The AI bubble is still ahead of us
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TikTok had a guy saying that part of China's plan is to have the best AI platforms and keep them free - and ensure they require less infrastructure to maintain. In doing so, they would undermine the mega-investments by US AI companies - which are over inflated anyway. Between the collapse of AI and a similar implosion of bitcoin, the US economy would be in shambles for some time to come.
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Yeah, but I have a self-managed account too. Everything is doing well there, but I'm looking into the possibility of some AI investments.
@Mik said in The AI bubble is still ahead of us:
Yeah, but I have a self-managed account too. Everything is doing well there, but I'm looking into the possibility of some AI investments.
I just shifted some money from AAPL to QCOM. We'll see how it does. AAPL is overvalued at this point. It hurt to part with those shares.
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I’ve read some interesting perspectives on why it isn’t in a bubble, both looking at PE ratios (much lower than in the dot com era) and the fact that the infrastructure companies aren’t building ahead of demand (like Cisco and the telecoms did in the dot com era). No one is laying the equivalent of dark fiber. Every gpu nvidia makes gets lit up right away.
Gavin Baker’s fund is interesting- he owns all these AI stocks but has a huge short position in QQQ as a hedge.
Person. Woman. Man. Camera. TV.
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@Mik said in The AI bubble is still ahead of us:
We haven't made any significant moves.
Well someone else manages your money. Professional money managers will do what they do, to minimize risk.
@Mik said in The AI bubble is still ahead of us:
We haven't made any significant moves.
Well someone else manages your money. Professional money managers will do what they do, to minimize risk.
Based on my experience with professional managers (never used one myself but I sit on the finance committee of three different foundations which use household name brokers) they usually have money in the latest thing, presumably because the latest thing is in the news and their clients will notice if they underperform AND are not in the latest thing which the client’s friends are in.
Person. Woman. Man. Camera. TV.
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I’ve read some interesting perspectives on why it isn’t in a bubble, both looking at PE ratios (much lower than in the dot com era) and the fact that the infrastructure companies aren’t building ahead of demand (like Cisco and the telecoms did in the dot com era). No one is laying the equivalent of dark fiber. Every gpu nvidia makes gets lit up right away.
Gavin Baker’s fund is interesting- he owns all these AI stocks but has a huge short position in QQQ as a hedge.
I’ve read some interesting perspectives on why it isn’t in a bubble, both looking at PE ratios (much lower than in the dot com era) and the fact that the infrastructure companies aren’t building ahead of demand (like Cisco and the telecoms did in the dot com era). No one is laying the equivalent of dark fiber. Every gpu nvidia makes gets lit up right away.
Gavin Baker’s fund is interesting- he owns all these AI stocks but has a huge short position in QQQ as a hedge.
Complicated hedging strategies don't make much sense to me. If you want to be both long and short highly correlated equities in order to insure the primary bet, maybe just discard the insurance and invest a reduced amount of capital in the primary bet. But if you want to potentially profit on a massive reverse move, I guess you'd have to do something more complicated.
Education is extremely important.
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@Mik said in The AI bubble is still ahead of us:
We haven't made any significant moves.
Well someone else manages your money. Professional money managers will do what they do, to minimize risk.
Based on my experience with professional managers (never used one myself but I sit on the finance committee of three different foundations which use household name brokers) they usually have money in the latest thing, presumably because the latest thing is in the news and their clients will notice if they underperform AND are not in the latest thing which the client’s friends are in.
@Mik said in The AI bubble is still ahead of us:
We haven't made any significant moves.
Well someone else manages your money. Professional money managers will do what they do, to minimize risk.
Based on my experience with professional managers (never used one myself but I sit on the finance committee of three different foundations which use household name brokers) they usually have money in the latest thing, presumably because the latest thing is in the news and their clients will notice if they underperform AND are not in the latest thing which the client’s friends are in.
