[HN Gopher] We remember the internet bubble. This mania looks an...
___________________________________________________________________
We remember the internet bubble. This mania looks and feels the
same
Author : speckx
Score : 76 points
Date : 2025-11-21 20:30 UTC (2 hours ago)
(HTM) web link (crazystupidtech.com)
(TXT) w3m dump (crazystupidtech.com)
| mmooss wrote:
| To say whether it's a bubble, we need to know the value of the
| technology.
|
| The value of modern AI seems very high. That nobody knows how
| high, that they still haven't figured out applications, and that
| the technology and its tools are still far from refined, is
| normal for any new technology.
|
| If you add the value of the potential political power gained by
| controlling AI, then the value to the owners and investors is
| astronomical. Many of the investors have demonstrated a strong
| motivation to sacrifice money for political power, for example by
| supporting nationalism that undermines a global economy that they
| benefit enormously from. Somewhere, I read someone explaining
| their investment by saying 'it's the greatest transfer of power
| in (modern) history'. Also see:
| https://news.ycombinator.com/item?id=45983700
| forgetfulness wrote:
| The implied promise was that these things were going to
| "revolutionize the workplace" i.e. massively automate middle
| class office jobs
|
| A couple of years down the road, their useful applications
| still are summarizing text, transferring style to text,
| generating code under strict supervision, and generating images
| that need retouching.
|
| That's a lot to get out of a tool, but it's dubious that
| investors were pouring trillions of dollars into these things
| thinking of automating away junior software engineers and low
| end design work.
|
| Edit: I forgot their other niche, that of generating homework
| and school test answers
| bluefirebrand wrote:
| > thinking of automating away junior software engineers and
| low end design work.
|
| And it's really still very arguable imo if it's even doing
| this
|
| Like you said, it still needs strict supervision. In my
| opinion it is not a good use of your supervisory time to be
| babysitting an LLM versus mentoring actual juniors
| kergonath wrote:
| > In my opinion it is not a good use of your supervisory
| time to be babysitting an LLM versus mentoring actual
| juniors
|
| Right. Because at least juniors are supposed to learn and
| at some point become senior and stop needing this kind of
| supervision. Also, interacting with people can be more
| rewarding (or not, depending on the people)...
| ares623 wrote:
| Not only that, but it's devaluing the sacred cows of the very
| same companies that are investing heavily.
|
| Search is dead or dying
|
| Social media is dead or dying
|
| Content creation is dead or dying
|
| If they cant make AI work, then they are left with AI at a
| level that continues to devalue their core business.
|
| They have no choice. They made a deal with the devil. And the
| devil means to collect.
|
| This is why I think Apple is lucky their attempt failed so
| bad. They dodged a bullet. They have an opportunity to guide
| a lost tech industry through a post AI bubble world.
| lagosfractal42 wrote:
| GPUs have massive applications such as Alphafold, CRISPR,
| Medical Imaging, Meteorology.
|
| The massive planetary investment is not to make more AI chats
| that summarize text. That's just short sighted.
| ares623 wrote:
| That's copium, as the kids say nowadays. The massive
| planetary investment is a 100% for AI chats. All those
| other things are taking the crumbs where they can.
| chickensong wrote:
| Big business and government aren't buying supercomputer
| clusters and licensing models to run chats.
| KalMann wrote:
| You're missing the point. Those kind of narrow AI
| applications are not the motivation for the trillions of
| dollars being poured into AI. Of course AI has a variety of
| applications many disciplines, as it has for decades. The
| motivation behind the massive investment in AI is as
| forgetfulness said, reap the benefits from "revolutionizing
| the workplace"
| munk-a wrote:
| As someone working in a field that has used NLP for quite
| some time - yeah, I generally agree that those investments
| are worth their weight in gold... which is unfortunate
| because before ChatGPT came along they were viewed as niche
| unprofitable money-sinks. The astronomical investments
| we've seen lately have been in general models which can be
| leveraged to outperform some of our older models but had we
| wanted purely to improve those models there were much more
| efficient ways to do so.
|
| Hopefully we can retain a lot of this value when the bubble
| bursts but I just haven't seen any really good success
| stories of converting these models into businesses. If you
| try and build as a middleman where you leverage a model to
| solve someone's problem they can always just go to the
| model runner and get the same results for cheaper - and the
| model runners seem (so far - this may change) to be unable
| to price model usage at a level that actually makes it
| sustainable.
