An inexperienced portfolio manager that’s never seen a down tech market in his life has created a massively leveraged position on frothy assets in a bubble and the bubble is looking ill. What could possibly go wrong.

Many of these AI plays are massively entangled and leveraged. It all looks good until it doesn’t and when there’s a hiccup things unravel quickly and exponentially. I fully expect in the next 12 months we’re going to see some rather spectacular investment implosions with folks losing their shirts. Get your popcorn ready.

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forgetfreeman 4 hours ago | parent | next [-]

I'd be excited for the show myself if I had any idea how to prevent my portfolio from tanking when this clusterfuck finally unravels.

	▲	mikestew 2 hours ago \| parent \| next [-]
		Sibling comment says "diversify", and I tend to agree. I've seen some shit, man. 2000 dot bomb, 2008, bumps along the way. 2000, I was in tech stocks like everyone else, lost a bunch. 2008, learned my lesson and was much more diversified. Lost some money, but not nearly as much as others. It was amazing watching, say, the S&P crater while our portfolio..just didn't. It just went down a fair chunk, and came back later (and probably didn't come back as much as it did for those that held on to their equities). Diversification is a smoothing function. You won't get as much upside holding 25-30% bonds, but your portfolio won't suffer as much on the downside. If you're young and not ready for boring old-people investments like bonds, at least limit your tech stock exposure. Go buy boring utilities or something, maybe Berkshire Hathaway B shares. One other advantage to diversification that I hear very little about is this: if you have to sell in a down market, you can sell your bonds and hold on to your equities in the hopes they'll bounce back. Regardless, you're not held to selling depreciated assets like equities, you can sell the bonds which are boring, but probably actually went up while everything else turns to shit.
	▲	cmiles8 3 hours ago \| parent \| prev \| next [-]
		Stay market diversified and you will be fine in the long run. The AI bubble popping will be painful for all in the short term but a blip on the radar in the long term. These hedge funds get wound up in complicated, leveraged, illiquid layered stacks of (often private) investment vehicles that go from highly profitable to financial nuke overnight. Thats how they just get wiped out while everyone else just has a bad day. Ironically the whole point of “hedge” in hedge fund is for this to NOT happen but we’re seeing increasingly inexperienced players like here just building a financial nuke and then acting all surprised when it lights off.
	▲	holtkam2 2 hours ago \| parent \| prev [-]
		That question is probably what inspired someone to create the first ever derivatives market

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bwfan123 3 hours ago | parent | prev [-]

> What could possibly go wrong

A barometer of the mania and one for the history books. A 23 year old wunder-kind publishes a 156 page prophesy with a catchy title which was lapped up by the silicon valley elite and funded to the tune of 10s of Billions. And, not sticking to his lane, the wunder-kind enters the finance world thinking his brilliance translates there too, and he was promptly taken to the woodshed by the wall street sharks.

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cmiles8 3 hours ago | parent [-]

Wall Street eats these types for breakfast and then moves onto another meal for lunch. Once more sophisticated players smelled blood in the water they just had a field day here. There are many more setups out there like this and there’s a whole army of folks just salivating for when they can blow up more AI over-leveraged financial nukes inexperienced and FOMOed investors have assembled.

	▲	bwfan123 3 hours ago \| parent [-]
		> leveraged financial nukes inexperienced and FOMOed investors have assembled A lot of debris waiting to happen in data-center debt for sure. The next several years are going to be interesting with more of these type of blowups. This is a canary in the ai-wreck coalmine.