It really is a sell off. that much is obvious. how long it lasts, is the next question. If history is any guide, not much longer. Rebounds tend to be very fast and sudden. See 2020 or 2025 for example.
I think we're overdue for a big correction. There are just too many companies keeping the same "we’re growing so fast, so we’re not profitable yet" line for 10+ years now.
If it takes 10 years then it becomes the new normal.
I definitely hadn’t expected a big correction, and would expect the market recover and recoup the losses soon.
The global events of last few years created a lot of inflation, and the new money has to go somewhere. A large part of stock market gains are the new money disguised as growth.
As someone not in finance, what actually leads to this pattern (of smaller blips followed by faster recovery)? Is this a consequence of central banks knowing more than before? Algorithmic trading?
My intuition is that financial markets seem increasing dissociated from any correlation with street level economy or the financials of traded companies?
I think that's just you noticing smaller blips in the market as you pay more attention. Markets are random walks so they exhibit a fairly fixed distribution of different sized crashes. If they deviated, someone could notice that pattern and trade on it, returning the market back to a random walk.
> Markets are random walks so they exhibit a fairly fixed distribution of different sized crashes.
Market prices being unpredictable random walks doesn't mean that the volatility or shape needs to be constant. To make the notation more precise, you need to talk about (sub-) martingales.
> If they deviated, someone could notice that pattern and trade on it, returning the market back to a random walk.
This is true, but "fairly fixed distribution of different sized crashes." doesn't follow at all.
Or it could be a sign of a greater amount of financial intervention to preserve the value of the stock market after crashes, particularly since most people are largely counting on their 401k/IRAs to maintain their value in their retirement years
Maybe. Nobody can see the future, so I agree it's kind of arbitrary to call this the sell-off, but plotting it against these other events over the coming months may be interesting, and you have to start somewhere.
It's going to take a year or two more. Will the humanoid robots being built be useful? Will Tesla's robotaxi ever work without a huge number of remote monitors? Will the free models start to displace the expensive ones? Will someone figure out a way to do all this at lower cost? We don't know yet. But there are too many huge companies with rather inflated market caps. Some of that has to be air.
Really? I find local models such as Qwen 3.8 and Muse Glimmer to be pretty good. Not Opus or Sol, but.... Close to Sonnet maybe? So if I had to only use the local models from now on, it would not be a huge loss. Granted, I can't work on parallel on multiple tasks locally. But it's still 48 GB of RAM vs 750 GB or what is required for GLM5.3
You’d happily take a TB of RAM if offered though. The fact you can’t get it is evidence that hardware manufacturers have a huge amount of life left in them and the current correction is a buying opportunity.
> There’s no version of the immediate future where this isn’t the case.
Pity you qualified your prediction with "immediate"; a simimlar sentiment was around just before the dot-com crash: "There's no version of the future where we won't be able to use all that extra network infra."
Turned out, in the immediate future, just post-crash, we actually didn't need them. They only got used a decade later.
> So we have enough RAM kicking around in the world today that will suffice for the next 5-10 years?
No, but we may have enough GPU (with their RAM) sitting around in datacentres that our AI needs will be taken care off for the foreseeable future.
I mean, RAM is not really fungible - these valuations are not tied to RTX5090s, they are tied to the server GPUs.
The investment was not used to buy RAM sticks for desktop and server m/boards. ANthropic did not use their VC money to buy RTX5090s. The VC money went to power generation, datacentres, and server GPUs with 768GB of RAM.
So, yeah, if the bubble pops, we're well taken care of in the immediate future by the stuff the VC money already bought.
Everyone either misinterpreting what it says or only reading the headline, because it's pretty clear that the author is arguing that only 1 in 5 sell-offs equivalent to the current one end up being significant.
> The recent AI sell-off brought a lot of fearmongering headlines. Put next to past stock market crashes, it's only a mild correction for the S&P 500, 6% below its record.
That’s also when NVDA’s margins started creeping upwards. Their gross margins are 75% (!!) today, a couple of hedge funds opening multi billion dollar positions isn’t going to inflate a stock like NVDA.
I have seen a few YouTube Thumbnails declaring the bursting of the AI bubble. It feels like they are so desperate for it to happen that they are not prepared to wait a week or two to actually have some real data to work with.
It's not like people will forget that they were predicting it. If it is inevitable it will happen, if it isn't inevitable it still might happen. If it bounces back it still might happen six months down the track. Declaring it to have already happened seems reckless if your intention was to inform. We will know soon enough. I guess at least they have staked there credibility on something falsifiable. It won't make them retroactively less reckless if they turn out to be right but it'll make them seem particularly foolish if they are wrong.
Between it and the "next housing bubble" getting predicted I almost wonder if there's some kind of stock market psychology to bullheaded resistance in the face of "it will fail" predictions.
That on something big if you have enough people constantly predicting it's upcoming failure people just keep investing anyway keeping it going. Never really sure if something is on life support or not.
> Tech fell harder, with the Nasdaq down 11% and chip stocks down 36%, as much as they fell during Covid (35%). We'll be tracking the sell-off here with daily data updates.
That does not feel like that's the point, this feels more like "we have witnessed the beginning of a multi car pile up on the interstate, we'll be tracking it with hourly updates". Not that it's too early to tell but that it's sliding and will only get worse. So I think original commenter point is still valid.
There are always bears who are predicting the next stock market crash. They always have various reasons that make sense on the surface. They're almost always wrong. But they're always eventually right.
In the AI era, you just spin up 1024 bots making substack posts prophetizing the future. That's ten binary predictions. Delete the 1023 that fail. Keep the one account that perfectly "predicted" the future.
