Mr. Money Mustache’s latest post is about this and I hope is right. Basically he thinks it will not destroy retirement, viewing market panic as a recurring historical pattern driven by fear rather than fundamental economic ruin. Instead of reacting to macroeconomic anxiety, he emphasizes that true wealth stems from human productivity and resilience, suggesting individuals ignore the news cycle and focus on personal financial habits. Also recaps the basics so a great reatd. We can do it one step at a time to increase freedom!
He’s predicted around sixteen market crashes so far by my count. The dude got lucky once and has been riding the fame ever since. I’m not necessarily disagreeing that this whole thing will crash, but timing is the important part and he keeps missing it. I’ll not be making any financial decisions on his recommended timeline anytime soon. He may as well be Dave Ramsay imo.
Trump will make sure it doesn’t crash by avoiding all regulations and anything that would make shareholders sweat.
“AI investment” is the reason why we’re not in a full blown “official” recession. He doesn’t want a recession for “his” economy while he is president. When the AI bubble bursts the GOP will be blaming the Democrats and will ask to be put back on power again
The question is can he float the problem for that long, the current pace of AI investment simply requires more returns than are possible, something like 1/5 of the entire GDP of the united states at a minimum yearly. At some point the emperors lack of clothes will become impossible to hide no matter how much they try.
Unemployment benefits in the USA? LOL! It’s gonna be a real shitshow when the bubble bursts.
Unemployment benefits in California are $450/week max. The average rent for a one bedroom apartment in California ranges between $2,100 and $2,460 per month, depending on the source and specific metro market.
It’s a safe bet.
The bubble will burst at some point, that’s our boom-bust cycle.
Coincidentally, The FED was made to stop boom-bust cycles. It’s never, ever worked, and it will never start working.
Yeah the fed did a great job preventing the Great Depression lmao. You know what really stops boom/bust ? Taxing the wealthy and holding them accountable for their crimes. Also all those pesky monopoly regulations, post Great Depression regulations like glass stegal and other regulations that have been systematically dismantled in the last 40 years.
Can you tell us what the FED is? The Federal Reserve?
Yeah, that’s another term for the Federal Reserve.
Just like the housing bubble, right?
Right??? <while wearing big titties>
Soapy* tiddies
He’s been saying this for 4 years
And it’s somehow a surprise to you that the worlds richest corporations collectively can keep up an investment bubble for four years?
They’ll not be able to do it indefinitely, and profitability of any LLM business is not on the horizon so far.
I’m saying Burry’s opinion on the timing is irrelevant.
He calls a crash basically every quarter since the '08 crash recovered. If you shorted every time he suggested something was going to burst “sooner than later”, you would already be bankrupt.
But he’ll be right everyday after it happens
just hope the crash and burn doesnt singe the rest of us
Oh boy, its going to fuck us especially hard.
Tax payers paid for 2008, their going to indebt our kids once again.
The thing is the collapse is like a random chance every week/day. At some point some human being will decide fuckem im not working all weekend to bail them out again and that’s when the crash will happen. That’s literally what happened in 2008, bear sterns and Lehman brothers for decades just rolled over their debt until one day the banks were just like yeah nah we had enough go ask the govt for help and that was the crash. It easily could have happened months earlier or months later, some bank execs were just in a room and finally decided they wanted to get off the ride one and that was the day it crashed. Just human emotion at that point if it would have happened the prior month or following month instead.
Exactly this. The entire market is held together by people who are willing to bend over backwards to keep it working. And all it takes is two or three of those to decide “enough is enough” at the same time, and suddenly all of the market’s sins are laid bare. And at that point, the investors panic and everything snowballs.
They’ve been saying the “bubble is going to burst” for a while now. If they keep saying it eventually they might be right. Then everyone will jump up and down trying to claim they were the ones who rightly predicted it. A quick search by date shows plenty of articles discussing the AI bubble from 2025, 2024, and even a rare few from 2023. Three years of doomsayers waters it down to meaninglessnes even if they‘re eventually right.
