Comment by pigpop
24 days ago
Weird that you mention the stock market and then conclude that there are only two outcomes: bust or success. If anyone can learn anything from the stock market it's that boom and bust are cycles that oscillate around a trend and everything tends to revert toward longer term trajectories. So, yes everyone is caught up with and overhyping AI and yes there will be a bust after the boom at some indeterminate point but that isn't the end of the story and we'll see a rise and further oscillation afterwards while we get better at applying the technology.
You're describing the Gartner cycle: https://en.wikipedia.org/wiki/Gartner_hype_cycle
No, he’s describing the Business Cycle, with literature about it predating Gartner by a few centuries: https://en.wikipedia.org/wiki/Business_cycle
Your comment and the parent comment are not in disagreement.
Yes and my partners father has been calling for a bust for the last decade and everything has simply taken off.
As a bear that's been very confused by markets failing to exhibit mean reversion in 2019 and 2022, and now with the Hormuz energy crisis, I've thought a lot about this. There's a lot of new things happening. Fed/QE intervention that has never stopped, just been more well disguised. Fiscal/government spend intervention. I think Mike Green's work on the rise of passive investing is really good, in particular explaining how it prevents mean reversion in absence of changing net cash flows into passive instruments. Passive will also induce or worsen the bust if net cash ever starts to flow out passive. Green's youtube interviews are great.
All to say, your SO's dad would have been right at any point prior to the current financial cycle. Knowing what's changed doesn't make forecasting easier though.
I don't see any taking off actually
I think they meant the stock market more generally? S&P 500 is up what, like 4x in the last 10 years?
12 replies →
I think in a way we have seen a take off, by detaching the hype bubble from success metrics. Companies making products being bought by companies making products, that are hyped by machines, bought bymachines and evaluated for viability by machines. If economy is to hack the API of VC this has taken off! For now.
I mean, there's a reason I started with a distancing phrase about a "reasonable argument"; I think what I'm suggesting is an interesting lens but does not capture the whole picture.
But also, even if bust is business as usual in the big picture and not a social disaster long term, it's of course not what individual investors want for their particular current investments.