There's a famous saying in investing:
The market can remain irrational longer than you can remain solvent.
"We did it, Patrick! We made a technological breakthrough!"
A place for all those who loathe AI to discuss things, post articles, and ridicule the AI hype. Proud supporter of working people. And proud booer of SXSW 2024.
There's a famous saying in investing:
The market can remain irrational longer than you can remain solvent.
One thing I learned with the $GME fun when that first happened: when you buy a stock, your worst case scenario in making a bad bet is that it becomes worthless and you lose everything you put into it.
That last ~5 words are important: your losses have a limit. When shorting a stock, your losses are the stocks gains, which theoretically has no practical limit. I agree that there's a bubble, but who knows when it will pop - or God forbid, it's not a bubble after all and actually holds. I would avoid going the shorting route for that reason.
It will crash eventually, but don't underestimate the fuckery and the amount of money that they will spend to keep it going up. When the insiders and rich folk dump it then you know
Don't underestimate the amount of money that investors can continue to dump into AI. I agree that there's a bubble and that it will pop some day, but I personally wouldn't bet against AI. It has zealous investors just like GME and AMC who make irrational decisions.
If you want a safer alternative to short-selling, you can buy puts on companies you think will take a hit when the bubble bursts, e g. NVDA. The amount you can lose is limited to what you buy the put for, with the downside that a put has an expiration date. You can buy puts that expire anywhere from days to about two years.
What are the options to bet against AI hype without betting against actual useful technologies?
Bet on industries and companies with good unions and workers rights/treatment, the economic value of a corporation valuing its workers as human beings is in the process of being ejected from the collective awareness of many societies, but that does not make the value of that unreal only camoflauged.
I think a good example from the past of what is happening in tech is what happened with The Big Three US Automakers during the Malaise Era of US automotive design.
Through an in-depth examination of labor relations and the production processes of automakers in the U.S. and Japan both before and after World War II, they demonstrate that the decline of the American manufacturers was the unintended consequence of their attempts to weaken the bargaining power of their unions.
Today Japanese and many European automakers produce higher quality cars at lower cost than their American counterparts thanks to a flexible form of production characterized by long-term sole suppliers, assembly and supply plants located near each other, and just-in-time delivery of raw materials. While this style of production was, in fact, pioneered in the U.S. prior to World War II, in the years after the war, American automakers deliberately dismantled this system.
As Murray and Schwartz show, flexible production accelerated innovation but also facilitated workers’ efforts to unionize plants and carry out work stoppages. To reduce the efficacy of strikes and combat the labor militancy that flourished between the Depression and the postwar period, the industry dispersed production across the nation, began maintaining large stockpiles of inventory, and eliminated single sourcing. While this restructuring of production did ultimately reduce workers’ leverage, it also decreased production efficiency and innovation. The U.S. auto industry has struggled ever since to compete with foreign automakers, and formerly thriving motor cities have suffered the consequences of mass deindustrialization.
The future, at least of the US, will be littered with this kind of thing. The question is where are the places you can focus on that are not like this? That are not stuck in this kind of thinking?
Bet on companies that operate within legal contexts that provide meaningful protection for the natural and human environment they operate in, no I am not talking about financial protection of banks and things, I am talking about protecting the environment (specifically fresh water wetlands, anywhere that understands the necessity of protecting them is somewhere you want to invest) and providing a real social safety net to human beings.
Invest in corporations that operate in places with good affordable mass transit and affordable housing.
Certainly, we are going through a rock bottom period for highly skilled tech workers in the US, the idea of valuing technical computer work has never been less popular, so I think any company that goes against that current and treats workers well is actually going to tend to outperform the market pretty easily because people want to show up to work... which makes them better workers. I don't think this current attempt to pretend AI can replace tech workers will work for tech any more than it will for most other industries, but for now the value is distorted downwards.
Another thing, there is an IMMENSE difference between what most of the insurance industry in the US understands about the current and future costs of Climate Change and what other powerful, wealthy sectors of the US economy understand about the current and future costs of Climate Change. AI is connected to this, especially with water use, and there is likely profit to be made addressing that reality in a way that many powerful people refuse to.
Look at insurance company outlooks on the future expected costs of insuring different areas, I imagine that decent corporations in relative havens from the worst impacts of climate change will fair far better and this is definitely not something being priced into the economy.
Thank you for the insightful comment. I will keep all that in mind.
Good comment; thank you for this perspective. Comments like this make me wish I could give a super-upvote, which is why I am taking the time to express my appreciation via my own comment.
I was at a conference recently and at one of the panels, someone asked "when do you think the [AI] bubble will pop?". The panelist said "hopefully never, given that our pensions are tied up in it".
That made a bunch of things click for me in terms of understanding why this ridiculous hype machine keeps chugging onwards despite being patently bullshit. Obviously companies like OpenAI are invested in continuing the hype, but there's a heckton of other companies and investors who have put enough money into this that they also stand to lose should the bubble pop. Even people who haven't directly invested in AI stand to lose out — even people who don't directly invest in AI stand to be affected due to how many index funds etc. work.
Furthermore, I don't think it's possible to bet against AI hype without betting against actually useful technologies, because the entire tech sector has become such a bloated, overvalued blob that extricating the useful stuff from the bullshit would be difficult, if not impossible.
Thanks.
Your post articulated exactly how I feel about it.
It’s tricky. Currently we are in a bubble, but we’re also on track for massive inflation so shorting could still lose even if number goes up. I would sell everything and buy land or REITs.
Short NVDA
I am not a investor bro, lawyer, financial expert. Please invest/trade wisely at your own discretion.
Shorting publicly traded AI focused companies would be the answer to your request.
Which one?🤷 Up to you.
I've got two words for you:
Beanie. Babies.
You just "short" all the companies that are currently gaining value from AI. So pretty much any tech company.
As others have said, short selling. If you have millions of dollars in cash, you may be able to cause them losses.
I’d look back at what stocks did well during the dot-com crash. Did any?
I mean.....yahoo still exists. I think surviving is a pretty key element to doing well.
Surviving is not the same thing as doing well. These companies can lose 50% of their value and still survive.
Buy Gold.