I bought a house in 2016 from a couple moving to Texas saying the housing market was going to crash. I sold it for a 400k profit 5 years later. Everyone says it and they’ll be right when it happens but when you keep saying for many years, you will be right eventually
A broken clock is right once a decade.
it has all the markers, unless the corporations drastically restructure their debt or the product suddenly finds an actual demonstrable use, then it’s going to continue being a bubble. all that requires for it to burst is a large swath of people vested in the bubble to get itchy enough to pull enough money out for the value to be questioned or need to be proved, and AI currently is wildly expensive incuring huge amounts of debt, which is being passed around in a very quick and difficult to account for manner, and has no proven value that can be demonstrated as of yet.
AI is obviously a bubble.
That said, Burry has also predicted 6 of the last 2 crashes.
More like 20. Besides, most of these articles are just reporters misunderstanding Burry’s trades. Guy is a trader, in and out. By time you know his positions, he’s sold and moved on.
Calling a bubble is easy.
Calling the top of the bubble or the bottom of the crash is the more or less impossible part.
It could very well be a bubble, and come crashing down to a low point that is still higher than it is today.
I agree in principle. It’s getting harder to believe that is possible at this point.
A combination of 1) companies maturing their AI policy and ending the “infinite play time” model most have had since 2021 e.g. cutting spending and 2) open source and open parameter models becoming better and better and cheaper. Data centers will still be in demand for #2 but the ai providers will hurt.
I don’t follow this extremely closely, but didn’t most companies end number 1 at least 6+ months ago?
Just like this “bubble” has supposedly been about to pop for years.
Burry is going by hard numbers and making a rational call. The markets are not rational, which is why it is hard to predict the timing of a crash. There are no good reasons why TSLA should be over $30.
He’s a good person to heed for safe, longer term investment.
More along the lines of - it’s been a bubble for years, and we’ve been hoping it’s about to pop. But, sadly, the longer it goes, the worse the pop will be.
He got Tesla wrong. Very hard to underestimate meme stocks.
Does anyone expect a large business to not fail when theyve been as poorly run as Tesla?
Also can we talk about how Musk seemingly is propping up all his companies with the values of his other investments? And that most of that money is government contracts?
The AI bubble will “burst” as soon as they figure out how to inflict all the damage onto regular working people. The housing bubble bursting is what enabled the ownership class to kick a bunch of working people out of their homes and then buy up all the recently vacated real estate for cheap. Nothing about the damage that the rich did to our economy caused any of them to face any actual consequences.
The promise of AI was that it would replace all the workers, but it’s not doing that fast enough and it’s beginning to look like it never will. We’ve been hearing that the AI bubble will “burst any day now” for years at this point, but if it happened right now, the ownership class are the ones who would be left holding the bag, and that can’t be allowed to happen. When they find a way to take it out of our hides, we’ll see that suddenly the “invisible hand of the free market” will present a scenario such that the floodgates open and the bloodbath is finally allowed to proceed. I imagine that’s why they started wrapping up so many pension funds and the like in AI investments.
Too big to fail!
Exactly, as long as it’s billionaire buddies with trump, they can always print more money to keep the bubble going. When they realize they need to print the money to keep the rest of us afloat, that’s when they’ll let it crash.
SPCX is the model all AI companies plan follow. IP0 valuation of 2K X forward Earnings.
Your retirement fund will be the exit liquidity forced to buy through indexes as the stocks crash and flat line.
They already have. Public Banks are huge investors in the private credit companies that underpin a good amount of the AI bubble.
The Magnificent 7 have been driving the stock markets gains for the last few years. They have also created independent companies to build out the data centers. The debt for these companies is off their books and funded primarily by private credit markets and is underpinned by contracts with the big 7 for data processing once the data center is built.
Projections by the Mag 7 have driven their share increase. So what happens if one or two of the magnificent 7 miss their projections? Well look at Oracle, its stock is tanking because it missed projections.
If the Mag. 7 stock tanks so will your 401ks. When their stock is worth less they will stop plowing money into AI. Suddenly all of the companies with contracts to build the data centers will loose their source of revenue. No revenue and they can’t pay off the loans to private credit. Private credit companies will start to go under and begin to take down the public banking companies that invested in them…
Its a house of cards ready to fall if any of the Mag 7 start to flounder.
