A Nikkei study found Alphabet, Microsoft, Amazon, Meta and Oracle carry $1.65tn in off-balance-sheet debt for AI, more than they report. It is all legal.
I mean you can sell everything and leave it in cash i guess. But you have no idea how long these fuckers can keep the house of cards propped up. Government bailout, angel investors, who knows.
Or if you really wanna get risky you could try to find a fund that shorts the market, specifically tech companies, then you could actually make money instead of just not lose any. I’m assuming you don’t want to get into options trading.
But again, timing is the biggest issue. There’s an old saying “the market can stay irrational longer than you can stay solvent”.
But why do you need to be rich to buy a hedge? A leveraged option can be bought starting from a few dollars.
The issue is not getting the hedge, it’s getting the timing right. Plenty of people saw the GFC crash coming and invested in hedges, but they were too early and lost a bundle.
That’s reasons why loses aren’t as big of a concern for rich people. Not why hedges are only for rich people.
Hedging costs are proportional to the assets being protected. If someone has say a $10,000 portfolio of stocks, and they think the market will crash in the next month or two, they could buy a protective option hedge for around $100. And if someone has a portfolio of $300 million, they could hedge for ~$3 million. Wealth is irrelevant.
Hedges aren’t risky. They reduce risk at a cost. They’re insurance.
If the money would wipe out from the economy, that is less money for everyone. First round of bankruptcies will also wipe out contractors and debt issuers of the bancrupted companies, and so on.
Mass layoffs. People cannot afford restaurants, or car washes, more businesses out, more mass layoffs.
In 2001 tech bubble the money haven’t been lost. Virtual valuation dropped sharply. But the economy recovered in a year.
This is like 2008, money have been poured into concrete and silicon chips. They were spend, gone for good.
It will take a few good years to recover if the bubble would burst.
I bought some value etf to hedge it. There is some theory out there that so called factor investing is worth it. The real deal is of course to catch the bottom. But as we saw with Iran war and the market it all gets eventually priced in even though everything seemingly goes to shit from different directions. I’m not smart enough for this…
You really either ride it out or be OK with the chance of missing out on a few more years of a hot market. I’ve been expecting a big (sustained) correction since 2018 and even COVID couldn’t get it done.
If you need money soon, put it in something fully insulated, like a CD or HYSA if you need it even more liquid. If you need wealth in 10+ years, just ride it out. Keep putting that piece of your paycheck in the infinite money glitch machine.
What can people do to avoid getting caught by the bubble popping? Remove all tech stocks from their portfolio? What about indices like S&P500?
I mean you can sell everything and leave it in cash i guess. But you have no idea how long these fuckers can keep the house of cards propped up. Government bailout, angel investors, who knows.
Or if you really wanna get risky you could try to find a fund that shorts the market, specifically tech companies, then you could actually make money instead of just not lose any. I’m assuming you don’t want to get into options trading.
But again, timing is the biggest issue. There’s an old saying “the market can stay irrational longer than you can stay solvent”.
not much, unless you’re rich and you make some smart hedge bets against it.
diversify assets is always smart, move more of your portfolio to cash and bonds.
Yep hedging would work .
But why do you need to be rich to buy a hedge? A leveraged option can be bought starting from a few dollars.
The issue is not getting the hedge, it’s getting the timing right. Plenty of people saw the GFC crash coming and invested in hedges, but they were too early and lost a bundle.
well if you’re rich and you lose a bundle it wont be a big of a deal, that’s why.
hedges are risky, and it’s much easier to take risks if you have a large cushion to fall on when you fall.
That’s reasons why loses aren’t as big of a concern for rich people. Not why hedges are only for rich people.
Hedging costs are proportional to the assets being protected. If someone has say a $10,000 portfolio of stocks, and they think the market will crash in the next month or two, they could buy a protective option hedge for around $100. And if someone has a portfolio of $300 million, they could hedge for ~$3 million. Wealth is irrelevant.
Hedges aren’t risky. They reduce risk at a cost. They’re insurance.
Foreign stock funds.
International markets will feel this too I’d imagine.
I’m hedging, mostly with Berkshire Hathaway stock, some agriculture, and a few others that historically perform well in recessions.
I would not touch S&P 500 with a ten foot pole. It’s all wrapped up in Big Tech.
I don’t like shorts; you can’t predict when the drop will hit, so you’re just burning cash betting against growth until then.
I don’t like commodities either. As Buffet said, a big block of gold doesn’t do anything; a factory or farm does.
No, this is have enough canned food scenario.
If the money would wipe out from the economy, that is less money for everyone. First round of bankruptcies will also wipe out contractors and debt issuers of the bancrupted companies, and so on. Mass layoffs. People cannot afford restaurants, or car washes, more businesses out, more mass layoffs.
In 2001 tech bubble the money haven’t been lost. Virtual valuation dropped sharply. But the economy recovered in a year.
This is like 2008, money have been poured into concrete and silicon chips. They were spend, gone for good. It will take a few good years to recover if the bubble would burst.
Commodities.
I bought some value etf to hedge it. There is some theory out there that so called factor investing is worth it. The real deal is of course to catch the bottom. But as we saw with Iran war and the market it all gets eventually priced in even though everything seemingly goes to shit from different directions. I’m not smart enough for this…
You really either ride it out or be OK with the chance of missing out on a few more years of a hot market. I’ve been expecting a big (sustained) correction since 2018 and even COVID couldn’t get it done.
If you need money soon, put it in something fully insulated, like a CD or HYSA if you need it even more liquid. If you need wealth in 10+ years, just ride it out. Keep putting that piece of your paycheck in the infinite money glitch machine.
S&P 500 is fucked, I put a chunk in an all-world ex-US ETF