|
| Those older models running specialized tasks seem to be
| trucking along just fine for now - but I remain concerned
| that when the bubble bursts it's going to starve these
| necessary investments of capital.
| foobarian wrote:
| > converting these models into businesses.
|
| I think it's pretty clear to all the big operators that
| they will need to go whole hog into ads and take some of
| the Google/Meta pie. It's just a matter of time.
| hyperbovine wrote:
| Eh, those applications (incl. protein folding) existed for
| a decade-plus before LLMs came onto the scene, and there
| was absolutely nothing like the scale of capex that we're
| seeing right now. It's like literally 100-1000x larger than
| what GPU hosting providers were spending previously.
| counters wrote:
| > Meteorology
|
| It seems like that at first glance. But in reality, GPUs
| have had extremely slow adoption for real-world operational
| meteorology applications. Because of the fundamental design
| and architecture of most NWP systems, it was very difficult
| to leverage GPUs as compute accelerators; most efforts
| barely eked out any performance gains once you account for
| host/device memory transfers. It really wasn't until some
| groups started to design new weather modeling systems from
| the ground up that they could architect things in such a
| way that GPUs made a significant difference.
|
| Obviously AI / ML weather modeling is a different story.
| DuperPower wrote:
| its helping people be more productive but its not helping
| firing people which was the wet dream
| carlosjobim wrote:
| The value of LLM is reliable high quality translation between
| all languages. The economic value of this is at least
| trillions of dollars per year. The cultural and humanitarian
| value is equally gigantic, even if it can't be measured in
| dollars and cents.
| munk-a wrote:
| That is of immense social value - but manual translation
| services for commercial projects (like application
| localization) is already dirt cheap to do and automatic
| casual translation services for consumers would be
| incredibly difficult to monetize.
| carlosjobim wrote:
| I think your perspective might be severely limited. There
| exists millions of businesses outside of big IT
| enterprises.
| simianparrot wrote:
| The hardware also wears out really fast. And every
| replacement is more expensive. How long can that party keep
| going when none of the companies make enough revenue to cover
| the expenses?
| ben_w wrote:
| How many people graduate from a US software engineering
| degree each year? About 100k? If they (the 100k in the US)
| earn $100k each in the first year, before gaining the skills
| to earn more, that's $10 billion a year, every year. If you
| can capture that market for next 20 years, it's worth $200
| billion.
|
| Except... can you capture it? A junior dev is... not exactly
| someone you want connecting to your business-critical
| database without supervision, and a real human dev will get
| better with a predictable rate. Will LLMs get better? The
| makers are betting on that, but we'll only know after the
| model releases, and even then after we play with them for a
| bit to differentiate between the record performance on
| whichever benchmark and the actual work we want them to do.
|
| Then there's the question of can you really keep an edge for
| 20 years with investments today: Sometime between 2030-2035,
| there's likely to be models matching 2025-SOTA performance
| that run on ${year}'s high-end smartphone.
|
| (Well, unless we all die in WW3 because of Russia getting
| desperate from its failure to remove Ukraine's sovereignty,
| or because China has a hot war with Taiwan and/or the USA
| messing with global consumer electronics supplies, but I
| don't think those get priced into the market...).
| thousand_nights wrote:
| > If you can capture that market for next 20 years, it's
| worth $200 billion.
|
| that's like 5% of NVIDIA's current market cap. sounds like
| peanuts when you lay it out like that
| ben_w wrote:
| Perhaps.
|
| But that's just the USA's software developers in just
| their first year after graduating. Software devs are 1%
| of the US job market, the first year after graduation is
| (66-21=45 years, 1/45 ~= 2%) of a working life, the US is
| just 4% of the world's population/25% GDP.
|
| For the 1% to matter, there have to be other jobs that
| LLMs can do as well as a fresh graduate. I don't know,
| are LLMs like someone the first year out of law school or
| medical school, or are those schools better than
| software? Certainly the home robotics' AI are nowhere
| near ready yet, no plumber, no driver (despite the news
| about new car AIs), would you trust an Optimus to cut
| your hair? etc.
|
| For the 2% to matter, depends how seriously you take the
| projections of improvements. Myself, I do not. Looks like
| exponential improvements come at exponential costs, and
| you run out of money to spend for further improvements
| very quickly.
