Posted: 10/5/2025 11:03:07 PM EDT
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Feels like we had some great gains across many tech stocks and funds (also realizing some funds are themselves tech-heavy), but we gotta be just around the corner from a big correction. Where are you going to run when the time is right for you ? REITs (but housing market is not great right now), utilities, energy (maybe an untick with the EV market faltering) or just dump it in a MM/t-bills ? |
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Originally Posted By @Skydivesnake: but we gotta be just around the corner from a big correction. Your posts interest me greatly. Can you share insight onto this perspective please? Also, if you are open to it, sharing age and employment status? |
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Why do you think the AI bubble is going to burst? Aside from there was a ""DotCom" bubble. Are you seeing something, just a feeling or ? The way things are progressing, I think AI is here to stay. My thoughts and fears are it's going to make many rich, but put so many out of work. I read something today where they said due to AI, Gen X will be the 1st Gen to need UBI. |
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| I don’t think it will burst with in the next 5-10 years. There is a lot of money being invested of the likes that makes the dot com era child’s play. These investors are in it for the long haul as their full potential won’t be fully realized until about 2030. I know this because i work in an industry that commissions AI facilities |
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Originally Posted By Skydivesnake: ...but we gotta be just around the corner from a big correction. It is plausible we are just around the corner from a correction, that is not big. When US leaders stop debasing the currency, a big correction becomes plausible. This is near-term very unlikely. |
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| I’m not planning on fleeing tech anytime soon. Even if we do get a correction I feel like it will only really be to shake out the trash. Too many companies are making too much money for it all to fall apart. It will continue to be a stock pickers market in which avoiding the losers is just as important as picking winners. |
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If it is a bubble, and that bubble pops dot-com style, I don’t think I’ll recognize it fast enough to act in a way that benefits me, and I don’t think I’ll be able to predict which AI-related companies live and die (except maybe the ones that survived the dot-com bubble). So I don’t really have any flight-to-safety plan for it, other than some stop-loss orders. I suspect that there is some degree to which this will happen, so I mostly just avoid concentrating too heavily in companies that derive most of their revenue from the boom or companies with no clear path to profit. I’m mostly in index funds anyway and broad ETFs, so I’m not too bothered. I’m also curious what led you to worry about this (though I think it’s a reasonable worry)….you don’t happen to spend much time on social media like Reddit or Youtube, do you? There’s a lot of gloomy propaganda available to consume that could lead one to watch their savings get slowly eaten by inflation. Edit: @Procat yeah, I think that among the scenarios that are plausible for the ending or pausing of the AI boom, a shaking out of the trash is most likely. And then everything goes on. I think that a genuine crash of related sectors or the whole market would require more catalyst than just progression of the hype cycle. In other words, even in a tech-heavy portfolio, there’s a good chance that the bear narrative of impending doom is overstated. Edit 2: we’re over here talking about bear protection, but IVES has gained like 3% just today. |
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Take a quick look at all of the AI companies. We are in a similar bubble as the one we were in with the .com era. Currently as it is today, right now, across the board with Tech companies, P&E is not there. Even for the big 5 companies. (Meta, Alphabet, Microsoft, xAI by extension OpenAI, Apple) are spending more than earning with AI. The big ones will be fine. All of the smaller ones will either go bankrupt or be bought and absorbed into other bigger companies. I give it less than 2 years until something we would consider a burst happens. Likely 2nd or 3rd Q next year we will see some sliming and thinning of the heard. And more established companies will get stronger. But there are thousands of AI companies all looking for capital and money. Not all of them will survive. And smart money will be looking for the signs. Like AI companies having so much capital they are buying food trucks, giving away food, and listening to the pitch they have is payment. We are in a bubble. I would keep an eye on the smaller companies (unknowns) if you are invested in them. Look at where they are spending their money, closely. If their expenditures for all employees & management (salaries not including stock options )are greater than or more than R&D, expansion & acquisitions, that company is in trouble. The companies that are buying up all the tech and smaller firms will be the ones to look to invest in long term. |