It’s a good time to learn about what investments are in your 401k if you have any. You can look at the data sheets on the investments to see what stocks the index funds are made of. I’m moving mine to International index funds that are not tech heavy. I’m no expert in investing but I have heard that it’s sound to invest in companies that make basic things that people need.
Morningstar is a decent source in breaking down the holdings of nearly every ETF and Mutual Fund.
Healthcare, consumer staples and utilities are considered to be defensive stocks because they are always needed regardless of economic situation.
I am minimising my exposure to US stock market as well. There is the perception that the European stock market doesn’t have the explosive growth the way that US stocks does but it is at least safer.
Japan could also be considered safe and their stock market have been on the rise after 30 years of stagnation.
ownership class
pension funds
Same thing. Pension funds ARE the ownership class.
I’ve been commenting that people over 55 own 52% of the US and baby boomers as a generation own ~8x more than billionaires as a class, but I re-checked and I’d quoted the wrong number in a bunch of my comments. 52% is for baby boomers only. All over 55s added together are actually over 70%. Let that sink in.
The entire goal of the economy is to let old people enjoy the spoils of the young’s work. Even billionaires are just a symptom of a larger, systemic issue (which is not to say they shouldn’t be hunted for sport, that should still happen).
Over 55 isn’t babyboomers anymore that’s gen x.
I think this kind of data is exactly what you’d expect to see in a somewhat equal society: you work your whole life, saving, of course you’ve got more savings then people who haven’t been working their whole lives.
Really I suspect averaging here is skewing your perception, that 70% can hide a few super wealthy and many more poor (which is what you’d expect given 1% of the population own more than the combined bottom 95% ).
Over 55 isn’t babyboomers anymore that’s gen x.
And silent. But notice how little the percent goes up when you add both silent and much of gen x to it. Most of it is still baby boomers.
I think this kind of data is exactly what you’d expect to see in a somewhat equal society: you work your whole life, saving, of course you’ve got more savings then people who haven’t been working their whole lives.
Yes. So why are people whining that their paychecks aren’t rising, that they can’t afford property, etc? All that goes to old people who, via retirement funds mostly, own the companies that young people work for. The housing is owned by old people and companies belonging to old people. If the US suddenly had a 50 dollar an hour minimum wage, old people would be fucked and have to go back to work because their holdings would no longer be worth shit.
Really I suspect averaging here is skewing your perception, that 70% can hide a few super wealthy and many more poor (which is what you’d expect given 1% of the population own more than the combined bottom 95% ).
Median baby boomer is worth like 400k, average is near 2 mill, so of course it’s still skewed, 10% of baby boomers own 70% of their wealth. But what I’m trying to argue is that you can’t have both a great working life and a great retirement life at the same time unless the amount of retired people is small. Baby boomers enjoyed a great working life and now they’re enjoying a great retirement life, but they can only enjoy the latter because everyone else’s wages stagnated. No other generation has ever been as rich as the baby boomers, no other generation’s wealth outclassed the preceding generation as early as theirs. They’re enjoying more time at the top than anyone before them. Gen X and millennials on the other hand are getting there much later in life and I don’t know if Gen Z will ever be the wealthiest generation before most millennials are dead.
People just aren’t having enough children for this whole retirement thing to work much longer. Millennials might never retire, Gen Z will definitely not retire (and this isn’t specific to the capitalist system). But we get to pay baby boomers to retire.
Eventually we need to start talking about getting rid of retirement altogether. We can’t have 5 retirees living off the back of one working person, that’s absurd.
Ironically the AI everyone’s fighting against, combined with a better economic system of course, is the only thing that can change things. When there are truly very few jobs that need a human, we can finally consider having so many non-working people for so few working people, without outright straddling all the working people with debt. Maybe not AI as it is now, but AI that can truly replace knowledge workers to the point that it can design automation for physical jobs on its own. As it is now, even supposedly “communist” countries need people working well into the 50s and 60s, and it’ll get worse when their demographics crises hit.
They own, but they don’t control that ownership. Their savings are used as investment funds, but very few actually know what they are invested in. That control is in the hands of the indexes. S&P, NASDAQ and the like. Just because NASDAQ blessed SpaceX with being part of their index, millions of pensions bought the stock.
