Comment by michaelmrose
14 hours ago
Because traditionally the pop is delayed while those who realized most of the gains attempt to offload the risk to other parties. Whether this works or not at some point it becomes an inevitable and self reenforcing feedback loop.
Just investing less in risky things on the run up means you personally perform worse so even in known bubbles you don't see reasonable slow downs instead of disastrous pops.
> traditionally the pop is delayed while those who realized most of the gains attempt to offload the risk to other parties
What? Source? Plenty of investment bubbles pop before the bag is passed.
This thread involves a lot of people looking at something they don't like and presuming karmic forces will give them what they deserve. There is no reason these companies, even if massively overvalued, have to "pop."
That's fundamentally different from e.g. the financial crisis, or the 2023 bank collapses, or even the dot-com bubble. Those did not have the ability to self correct. There was no slow deflation other than through a bailout.
> There is no reason these companies, even if massively overvalued, have to "pop."
This is a wild thing say without any qualification.
> This is a wild thing say without any qualification
It’s really not. Bubbles are notable because most elevated asset prices slowly go down. And they have common characteristics that force the reckoning. Usually debt. Sometimes operational leverage.
I'm genuinely curious why you say this is different from the dot-com bubble?
As I see it, this is the exact same situation - wildly overvalued companies based on investor exuberance, the underlying business is not capable of supporting this kind of valuation. IPO tends to be the crunch point at which this overvaluation is exposed. Once exposed, the valuation correction spreads to other similar businesses quickly and the bubble pops.
What's the self-correction ability that AI companies have?
> genuinely curious why you say this is different from the dot-com bubble?
A lot more revenue. Dot coms were going public pre revenue. And Anthropic is profitable. Both it and SpaceX wouldn’t be dependent on further stock sales to stay alive—that lets them weather a downturn.
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If what you say is true and it predicts the future, then everyone would be selling right now. The fact is, no one knows when or if the bubble will pop, and we will only be able to say in hindsight whether your comparison is correct.
I said attempt to offload see mortgage backed securities for one such attempt.
The point is that nobody wants to be the first out of a hot market nor the last so that bubbles everyone knows are bubbles first hang on despite it being broadly believed to be so and then crash as people head for the exits.
Broadly people are taking on debt to realize profits that may not exist. Retrospectively widely acknowledged bubbles like every crash in the last century all popped im not aware of any big enough to cause a recession that petered out slowly. Since we don't need to look up 100 years of crashes together can you name some similarly large issues that were resolved slowly over time?