I rather have one extreme win than 100 smol wins that get evaporated once the market crashes. There’s an expression that goes ”Eating like a chicken, shitting like an elephant”. That’s the beauty of puts.
You could buy something when you think it's a good value, but it might go down a lot or stay low for a while before it goes up. One of the advantages individual investors have is that they can wait, rather than chasing short term gains
The derivatives market wouldn’t exist if there wasn’t a legitimate economic need to insure against unexpected crashes. Aka it’s not just bear speculation; crashes happen all the time in markets around the world.
It wasn't midterms. Everybody expected that the Democrats would take the house and senate, it should have been priced in. The results of the election played out on election night on the futures markets overnight and into the next day. Thursday was something else, perhaps some fund blew up.
Can someone explain how to read this? Since "past performance is not indicative of future results" and "technical analysis is astrology for men"? I'm assuming these data is useful in some way, just don't know what.
The tech oligarchs are certainly panicking, given how they are acting cute now, like "space laser didn't work lol" and "Ram Altman" etc.
But I'm guessing, the market is panicking because it don't know what exactly the democrat would do to AI developments, so maybe some clarity from the party could fix it. More clear than "lowering living costs" that is.
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[ 0.19 ms ] story [ 29.7 ms ] threadI definitely hadn’t expected a big correction, and would expect the market recover and recoup the losses soon.
The global events of last few years created a lot of inflation, and the new money has to go somewhere. A large part of stock market gains are the new money disguised as growth.
My intuition is that financial markets seem increasing dissociated from any correlation with street level economy or the financials of traded companies?
Market prices being unpredictable random walks doesn't mean that the volatility or shape needs to be constant. To make the notation more precise, you need to talk about (sub-) martingales.
> If they deviated, someone could notice that pattern and trade on it, returning the market back to a random walk.
This is true, but "fairly fixed distribution of different sized crashes." doesn't follow at all.
Maybe. Nobody can see the future, so I agree it's kind of arbitrary to call this the sell-off, but plotting it against these other events over the coming months may be interesting, and you have to start somewhere.
A sell-off is required to start a panic-sell and bubble-pop, but not all sell-offs start a panic-sell and bubble-pop.
It's hard to tell in advance what this is.
It's going to take a year or two more. Will the humanoid robots being built be useful? Will Tesla's robotaxi ever work without a huge number of remote monitors? Will the free models start to displace the expensive ones? Will someone figure out a way to do all this at lower cost? We don't know yet. But there are too many huge companies with rather inflated market caps. Some of that has to be air.
There’s no version of the immediate future where this isn’t the case.
Pity you qualified your prediction with "immediate"; a simimlar sentiment was around just before the dot-com crash: "There's no version of the future where we won't be able to use all that extra network infra."
Turned out, in the immediate future, just post-crash, we actually didn't need them. They only got used a decade later.
Will we need every larger compute and RAM?
Sure?
Will we need it in a post-crash scenario?
Nope!
And an RTX5090 is going to drop down to a few hundred dollars is it?
No, but we may have enough GPU (with their RAM) sitting around in datacentres that our AI needs will be taken care off for the foreseeable future.
I mean, RAM is not really fungible - these valuations are not tied to RTX5090s, they are tied to the server GPUs.
The investment was not used to buy RAM sticks for desktop and server m/boards. ANthropic did not use their VC money to buy RTX5090s. The VC money went to power generation, datacentres, and server GPUs with 768GB of RAM.
So, yeah, if the bubble pops, we're well taken care of in the immediate future by the stuff the VC money already bought.
Tesla? Waymo is operating in American cities right now. I've taken them.
Everyone either misinterpreting what it says or only reading the headline, because it's pretty clear that the author is arguing that only 1 in 5 sell-offs equivalent to the current one end up being significant.
> The recent AI sell-off brought a lot of fearmongering headlines. Put next to past stock market crashes, it's only a mild correction for the S&P 500, 6% below its record.
https://www.multpl.com/shiller-pe
I think a big bubble pop is plausible.
It's not like people will forget that they were predicting it. If it is inevitable it will happen, if it isn't inevitable it still might happen. If it bounces back it still might happen six months down the track. Declaring it to have already happened seems reckless if your intention was to inform. We will know soon enough. I guess at least they have staked there credibility on something falsifiable. It won't make them retroactively less reckless if they turn out to be right but it'll make them seem particularly foolish if they are wrong.
That on something big if you have enough people constantly predicting it's upcoming failure people just keep investing anyway keeping it going. Never really sure if something is on life support or not.
https://www.reuters.com/world/china/china-ai-bubble-has-alre...
When the author is right, he will be like, "i told you so", if wrong, "It's hard to predict" and shrug off.
Don't buy into crap post like this.
That does not feel like that's the point, this feels more like "we have witnessed the beginning of a multi car pile up on the interstate, we'll be tracking it with hourly updates". Not that it's too early to tell but that it's sliding and will only get worse. So I think original commenter point is still valid.
Can you really call it "right" if the market goes up 40% before eventually going down 15%?
If you can’t act on predictions they’re not meaningful.
" Fiscal stimulus during the pandemic contributed to an increase in inflation of about 2.6 percentage points. "
https://reason.com/2023/02/02/covid-stimulus-spending-played...
It wasn't midterms. Everybody expected that the Democrats would take the house and senate, it should have been priced in. The results of the election played out on election night on the futures markets overnight and into the next day. Thursday was something else, perhaps some fund blew up.
The tech oligarchs are certainly panicking, given how they are acting cute now, like "space laser didn't work lol" and "Ram Altman" etc.
But I'm guessing, the market is panicking because it don't know what exactly the democrat would do to AI developments, so maybe some clarity from the party could fix it. More clear than "lowering living costs" that is.