What can we do? Short those companies.

I mean, sure we're in a bubble, but the trick is to call it, with that old Keynes quote about the market staying irrational longer than you can stay liquid.

But also: > "So, you're saying a third of the stock market is tied up in seven AI companies that have no way to become profitable and that this is a bubble that's going to burst and take the whole economy with it?"

> I said, "Yes, that's right."

that is something different in this case isn't it? those seven companies making up a third of the market do not need to become profitable, they are insanely profitable. Mostly they invest a lot in AI but if that doesn't pay out, all but NVidia have their day job to go back to.

The difference to the dot com bubble is that the unprofitable companies are privately held and the public companies are extremely profitable and have finally found something to soak up their ridiculous profits other than stock buybacks. How a crash affects anyone other than high-net-worth individuals with money tied up in VC funds is not explained.

Real estate and crypto on the other hand...

Its a matter of time until the implosion happens.

As a corporate finance and valuation geek, Ill warn you now: dont try and time mood and momentum. Thats what is driving much of the valuations being thrown around.

If this blows up big time and it is found that the Big Tech firms were operating on lies and false hope, there will be consequences - in the form of shareholders demanding cash returned and setting limits on the cash balance held by Google et al. Apple has stayed smart staying out of this nonsense and not doing M&A.

Investing in projects with negative NPV destroys the wealth of shareholders.

So I do think we're in a bubble, but I also remember when all the discussion around here was around Uber, and I read many, many hot takes about how they were vastly unprofitable, had no real business model, could never be profitable, and only existed because investors were pumping in money and as soon as they stopped, Uber would be dead. Well, it's now ten years later, Uber still exists, and last year they made $43.9bn in revenue and net income of $9.8bn.

There is on the other hand a strong correlation between the sky is falling and the sky not actually falling.

It makes one tempted to take the sky is falling as a buy signal.

I disagree with Doctorow's conversation with a student at Cornell. You can prevent further misallocation of funds by agitating against "AI" usage in general. If you are at Cornell, organize meetings, protests etc. against the dehumanization and decreased job prospects.

As a student, you have much more freedom to protest than as an employee, and that is where the resistance must come from.

We also need to take into account that while there is a bubble, most of the insane amounts of investment that were seen in headlines have not materialized.

Nvidia will crash, Tesla will crash (Optimus robot nonsense) but Microsoft and Google should be fine. If there is a bailout, protest again. preferably in the physical space and focusing on economic topics rather than culture wars (which is what the politicians want you to focus on).

Something of a logical leap here: if LLMs aren't capable of replacing workers and it's all lies, then what company is going to engage in mass layoffs without seeing results first? Sounds like companies that deserve to go away.