Being "in" an investment doesn't say much. But they're almost certainly not "concentrated" in meme investments, unless they run a very specialized service.
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I’ve read some interesting perspectives on why it isn’t in a bubble, both looking at PE ratios (much lower than in the dot com era) and the fact that the infrastructure companies aren’t building ahead of demand (like Cisco and the telecoms did in the dot com era). No one is laying the equivalent of dark fiber. Every gpu nvidia makes gets lit up right away.
Gavin Baker’s fund is interesting- he owns all these AI stocks but has a huge short position in QQQ as a hedge.
Complicated hedging strategies don't make much sense to me. If you want to be both long and short highly correlated equities in order to insure the primary bet, maybe just discard the insurance and invest a reduced amount of capital in the primary bet. But if you want to potentially profit on a massive reverse move, I guess you'd have to do something more complicated.
I’ve read some interesting perspectives on why it isn’t in a bubble, both looking at PE ratios (much lower than in the dot com era) and the fact that the infrastructure companies aren’t building ahead of demand (like Cisco and the telecoms did in the dot com era). No one is laying the equivalent of dark fiber. Every gpu nvidia makes gets lit up right away.
Gavin Baker’s fund is interesting- he owns all these AI stocks but has a huge short position in QQQ as a hedge.
Complicated hedging strategies don't make much sense to me. If you want to be both long and short highly correlated equities in order to insure the primary bet, maybe just discard the insurance and invest a reduced amount of capital in the primary bet. But if you want to potentially profit on a massive reverse move, I guess you'd have to do something more complicated.
The short gives you a lot more money to invest. You’re betting that the AI companies will compose a larger and larger percentage of the tech stock universe, which could pay off regardless of what happens to the overall market. It’s actually how hedge funds got their name.
Person. Woman. Man. Camera. TV.
-
I’ve read some interesting perspectives on why it isn’t in a bubble, both looking at PE ratios (much lower than in the dot com era) and the fact that the infrastructure companies aren’t building ahead of demand (like Cisco and the telecoms did in the dot com era). No one is laying the equivalent of dark fiber. Every gpu nvidia makes gets lit up right away.
Gavin Baker’s fund is interesting- he owns all these AI stocks but has a huge short position in QQQ as a hedge.
Complicated hedging strategies don't make much sense to me. If you want to be both long and short highly correlated equities in order to insure the primary bet, maybe just discard the insurance and invest a reduced amount of capital in the primary bet. But if you want to potentially profit on a massive reverse move, I guess you'd have to do something more complicated.
The short gives you a lot more money to invest. You’re betting that the AI companies will compose a larger and larger percentage of the tech stock universe, which could pay off regardless of what happens to the overall market. It’s actually how hedge funds got their name.
I’ve read some interesting perspectives on why it isn’t in a bubble, both looking at PE ratios (much lower than in the dot com era) and the fact that the infrastructure companies aren’t building ahead of demand (like Cisco and the telecoms did in the dot com era). No one is laying the equivalent of dark fiber. Every gpu nvidia makes gets lit up right away.
Gavin Baker’s fund is interesting- he owns all these AI stocks but has a huge short position in QQQ as a hedge.
Complicated hedging strategies don't make much sense to me. If you want to be both long and short highly correlated equities in order to insure the primary bet, maybe just discard the insurance and invest a reduced amount of capital in the primary bet. But if you want to potentially profit on a massive reverse move, I guess you'd have to do something more complicated.
The short gives you a lot more money to invest. You’re betting that the AI companies will compose a larger and larger percentage of the tech stock universe, which could pay off regardless of what happens to the overall market. It’s actually how hedge funds got their name.
I had ChatGPT explain it to me. The reason I was confused is that it's not really an insured long on the AI stocks. It's a pairs trade where the investor is betting the AI stocks will outperform the broader QQQ, regardless of the overall direction of either. I guess that's a "hedge" by some other definition than the one I'm familiar with. I know it as a pairs trade, or arbitrage.
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