[mangecoeur]

Many of the dumb ideas being hyped in this AI bubble make sense viewed through this lens.

Data centres stirring up opposition? Sell a sci-fi vision that you will move them to Space! And reassure your over-extended investors that the data centre buildout rush you’re committing to isn’t going to get bogged down in protests and lawsuits.

The people hyping this stuff are not stupid, just their real goal (make as much money as possible as quickly as possible) has only a vague relationship to what they claim to be doing.

[smcin]

If Arthur C Clarke was still alive, he would be much in demand as sci-fi frontperson for these.

[DamonHD]

I think that he had more sense...

[rsynnott]

At the point, it's beginning to feel a bit like the 419 scam (where you make the details deliberately absurd so as to ward off people inclined to be sceptical early, leaving you with only the easiest marks.) SMRs! Data centres in space! "phD level AIs".

[eru]

You can short the publicly traded companies that do this.

[jeltz]

No, because to do that and not ruin myself I need to know roughly when the double will burst. Just knowing it is a bubble is not enough.

[jnwatson]

Exactly. I shorted Sears in 2005 when Lampert took over. I knew he was going to drive that company into the ground.

Sears went bankrupt in 2018. It took a long time for the market to catch on.

[datavirtue]

Most investors can time this aspect of the market accurately enough. It's tough for these people to stand by and watch profit being left on the table for a year or two, though. So they get back in, seeing how long they can leave their hand on the got plate.

Myself, I made the decision to go to cash a while ago, right before the recent AI pullback. Things were going great for a week until I started seeing all that money go unclaimed. I get back in, and the pullback I predicted happens. It was my own conscious decision to look past the gorilla in the room to get more free treats. I'll be fine but this is a good anecdote for how these things unfold.

[vpribish]

It is not at all true that "Most investors can time this aspect of the market". This is laughably, absurdly, wrong - as if most people could predict the future. Here's a little advice I sincerely pray you accept : don't trade options.

[rsynnott]

The market can, as always, remain irrational longer than you can remain solvent, or certainly for longer than _I_ can.

Like, come on, you must understand what a stupid response this is? “There is a bubble” is not a sufficient thesis to, well, do much of anything on.

[datavirtue]

Really? Logic wouldn't dictate that if I'm up 300% or more over two years and everyone is starting to get jittery about an AI bubble that perhaps I should pull out now and await the pullback? If it happens in a year, and I can buy back in at a 15-20% discount, that is also a return!! Do you hold for possibly another 5%? That doesn't make any sense. Your cash gets 4% a year just waiting--paid monthly.

[Earw0rm]

Yep, taking your winnings if you're up 300% isn't a bad idea, but timing things right on a short is much harder.

[rsynnott]

Yeah, that you could do, though even then if the timing is sufficiently uncertain you might be in trouble, and it's particularly risky in a time of stubbornly higher-than-ideal inflation. If you happened to have a bunch of Hype-y AI Ltd, then sure, probably. Far less clearly a good idea if you just have the S&P500, though.

It's further complicated by the fact that most of the worst examples of AI hype are not public. Like, if and when the bubble bursts, the hyperscalers will likely get burned, but they're not going to go to zero or anywhere near it.

And that's assuming you already have stocks; it's very different, risk-wise, from shorting or buying puts.

> Your cash gets 4% a year just waiting--paid monthly.

It really doesn't, due to inflation.