|
| For the 4% to matter, depends on how fast other economies
| grow. 4% by population, about 25% by GDP. I believe China
| is still growing quite fast, likely to continue. Them
| getting +160% growth, and thus getting 2.6x times the
| money available to burn on AI tokens, over the next 20
| years would be unsurprising.
|
| All in all, I don't think the USA is competent enough at
| large-scale projects to handle the infrastructure that
| this kind of AI would need, so I think it's a bubble and
| will burst before 2030 because of that. China seems to be
| able to pull off this kind of infrastructure, so may pull
| ahead after the US does whatever it does.
| mancerayder wrote:
| You forgot - cheating on job interviews, writing resumes to
| be repetitive, and adding an annoying flowery tone to non-
| native English speakers who think AI wrote something for them
| that isn't AI-obvious.
| forgetfulness wrote:
| Many of those things were already at a "good enough" level
| since GPT-3.5.
|
| There's probably a good business usecase there for
| companies wanting to have smoother communication with
| offshore teams.
|
| Could that be a game-changer? I wouldn't discount it, but
| it does sound like something that has to operate at a very
| low margin and that doesn't merit a lot more investment.
| VirusNewbie wrote:
| Ok, ignoring any AGI or massive advances, let's just say an
| LLM can help the average office worker be 15% more
| productive... what do you think the economic value of that
| is?
| redwood wrote:
| The value can be incredibly high... just like the value of the
| internet was incredibly high.. and it can still be a finanfial
| bubble. I feel like the people arguing against the bubble
| perspective are saying look the internet was actually valuable
| and so too will this.. and that's totally a valid perspective.
| The bubble is not about whether there's value but about whether
| or not the market will come down. All of the above can totally
| happen
| worik wrote:
| > The value of modern AI seems very hig
|
| Very useful, clearly. But valuable? In aggregate it seems
| clear that it is. But where does that value acrue? It seems
| to me the value will be thinly spread while the costs are
| concentrated.
|
| It does not seem possible that any conceivable business can
| pay for all the announced plans for developing data centres,
| nor energy available to power them.
|
| If AI systems can be developed to be trust worthy enough to
| act on their own, none so far (?), then I can see where the
| value could acrue, but as things stand?
| pegasus wrote:
| Yep. It seems somewhat inevitable to have a readjustment at
| some point. Both Web 2.0 (online retail) and AI are
| (rightfully, I believe) creating a lot of buzz and
| stimulating a lot of investment. It's all very new and
| exciting and there is bound to be a lot of hit and miss
| activity. Once the dust settles, the misguided bets will
| become more obvious and there will be a culling, just as we
| had during the dot com bubble.
| nitwit005 wrote:
| You can have brilliant technology and still go broke.
|
| The internet was amazingly valuable, but many of the early
| companies failed. Investing in internet companies was hardly a
| sure bet.
| munk-a wrote:
| There was a recent Bezos talk about the fact that (much like
| the dot-com) we've overspending on infrastructure that'll
| bubble and implode but then we'll have all this amazing infra
| for companies to build off of... but the process of that
| overspend and implosion is essentially a massive debt erasure
| - a lot of people are currently propping up this market with
| their capital and the companies they're propping up will
| collapse and those obligations liquidated - and that will
| result in massive society-wide pain. We may end up in a
| better place for the next generation because of this
| investment - but if you're a retail investor don't expect
| your 401k accounts to weather that burst gracefully... and,
| unlike the boomers, this will largely hit Millenials and Gen
| Z both of whom are currently under massive financial stress.
| nonameiguess wrote:
| Arguably, it's exactly this mindset creating the problem. It's
| not the value of the technology that matters. It's the value of
| the companies. If one company was the only one that had a
| particular valuable technology, then that would matter, but
| otherwise 90% of them likely end up worthless even if the
| sector itself doesn't.
|
| How that washes out on net we'll have to see. I'm not gonna
| pretend I know more than anyone else. Just keep in mind that a
| major difference between now and 2000 is companies stay private
| a lot longer. An IPO forces you to open the books and sustain
| public scrutiny of the broad investor class. A still-private
| startup only needs to convince one funder of their value. That
| inevitably leads to higher variance and a greater risk of
| failure. That doesn't mean the whole sector is necessarily a
| bubble, but _if_ it is, it can be sustained a lot longer
| without us knowing. A small number of people with $50 billion
| they need to park somewhere and no other obvious options can
| keep shitty ideas afloat in a way that wouldn 't be possible if
| they had to be subjected to broader exposure. We like to
| believe people with $50 billion can't be wrong, but the wisdom
| of crowds always beats the wisdom of individual genius.
