> Enron is often remembered simply as one of the largest corporate frauds in American history. While this is true, there are lessons to be learned from the way investors acted during this time. At its peak, Enron was viewed as one of America's most innovative companies. Investors believed it had fundamentally transformed the energy business through sophisticated trading platforms, financial engineering, and technology-driven markets. Its stock price reflected extraordinary confidence in the company's future rather than its demonstrated earning power.

> Part of that confidence was fueled by Enron's use of mark-to-market accounting, which allowed the company to recognize estimated profits from long-term contracts immediately instead of waiting for those profits to actually be earned. Future expectations effectively became present-day earnings. Those projections were wildly "optimistic". When investors realized the expected profits were unlikely to materialize, confidence disappeared almost overnight. Between August 2000 and November 2001, Enron's stock collapsed from roughly $90 per share to just pennies, erasing billions of dollars of wealth and devastating employees and retirement investors alike.

Draw your attention to:

> Despite the advancements created through use of AI and the increasing numbers of applications, investors still face an important question: How much of today's valuation reflects profits that have actually been earned, and how much reflects profits investors hope will eventually exist?

and

> Artificial intelligence represents one of the most significant technological developments of our generation. Its long-term impact may ultimately justify much of today's enthusiasm in the market. History, however, reminds us that markets frequently price revolutionary technologies well before their economic potential is fully realized and fluctuations occur in even the most stable sectors.

> The lesson from Enron is not that today's AI leaders are engaging in similar behavior. It is that investors should remain cautious whenever valuations become increasingly dependent on future expectations rather than demonstrated earning power.

TLDR https://en.wikipedia.org/wiki/Reflexivity_(social_theory)

Anthropic's IPO prospectus illustrates this fairly well.

Anthropic's IPO Prospectus Is a Fucking Doozy - https://news.ycombinator.com/item?id=49914149 - September 2026

Anthropic's IPO prospectus shows AI vision, surging costs - https://news.ycombinator.com/item?id=49886005 - September 2026

> Matt Levine's summary of Sam Altman's (and most of AI industry's) business plan remains accurate: "We will create God and then ask it for money."