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Recall the dot come crunch era of the late 90s - most people still used a modem and AOL to read email and news. TV came to your house via an antenna or cable. No smartphones, no streaming, you couldn't even buy music online much less stream movies or TV. Amazon only sold books and buying things online was a novelty. All that money invested in tech and all that came from it was stupid cat pictures on AOL and some free digital porn. AI has economically viable uses today and more and more become viable every day. It may not be the utopia some companies claim, but I don't think the pullback won't take anywhere near the 7 years to recover like the dot com crunch required. |
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Originally Posted By smullen: Why do you think the AI bubble is going to burst? Aside from there was a ""DotCom" bubble. Are you seeing something, just a feeling or ? The way things are progressing, I think AI is here to stay. My thoughts and fears are it's going to make many rich, but put so many out of work. I read something today where they said due to AI, Gen X will be the 1st Gen to need UBI. The internet was here to stay as well but that didn't stop a bubble from forming and popping. The lesson from the DotCom bubble wasn't that people foolishly invested in the wrong thing in general. The lessons from the DotCom bubble were: 1) Investors weren't wrong, they were just early 2) Investors were heavily oversubscribed 3) There were plenty of losers (pets.com, geocities, netscape) even though the overall market for internet tech based companies ultimately exceeded the peak value of the bubble AI will probably play out pretty much the same. In 20 years, there will be AI companies whose value far exceeds their current valuations. There will also be lots of AI companies that go "poof" along with your investor dollars and you never hear from them again. It's also possible that after the initial surge that there is a period of up of several years where valuations lag while the actual business catches up with the hype...just like DotCom. And that's all to OPs point that the AI bubble could burst at some point with investors needing to find a safe place to be for a few years until the market gets its footing and starts running again. How far we are from the peak remains to be seen though. This is still a really new thing and I'm not so sure I would bet right now that we are near peak hype quite yet. DotCom was in the mainstream consciousness for a solid 5 years before the bubble popped. AI is maybe just a couple years in. |
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Most of the AI implementation out there is utter trash. It is AI, just to jump on the bandwagon of saying you have or use AI. There is some really good use out there as well. I think there are two bubbles or plateaus that we will see. One will be capacity. We dont have the infrastructure both power and computing to support the current growth. Not without real investments in things like new nuke plants. The other is the dying off of all the "companies" and "consulting" that is duct taping all the shit AI implementation into every business, website, and service imaginable. Right now people are hiring and spending money on anything, just to be on the train. At some point the trend of "we got AI" will come to a head and there will be a big fall off of these companies and people. These shit companies are also the ones throwing out dev all over the place that is almost completely done by AI and is worse than trash. |
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one big difference from dotcom bubble and now is how people are able to invest. People don't need to go through a broker to buy and sell stocks these days and the information readily available now vs then is amazing. Will that make the situation better or worse? I am not sure what the result will be but speaking only for myself, I am far more informed and diversified then I was during the dotcom era As for any potential AI bubble bursting, except for some very minor speculation, the majority of my investments in that area are in companies that I expect to weather any storm and that if a storm comes, I will double down on if the market crashes. |
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Originally Posted By woodsie: 1) Investors weren't wrong, they were just early 2) Investors were heavily oversubscribed 3) There were plenty of losers (pets.com, geocities, netscape) AI will probably play out pretty much the same. In 20 years, there will be AI companies whose value far exceeds their current valuations. There will also be lots of AI companies that go "poof" along with your investor dollars and you never hear from them again. Recall that, at the time of the dot com crunch, Amazon only sold books and that buying things online was a novelty, most people got online with a dial up modem to AOL, smartphones were nearly a decade away, and you couldn’t buy music or movies online. For a decade AFTER the dot com crunch Netflix was still sending physical dvds to you via USPS. And now you can buy a refrigerator that streams video from inside your fridge to your phone so you can see if you’re almost out of mayonnaise when you’re at the grocery store - who would’ve guessed that in 1999? There are AI applications that will be wildly successful that nobody has even imagined yet. There will be a lot of companies that fail or get bought up, and some will be wildly successful. My take is that bleeding edge tech is great, but the companies that succeed will be the ones that solve real world problems or are the first to make a product that people want to buy. |