|
| Heck, AI itself taught us that same lesson!
| digdugdirk wrote:
| Alternate viewpoint - The value of modern AI seems very high.
| That nobody knows how high, that they still haven't figured out
| applications, and that the technology and its tools are still
| far from refined, _might be a sign that the technology shouldn
| 't be valued this highly at all_
| usrnm wrote:
| Absolutely nothing in your list prevents the AI from being a
| bubble. The Internet is an absolute marvel of engineering that
| completely changed the life of the majority of people in the
| world, and yet it crashed 25 years ago, and crashed hard. Both
| can be true at the same time.
| kergonath wrote:
| Also, video games in the 1980s.
| hyperbovine wrote:
| > The value of modern AI seems very high. That nobody knows how
| high, that they still haven't figured out applications, and
| that the technology and its tools are still far from refined,
| is normal for any new technology.
|
| The same could be said for the internet. But, and I know this
| will be hard for younger readers to believe, I seem to recall
| the value proposition of the Internet being more immediately
| apparent at the time.
| kergonath wrote:
| > To say whether it's a bubble, we need to know the value of
| the technology.
|
| Not really. I mean, not only. The value of the web is immense.
| And yet, the dot-com bubble was indeed a bubble. What matters
| is the value _in the short term_ compared to the value of the
| companies _in the current context_. Even if AI is huge 20 years
| from now, it can still crash dramatically tomorrow.
| bdangubic wrote:
| writing a "bubble" post is new monad tutorial - gotta write one
| to get some street cred
| skeeter2020 wrote:
| This post argues the burst is not only inevitable it's right
| around the corner - never mind their principal argument being
| "we're terrible at predicting technology revolutions in the
| near term".
|
| This seems like a variation on the President's (and my CTO's)
| process of 1. go on record both supporting and denouncing all
| positions, but commit to none, 2. wait... 3. spin your previous
| wisdoms based on the actual outcome. A super-inconsistent &
| confusing track record is actually a major asset when executing
| this strategy!
| skeeter2020 wrote:
| This sort of reactionary post is a tiring as the motivating
| situation. Here's a big difference: aside from all the circular
| investments the companies at the root of AI have huge earnings
| and did so before the boom as well.It's convenient to say "Look
| at all these declines in the past month! The end is nigh!" -
| maybe expand your chart to 12 months or even 5 years. You can
| argue against Nvidia but if you do they've made you look foolish
| 3 pivots in a row. Are companies very expensive right now?
| Absolutely. Are there a lot of frothy valuations and looming
| failures? Probably - I think so. Is this just like the Internet
| bubble? Beyond the generic basics, no.
| christophilus wrote:
| Most of them have big revenues; not earnings.
| skeeter2020 wrote:
| that's not true; check the (edit: historical) PE ratios for
| the big names referenced in this post.
| biff1 wrote:
| There's a bubble bubble and it will pop in 26.
| chasing0entropy wrote:
| The internet was monumental and valuable, offering instant
| conveyance of media and data. AI is monumental, allowing instant
| access to near infinite data; but whether instant access is as
| valuable as instant conveyance yet alone five times the value,
| appears to be the question
|
| Honestly anyone who thinks AI has intrinsic value to rival the
| GDP of nations is a bagholder in denial and I'll be happy to buy
| your puts.
| wewewedxfgdf wrote:
| Yeah except I pay hard cash for multiple AI services and use them
| all day long.
| resize2996 wrote:
| I paid for my internet and used it all day long.
| more_corn wrote:
| Ok, so if that prediction is true what actions did you take?
|
| Identify the therefore part of the prediction and enumerate the
| three highest priority steps.
|
| Have you determined that the stock market will crash and bought
| positions accordingly? Have you sold all your nvidia stock? What
| are the implications in the broader economy and what steps have
| you taken?
