before the great recession.

I see he is now betting against the AI bubble. His call in 2008 was laughed at. I imagine this call will be laughed at again.
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Hope he's right. I'd love to see some of these greedy, spineless, Trump-fellating CEOs eat shit.
 
lawtig02 said:
No, and that's kind of my point. Dot com bubbled, then popped, then grew to something that dwarfs the bubble. If you had invested in Netscape or Intel in 2006, you'd have taken a bath. If you had invested in Apple or Amazon and held through the crash, you'd be living on a beach today. I don't think it would be accurate to say that in 2006, the speculative exuberance for dot coms had outpaced their application. It was just really hard to pick the winners and losers, as it is now for AI companies.
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Speculative exuberance must be a lot of fun.... if you have a lot of money to play with. But for ordinary folks like me it is foolhardy...IMO. "Nonetheless, Berkshire Hathaway [...] finds about 24% of its $300 billion in marketable equities invested in three AI stocks [...]".
 
lawtig02 said:
I'm not sure how anyone could know this yet. The housing bubble was different. We have a lot of experience in how real estate valuation works. I don't think we have any clue how AI will disrupt the economy (for good or bad), whether and which of the current players will benefit from it, or how future regulation might impact it. I completely agree the valuation of AI companies is largely speculative. Putting a ton of money in those companies is risky as hell. But I don't think we have any way of knowing if those companies are overvalued, undervalued, or if the markets have it right on the nose.
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I remember back in early 2000 during the dot.com bubble and having a discussion with my best friend who was a savvy investor and seeing these dot.coms losing money and some with a p/e of 400 and wondering why the market prices for those stocks were continuing to go through the roof. He said to me to wait and trust that this bubble will burst sooner than later. The bubble burst one year later.

I don't think we knew whether the dot.coms were overvalued at the time, but we soon found out . Maybe the AI stocks are being valued correctly this time around. 25 years later this feels to be the same to me.

In Dec. 1999 the Shiller p/e ratio was 44 and it came down to 32 in March 2001 ( historical average is a bit over 17 ). Today, the ratio is at 40 and trending up. Nvidia p/e is 58

Maybe it will be different this time.
 
heelinhell said:
I remember back in early 2000 during the dot.com bubble and having a discussion with my best friend who was a savvy investor and seeing these dot.coms losing money and some with a p/e of 400 and wondering why the market prices for those stocks were continuing to go through the roof. He said to me to wait and trust that this bubble will burst sooner than later. The bubble burst one year later.

I don't think we knew whether the dot.coms were overvalued at the time, but we soon found out . Maybe the AI stocks are being valued correctly this time around. 25 years later this feels to be the same to me.

In Dec. 1999 the Shiller p/e ratio was 44 and it came down to 32 in March 2001 ( historical average is a bit over 17 ). Today, the ratio is at 40 and trending up. Nvidia p/e is 58

Maybe it will be different this time.
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I have no doubt whatsoever that many -- probably most -- of the AI companies are greatly overvalued right now. The sector as a whole is as well. My only point is that an investment in something like NVDA is not inherently irrational. If NVDA today turns out to be the Apple of 2000, it will lose value in the short term when the bubble pops, but will still have extraordinary value in the long term. The risk an investor is taking is that NVDA is Apple and not Intel. It would be totally irrational to stake one's retirement on that bet, but a lot of people will make a killing on whichever AI companies end up surviving.
 
lawtig02 said:
I have no doubt whatsoever that many -- probably most -- of the AI companies are greatly overvalued right now. The sector as a whole is as well. My only point is that an investment in something like NVDA is not inherently irrational. If NVDA today turns out to be the Apple of 2000, it will lose value in the short term when the bubble pops, but will still have extraordinary value in the long term. The risk an investor is taking is that NVDA is Apple and not Intel. It would be totally irrational to stake one's retirement on that bet, but a lot of people will make a killing on whichever AI companies end up surviving.
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I do not disagree over the long term. Some AI stocks will survive and prosper and many will not.

Be that as it may, I feel like the stock market is overvalued and overdue for a 10-20% correction. Meantime let the good times roll and be the rocket man burning out your fuse up here alone but be aware that touchdown will bring you 'round here to find...
 
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