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Altman etc al were hyping LLMs as AGI within 5 years because of the belief that they would scale exponentially like the 3rd and 4th generations. It triggered both a messianic belief in "AI" and a gold rush to be first. Chat GPT 5 did not scale. It is an iterative improvement. "AI" ranges from extremely useful to all but irrelevant across business applications. The subtext of the big pitch "reduce payroll costs while increasing efficiency" by replacing humans hasn't proven feasible. It extends workers capacity in tech-centric fields. In others, it's an overpriced search engine. With a dash of cold water, half a billion dollars |
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For the dotcom bubble, yeah a lot of trash got bought, but a lot of the infrastructure got built that became important as the internet became popular. And some of it got built by companies that don’t exist anymore. Some companies that exist today, and produced important or even critical things that are still being sold and used today that still haven't recovered to their peak. Like Cisco. I do *think* I see a lot of similarity with the general public being really excited about something that I think will take a long time to live up to the hype, if ever. |
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Saying the bubble is going to burst because of fundamentals, news or history is a fools errand. Back during the .com bubble algorithmic trading was in it's infancy, now it is about 3/4 or the order flow. As a result the market is completely different, we go where the algo's want and only in extreme circumstances do real peoples trades matter. Now if you want safe harbor because the tail is wagging the dog and a gamma shitstorm of epic proportions is brewing, the dispersion trade is falling apart, or simply because Joe Blow on the street is talking stocks, I'm on board with that. No specific stocks, just boring dividend paying stocks, with options positions to hedge risk. Beta weight your account and be happy with how many SPY deltas of risk you have and look at your risk array and be prepared for what your account will look like at 6200, or 7200, or 5200, all are possibilities in the near future. Make small moves now to prepare you if any of that happens. This isn't a stock pickers market, or a traders market, or investors market. This is a risk managers market, and people who are prepared for the risk, or prepared to react to moves will do well. You will not predict this market. |
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Some AI companies will fail others will prevail. As long as there's a demand for AI it'll keep growing. Right now there is a lot of demand. If anything the safe thing would be to set trailing stop losses, sit back and enjoy the ride. There is no "safety" in any investment. Some are less risky. Consumer staples, gold, REITs and such are good to have on the side. |
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The dot com bubble burst because none of the stocks were actually making money, and the confidence in the companies was shaken. Meta and Google and Apple and Amazon still make plenty of money. Open AI is more of a question mark, but it is bankrolled by Nvidia and Microsoft. I don't see how the bubble bursts for a while - it is more of another tech bump than an AI bump. There really isn't a single profitable AI core business currently. Blockchain was this was in tech a few years ago too, everything was "crypto, blockchain". Same with "cloud". It was a fad. AI is a fad. There will be a new one soon. But a lot of private equity folks are going to lose a lot of money, unless they can bring BS unicorn's to market. |
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Originally Posted By Middlelength: The dot com bubble burst because none of the stocks were actually making money, and the confidence in the companies was shaken. Meta and Google and Apple and Amazon still make plenty of money. Open AI is more of a question mark, but it is bankrolled by Nvidia and Microsoft. I don't see how the bubble bursts for a while - it is more of another tech bump than an AI bump. There really isn't a single profitable AI core business currently. Blockchain was this was in tech a few years ago too, everything was "crypto, blockchain". Same with "cloud". It was a fad. AI is a fad. There will be a new one soon. But a lot of private equity folks are going to lose a lot of money, unless they can bring BS unicorn's to market. Some of the companies in the dot com bubble were making money, in fact you mentioned a few of them, throw in E-bay, Intuit, Cisco and a few others, they were making money and had a real business so they survived. It will be the same way this time, companies will lose a bunch of value, but in a few years they will climb to new highs. Others will go away because they are just issuing stock or crypto and not using the money raised to actually create anything. Whats really going to cause problems is the incestuous relationships between all these AI companies, they borrow money to give it to each other and put out press releases. Something fairly small is going to cause the problem to snowball, maybe it was Morgan Stanley's change in crypto trading rules, maybe a margin rule change in silver or gold. It'll happen in the next few months, you wont notice it at first, but it will happen because they want it to, probably a nice 10-20% pullback early next year. People will say everything is ok, probably by about April, but the damage will have been done and the collapse will continue, next September/October will be the real collapse "a black swan" " nobody could have predicted this" blah blah blah. It's coming, it's not here yet, the only question is will people prepare for it, or ignore it then panic at the bottom? |