| skeeter2020 wrote:
| I've thought about and asked this question. One potential idea:
| AI was sold as the "death of SaaS" and hit their share prices
| accordingly. If you think this is not true (at least in the
| near to mid-term) you could buy stock at (what you perceive as)
| a discount. I might look at a company like Constellation (a big
| vertically integrated portfolio of mature, decent revenue-
| generating SaaS) as a proxy for a fund focused on this
| strategy.
|
| This sort of approach is pretty aggressive and definitely
| contrarian to the general market, but some alternatives to
| mitigate the coming pain (if you believe it's near) would be
| shifting into a more liquid position to take advantage of
| tightening liquidity, i.e. big companies may see their shares
| tank but will likely still be able to service their debt. In
| the meantime you'll miss out on a market that still seems
| pretty strong.
| nonameiguess wrote:
| Do you have to? I'll be 45 in a few days, but even at that age,
| I'm still not expecting to need anything I have invested for at
| least 20 years, the ratio of the value of the broad overall
| market then to now is still likely to be a larger multiple than
| for any other asset class I can expose myself to. If there's
| really a bubble, maybe that won't be true in 5 years, but I've
| yet to see a downturn that didn't recover in 20. Even if your
| predictions are directionally correct eventually, if you're not
| clairvoyant, trying to time the market is still not a great
| idea.
| exegete wrote:
| I've got 15-20 years to retirement so I just watch the market
| but don't do anything other than keep buying index funds and
| rebalancing periodically.
| rafaelero wrote:
| Idk, we seem to be the at the cusp of autonomous driving.
| Transportation is like ~8% of world's GDP. Payroll is, what, 30%
| of that? It seems like we can already have the return on all AI
| investment by just conquering this one application.
| smrtinsert wrote:
| Maybe guard your investments, but the big question back then was
| "is the internet really that good, will it stick around" and the
| reality is it won argument hands down. The same thing will prove
| true about AI.
| mancerayder wrote:
| I grew up in the 90's and remember being a computer nerd BEFORE
| the .com bubble, and starting my career precisely after it burst.
| Let me tell you one difference I personally am experiencing that
| differentiates the two. Note, this is a pro-'we're in a bubble'
| stance:
|
| In the late 90's and early 2000's, businesses were SALIVATING to
| get online, individuals were finding new ways to benefit and
| profit from it, and massive investment was being made to
| facilitate what was inevitable: an interconnected network of
| everything. Do you remember faxing things ? Paper mail? People
| half in the know were pushing the Boomers and older Gen-X types
| to get on with it and modernize.
|
| Now? Not only are people not CLAMORING for more AI, it's that The
| Powers that Be are forcing it down our throats. At work, we have
| mandatory AI training, we have people getting promoted for
| promoting extremely dubious AI solutions both internally and on
| our product. I log into ANY web site now, whether I'm shopping
| for a vacuum cleaner or logging into a vendor website, and I get
| AI shoved in my face, from from "assistant" I have to interact
| with before typing "agent" to new features I don't care about.
|
| Is there some truth, some merit? Absolutely. But my red flag I'm
| trying to raise is this: never did it feel FORCED in the 90's,
| there was a salivation from individuals to get more online, and a
| reluctance from institutions like elementary and high schools to
| get with the program.
|
| Now? Corporations large and small are shoving it down our
| throats. Why? Well, to justify the crazy spending.
|
| I'm no prophet and the world (and economy) are fundamentally
| unpredictable. But I'll say this. I'm putting my money where my
| mouth is, and I've put in an order to buy a 5 digit dollar amount
| of puts on a big 'AI' type ETF, that'll expire in the Spring.
| It's already wobbling and if you can't beat them, profit off of
| them when they stumble.
|
| There's absolutely something wrong in the current moment, even if
| AI _is_ somehow the future. For one thing, the U.S. economy would
| probably be in a recession right now if it weren 't for this
| insane AI spending. It's wobbled with the recent Nvidia earnings
| release, and I think it is going to dip (not crash, but start
| dipping) soon.
|
| The author wrote:
|
| "None of these companies has proven yet that AI is a good enough
| business to justify all this spending. But the first four are now
| each spending $70 billion to $100 billion a year to fund data
| centers and other capital intensive AI expenses. Oracle is
| spending roughly $20 billion a year. "
|
| In my opinion it's a theoretical arms race 'just because my
| competitor might win', and not based on anything certain.