They don’t control, yes - the control (on the level of the individual companies) is being handled for their benefit though. Line must go up for the shareholders - aka old people.
I noticed the pension fund thing and I’m scared.
The “invisible hand of the market” is such a fascinating myth, because it frames the results of capitalist endeavors as inevitable and almost holy - but as soon as the sufficiently wealthy and well-connected suffer a setback, then “government bailouts” are granted.
The invisible hand is actually very visible of you dare to look close enough.
The problem is this time American national debt is too big for the size of bailout needed for AI.
Housing is already maxed out so where is the next thing to prop up the market?
It’ll have to be robotic automation.
It’ll have to be robotic automation
Factories are already robotic. Replacing humans is just more tech bro bullshit, like how AI will fix your toilet.
The basic supply & demand, “invisible hand of the market” stuff applies at like. A farmer’s market. This is the context Adam Smith was talking about when he made up the invisible hand phrase. If one farmer has cheaper produce than another, he’ll probably get more customers. Anything more complicated than a local farmer’s market is… more complicated.
Yeah but how do we PROFIT off of it?! Fuck capitalism because this is a valid question
It’s too complicated to try to figure out which stocks to short and when. Rather, the play is to invest in solid companies that produce non-bubble goods and services and will still be producing that after AI economy crashes. UPS, Kraft-Heinz, Edison International, etc. These companies pay out 5%+ dividend yield and sell massive amounts of real world services and goods that will still be necessary to households and businesses no matter how badly the AI economy craters.
An investment that would pay off if the tech industry went to hell would be Put options on QQQ (an ETF that tracks the NASDAQ-100). You have to get both the timing and the drop correct, and better funded groups with much faster computers AND the ability to make trades to prop up the market while they unload their shit will be competing against you (every options trade has an opposite side and most of them expire worthless). Watch the movies Margin Call and The Big Short for research as much as playing the lottery can be researched (they’re good movies so it’s time well spent anyway). Make a movie night out of it and watch The Other Guys which was directed by the same guy who directed The Big Short. Watch through the end credits.
I didn’t read the article because gizmodo, but as other people here have said, Dr. Burry (he’s played by Christian Bale in The Big Short) often thinks things are going to go south, and there’s usually reason to think so, but in general as Warren Buffett could easily have said, “stonks only go up.” NVDA, AAPL, and MSFT make around 15% or so of the entire world stock market and around 20% of the US market. Nobody’s going to let them collapse and even without the AI craze they still have all the other stuff to fall back on. Thumbs will go on the scale to an extent even greater than the 2008 collapse.
This is posted once every few months for the past few years btw
And not just about AI. Ever since the movie, I keep seeing posts about what this guy is betting on. I think some of it is news companies preying on poor people for clicks.
So I saw a few relevant newspieces:
~ Companies are now ceasing their mandate to workers to use AI to do things that used to be done without AI. They’re now saying don’t use AI just to use AI. They’re trying to reduce their token purchases.
~ The estimation now for AI use cases is to reconsider if tokens cost ten times their current price. If the use case is still worth it, then that use case will likely survive the bubble. If it’s not worth it, it’s time to hire back employees.
~ The hyperscale AI industry will have to make $6 trillion annually to break even. Amazon makes $2 trillion by selling people material stuff. Walmart is similar. There may not be a market for $6 trillion in tokens every year, even from government projects. Also, it’s a bad sign if government projects are propping up the whole stock market.
~ China is mostly turning to a software AI model which does home and small business AI tasks fairly well without buying compute from a hyperscaler. You get a gaming machine, get open source AI software and a dozen terabytes of training data, and you should be able to create slop, vibe code or fix the grammar and style of your report. Also, hyperscale models are opinionated and don’t like certain topics. Home-grown AI doesn’t have those objections.
Some companies already run Chairman Xi’s big models on-prem and do not limit token usage on those.
Also, hyperscale models are opinionated and don’t like certain topics. Home-grown AI doesn’t have those objections.
Unless you create or review the training data and train your model yourself, home grown AI models do have those objections.
So do I. We had our financial person take steps to limit our exposure. Still, I expect we’ll take a major hit regardless. Hopefully, we can ride it out with no major financial emergency forcing us to sell while the market is down.
