Comment by saidnooneever

> Also some EU pension funds are already in the process of divesting from US markets...

And where will they go to?

I wish we would start paying proportional attention to business news, instead of treating AI (or any other "cutting edge") companies as economy-defining and giving these 50+% of the attention.

It is especially telling if we try to list out all the psychological biases at play:

  - Availability & salience bias - vivid, memorable things feel more important than they are
  - Narrative bias - humans tend to think in stories, and AI tells plenty
  - Recency and novelty bias — new things feel more consequential than established ones (this one already drives like 80% of all HN content btw)
  - Proportionality neglect - people are bad at intuitively grasping what percentages mean, even if they see the stats
  - Social proof and reflexivity - coverage signals importance, and drives more coverage
  - Status quo invisibility - things that work reliably become invisible (surprisingly, HN is really good in terms of working against this bias, I feel like at least 5% of all posts are some niche "inner daily workings" topics)
  - Speculation premium in attention - uncertainty generates more discussion than certainty
  - In-group signaling - cutting-edge things are status markers among influencers

I've recently learned a new finance term, "float", and I want to check if this makes a difference to this discussion?

https://en.wikipedia.org/wiki/Public_float

I hear S&P 500 is weighted on float rather than on market cap, while Nasdaq 100 is based on market cap.

If they go bust won't it likely trigger a massive market crash? Afterall index funds will be forced to sell other US stocks to buy them, bringing their values down. Non-passive investors will predict that and divest even more and so on...

And that is on top of the IPO companies losing value themselves, this seems likely to trigger a doom-loop until the market reaches a low enough value. This will likely trigger layoffs and companies reducing spending and investments further depressing the economy. Added inflation from oil prices and war.

This doesn't seem like one big balloon ready to burst, but more like a house suspended by hundreds of balloons and they are about to be ran over by an airplane.

That's if everyone were acting perfectly rationally, but a world in which those three companies go bankrupt would have everyone panic selling every equity possible like it's the endtimes.

You're not modelling the contagion here. The problem is that while any single one isn't that big a share of the S&P 500, similar companies do make up a lot collectively. Excl some non-tech/AI firms:

NVIDIA Corp NVDA 8.02%

Apple Inc AAPL 6.53%

Microsoft Corp MSFT 4.84%

Amazon.com Inc AMZN 4.01%

Broadcom Inc AVGO 3.36%

Alphabet Inc GOOGL 3.32%

Alphabet Inc GOOG 3.09%

Meta Platforms Inc META 2.23%

Micron Technology Inc MU 1.71%

Advanced Micro Devices Inc AMD 1.19%

Oracle Corp ORCL 0.99%

That's 40% of the S&P 500.

And if anything happens to the AI bubble all of these go down together. While they won't all go to zero and cause a "-40%" overnight, Nvidia's rise is so meteoric that they will trigger a -8% and the rest's valuation has more than doubled since 2023. Even Apple, which isn't much of an "AI company", is still following the AI-tech hype.

If Nvidia eats shit, and the others go -50%, that translates to an overall ~-24% on the stock market.

Before any contagion outside the tech industry is considered. Look at the Dotcom Bubble and a -40% to -50% crash is quite plausible.

They will drag the rest with it.

thank you

You've been told a lie. Productivity has increased every step of the way even as populations shrink and the elderly cohort grows. Most of those productivity gains, i.e. the added value produced by each worker, has gone to shareholders' profits. If we had a reasonable tax system that captured more of that surplus value (which mostly goes offshore and does not in fact "generate more jobs"), then we'd have no problem at all funding the pension systems, and much more.

each few years the pension age rises 69 for me now, but it will likely go up further. much further up is beyond the average life expectancy...

> unless automation taxes pay for it

But this doesn't solve the problem in any way; it simply leads to production drop.

I mean, this is literally the logic of every communist government in the 20th century. They had the same logic that "given the mechanization of agriculture, food practically produces itself; you just need to throw a seed in the ground and give it a couple of tractor rides, and the earth will do the rest. Therefore, we need a tax on such activity, because we have enough resources to feed everyone".

In other words, it's literally a pure tax on automation. The results were mass deaths from starvation every single time.

Originally pensions were created so people who could not work would not be destitute.

The fact it became an all-inclusive all-year-round vacation reward is an anomaly which is getting corrected. Too bad for us we're the generations holding the bag.

I doubt that a FAANG programmer from hacker news has to work till they die. You are doing something wrong.

Current system isnt great but works. Just fear uncertainity doubt here.