| exegete wrote:
| Work keeps forcing it on us. I'm hoping the bubble bursts just
| so I don't have to hear about it at work anymore and can
| actually get some work done.
| baxtr wrote:
| No, it doesn't. Go and actually read the crazy story about
| startups like Global Crossing.
|
| Crazy amount of funding, little to no revenue, no competitive
| moat, no demand.
|
| Compare that to today, and you see only the crazy amount of
| funding part is the same.
| coffeebeqn wrote:
| How are the revenues these days? Let's not count Nvidia since
| they're the ones selling the shovels. How are the moats?
| baxtr wrote:
| Revenues are up massively, across the board for the big
| companies but interestingly enough also for startups like
| ChatGPT, Loveable, Cursor etc. Which is again totally
| different than last time where mostly startups were driving
| the insane valuations.
|
| For the shovels part: Actually Global Crossing tried to sell
| shovels. But failed since there was no demand and no moat.
| Now compare that to NVIDIA.
| charlierguo wrote:
| > Crazy amount of funding, little to no revenue, no competitive
| moat, no demand.
|
| Doesn't this also describe Thinking Machines Lab?
| zahirbmirza wrote:
| I am very grateful how the title of the actual article linked
| saved 40 minutes reading the whole thing.
| vjvjvjvjghv wrote:
| What's really scary is the money that's being invested vs the
| .COM bubble. In the end 90s 100 million was a huge investment.
| Now it seems every AI company immediately a billion dollar and
| more valuation. There was a time when this was called "unicorn".
| stevage wrote:
| Fundamentally they seem different. The web looked like it had the
| potential to make lots of money but no one knew exactly how.
|
| AI literally does people's jobs for them. There's not much
| imagination required.
| _verandaguy wrote:
| But currently, nobody's actually making money on AI.
|
| It's also not doing peoples' jobs for them, for the most part.
| AI's supporters do very loudly proclaim this, though.
| rokhayakebe wrote:
| What would it take to make money? Double or triple the
| pricing. Most of these companies messed on pricing initially.
| ChatGPT Plus/ Claude Plus (or whatever it is called) are
| $20/month. These should be $80 to $100/month products.
| Probably even more, $200.
| kergonath wrote:
| But then, how do you get the users and growth figures that
| justify the current boom in infrastructure build-up? A high
| equilibrium might be profitable to a few companies and
| useful to a few rich customers, but it's far from
| justifying current valuations.
| AstroBen wrote:
| Which jobs is it doing, exactly?
|
| From what I can tell at this point it's a solution looking for
| a problem. Incredibly impressive, not so useful
| chermi wrote:
| Customer service.
| mattmaroon wrote:
| One difference is most of the companies listed are old, long
| standing, well-performing businesses. Pets.com had potential,
| Apple, Amazon, and Google had large amounts of revenue even 3
| years ago.
|
| The bubble may deflate but every company mentioned will still be
| standing, whereas in 1999 many of them were basically Ponzi
| schemes relying on further investor dollars to subsidize losses.
| All this AI spending will hurt some investors if the bubble pops
| but just make for a few bad quarters for the big tech cos.
| kergonath wrote:
| > One difference is most of the companies listed are old, long
| standing, well-performing businesses. Pets.com had potential,
| Apple, Amazon, and Google had large amounts of revenue even 3
| years ago.
|
| Plenty of old companies spiked in 2000. Companies like
| Microsoft, Intel, or Cisco. Shovel sellers with a history of
| decent profits. I mean, the NASDAQ crashed, an it is not all
| made of start ups. You sound in denial, but there are more
| similarities than you seem to realise.
| shevy-java wrote:
| Hmm. The comparison makes sense in some ways, but the thing is -
| as much as I dislike AI, I think AI will stay, whereas the
| internet bubble seemed to subside without that much left from it,
| more or less. While I hate most of AI, it does have some use
| cases - the current hype will eventually subside or collapse, but
| I think the core use cases will most likely remain.
|
| "All but Alphabet have seen big share declines in the past month.
| Microsoft is down 12 percent, Amazon is down 14 percent, Meta is
| down 22 percent, Oracle is down 24 percent"
|
| That fluctuates anyway and profits are made by some - nothing new
| here.
|
| I think the world needs to detach from the stock markets though.
| That may not seem realistic right now, but if you look at the
| current US president and the ties to superrich, we really have a
| huge problem now. A few parasitize on the masses. That can not be
| sustained. It is not ethical.
|
| "It will spark a generation of innovations that we can't yet even
| imagine."
|
| I am not so sure. So far I successfully avoided AI, including
| becoming dependent on AI - I am not. So that is good.
|
| I can not really see what "innovation" would make me want to
| embrace AI. Perhaps I can be forced into it, but right now I am
| happy avoiding it.
|
| "Because we humans are pretty good at predicting the impact of
| technology revolutions beyond seven to ten years."
|
| No, we really are not.
|
| "Not only does the AI bubble in 2025 feel like the internet
| bubble in 1999"
|
| It is still not the same.
|
| I feel the article is falling apart there. It tries too much to
| compare to the 1999, but it is not the same.
| shigawire wrote:
| I think I'm asking for the impossible here... But is anyone
| trying to hedge risk in their personal finances?
|
| I'm not a real "investor" (index funds only) but I am feeling
| more willing to forgo gains to be more risk averse just based on
| my own neuroses.
|
| Maybe I cash out and buy T-bills? Gold? Bullets? What's the non-
| crazy person equivalent?
| tempestn wrote:
| I've always used value-tilted indexes, and am hoping that they
| will suffer less when the bubble pops. With that and a healthy
| dose of fixed income (which I chose years ago based on an
| assumption that the equity portion of the portfolio could drop
| 50% in a downturn at any time) I'm trying to stick to the plan
| and not try to time the market. Even though it very much feels
| like the bubble is near its peak (if not just past it!) I do
| still believe on some level that market timing is a fool's
| game, so I'm trying to stay convinced that the steps I've
| already taken are all one can rationally do.
| mancerayder wrote:
| What sort of fixed income that doesn't require much research?
| A broad bond fund?
|
| What are the implications of bond prices in this dubious
| interest rate environment? It seems no one knows what the Fed
| should or wants to do, including the Fed. And if the economy
| is on shaky ground, won't that be bad for bonds if companies
| can default?
| tempestn wrote:
| At least historically, the research I've seen is that one
| is better off keeping risk in the equity side of a
| portfolio, not trying to eek out gains on the fixed income
| side. So that would suggest sticking with intermediate
| duration, government bond (funds).
|
| You're not expecting it to earn much, but it should hold
| its value over the long term. This will reduce the expected
| return of the portfolio, but the goal is to get volatility
| to a level you can stomach, allowing you to ride out
| fluctuations on the equity side. Because even though we can
| all look at the current situation and say the stock market
| appears overvalued, we can't know how much higher it will
| go, when we've hit the top, or once it starts declining,
| when we've hit the bottom. Even experts do no better than
| luck would dictate at that game.
| KK7NIL wrote:
| I would stay away from US fixed income due to low spreads,
| higher than usual inflation and a devaluing currency in
| forex.
|
| I'd say ex-US international value stocks, especially EU, are
| a better hedge.
| tempestn wrote:
| Agreed on globally diversified value stocks/funds.
| Personally I still like to have a fixed income cushion as
| well, though there are certainly arguments both ways on
| that. (And on whether to globally diversify the bonds you
| do hold.)
| mancerayder wrote:
| I have been 'raising cash' by selling stuff in my portfolio
| that seems high risk and is up. I've learned from the past that
| I end up feeling physically unwell when the portfolio sinks and
| stays low for a year, some days 1-5% which make me stop
| looking. Now I'm reducing my risk exposure - yes, that means
| not literally 'cash' but either a money market fund and a tax-
| free bond fund. For years I had a lot of gold miners and a gold
| mining index which only recently popped, I thought that was a
| 'hedge' but now I am convinced the only hedge is cash or if you
| know what you are doing, options. Everything is prone to pops
| and crashes, from big giant index funds, to gold, to bitcoin,
| to large caps, all the stuff people said was supposed to be a
| hedge.
|
| For this round I've bought (well, bought and sold, and now
| waiting to buy via an order) puts on a semiconductor ETF. Since
| I own some of the stocks, if it goes sky high still I win, if
| it crashes I win, and if nothing happens I'll have to sell it
| 30 days before it expires to avoid the theta decay, which
| starts to really bite in that last month.
|
| No one knows anything - which is the environment I'm learning
| to operate it.
|
| A very conservative investor, say a boglehead or a 'value
| investor' would tell you to buy in an index fund and not look,
| unless you know for sure what you are doing and have done
| insane research on a company and it's priced low. They would
| say, buy VTI or VOO if you don't need the money within 5 years,
| and stop looking at it. Oh, and DCA into it versus all at once.
| randomNumber7 wrote:
| If you look at most stock markets over a very long timeline, on
| average it goes up because the economy is growing. So a very
| broad portfolio of stocks or ETFs.
|
| Gold is only for very rich people if you want to have something
| in the case the whole economy goes to the bin.
|
| Bullets if you are paranoid.
| pinkmuffinere wrote:
| Why is that an impossible question? I've moved from investing
| mostly in the SP500 (which is something like %25 big AI
| companies) to investing into other indices which are not so AI-
| heavy -- healthcare, infrastructure, etc. I've also put a lot
| into TSLS (inverse etf for tesla), because I think it is
| particularly overvalued. I still have a fairly high risk
| tolerance, but trying to reduce the amount that I'm tied to AI.
| I'm sure there are even better ways this could be done, but
| this is a fairly simple way to do roughly what I want.
| hnburnsy wrote:
| Property. It is the one thing they cannot produce more of.
| m0llusk wrote:
| Real Estate is currently trading at the highest price to
| earnings ratios ever recorded.
| pedalpete wrote:
| I wonder if we need a new term rather than bubble for these types
| of short-term over-invested sectors.
|
| The Tulip mania (if it existed) was a bubble. It popped, it's
| never coming back. BeanieBabies was a bubble for the same reason.
| NFT art remains to be seen, but I think it was likely a bubble.
|
| The internet was over-invested and decreased significantly when
| looking on a timeline of 5-7 years.
|
| But outside of that, if you were to take the valuation of
| internet companies, it is greater than during the period we call
| the bubble.
|
| We'll see the same with AI. There will most likely be a drop in
| valuations when looking at a medium term timescale, but long-
| term, I expect AI companies will be worth far more than they are
| today.
|
| When the markets drop on a monthly scale, but then rebound, we
| don't call that a bubble, so why do we call this sub-decade
| decline a bubble?
|
| Do you think we should have another term for this?
|
| Same with the housing bubble, yes, it popped and lots of people
| got hurt, but those who were able to hang-on, I think, ended up
| ok, and on a moderately decent timeline.
| kittikitti wrote:
| This is another doomer article about AI. The author openly admits
| to using AI for the article and the irony isn't lost on me. How
| long will we be hearing about the AI bubble?
| molave wrote:
| From what I remember, in past bubbles that burst, everyone
| thought stocks will go up forever.
|
| So, if people are wondering out loud (with widespread traction)
| if there's a bubble, there's probably not one. It may be self-
| fulfilling. The awareness of a potential bubble influences us to
| be more cautious.
| hnburnsy wrote:
| Pets.com-Chewy
|
| Webvan - Instacart, DoorDash, Amazon Fresh
|
| Kozmo.com - Postmates, Uber Eats, Gopuff
|
| Boo.com (fashion) - Farfetch, Net-a-Porter, ASOS
|
| Broadcast.com - YouTube, Netflix, Twitch
|
| The dot-com bubble didn't prove the internet was a fad -- it
| proved the internet was inevitable, but the valuations assumed
| adoption would happen in 2 years instead of 15-20. To me it feels
| like the AI inevitability will be much quicker.
| bluefirebrand wrote:
| > To me it feels like the AI inevitability will be much
| quicker.
|
| AI is accelerating "let them eat cake" at rates never seen
| before in history, so I imagine the violence will follow soon
| after
| toephu2 wrote:
| The fact that I'm getting rate-limited every day even though my
| company has enterprise-level subscriptions to gemini, chatgpt,
| etc. tells me this bubble is far from popping. I predict within a
| year 80%+ of devs will be using LLMs to write most of their code
| for them.
| ManuelKiessling wrote:
| I know this is semantics pedantry, but there has never been an
| ,,Internet bubble", only an ,,Internet-related stock market
| bubble".
|
| It's not as if there were ten million people using and/or
| building on the Internet, and then this bubble popped and for
| some years there were only ten thousand people on the Internet.
|
| And I think the same is true for ,,AI usage/adoption".
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