Truly, it could be anything that unsettles the market. A bubble popping is essentially a cascading failure, where the dominos fall, when the house of cards collapses, when fear turns into panic, even when everyone is of sound mind.
The Great Depression is said to have started because of a colossally bad “short squeeze”, where investors tried to corner the market on copper futures, I think. That caused some investment firms to go broke, which then meant trust overall was shaken. And then things spiraled out of control thereafter, irrespective of whether the underlying industries were impacted or not.
So too did the Great Financial Crisis in 2008, where the USA housing market collapsed, and the extra leverage that mortgagees had against their home value worked against them, plunging both individuals and mortgage companies into financial ruin. In that situation, the fact that some people lost their homes, coupled with them losing their jobs due to receding market, was an unvirtuous cycle that fed itself.
I can’t speculate as to what will pop the current bubble, but more likely than not, it will be as equally messy as bubbles of yore. But much like the Big One – which here in California refers to another devastating earthquake to come – it’s not a question of if but when.
Until it (and the AI bubble popping) happens though, it is not within my power to do much about it, and so I’ll spend my time preparing. That doesn’t mean I’m off to move my retirement funds into S&P500 ex-AI though, since even the Dot Com bubble produced gains before it went belly up. I must reiterate that no one knows when the bubble will pop, so getting on or getting off now is a financial risk.
Preparation means to build resilience, to decouple my home from my job, to keep my family and community safe even when the shaking starts. For some, this means stocking food and water. For others, it means building mutual aid networks. And for some still, it means downsizing and making their lives more financially sustainable, before the choice is made for them.
This is a rollercoaster and we’re all strapped in, whether we like it or not.
Truly, it could be anything that unsettles the market. A bubble popping is essentially a cascading failure, where the dominos fall, when the house of cards collapses, when fear turns into panic, even when everyone is of sound mind.
The Great Depression is said to have started because of a colossally bad “short squeeze”, where investors tried to corner the market on copper futures, I think. That caused some investment firms to go broke, which then meant trust overall was shaken. And then things spiraled out of control thereafter, irrespective of whether the underlying industries were impacted or not.
So too did the Great Financial Crisis in 2008, where the USA housing market collapsed, and the extra leverage that mortgagees had against their home value worked against them, plunging both individuals and mortgage companies into financial ruin. In that situation, the fact that some people lost their homes, coupled with them losing their jobs due to receding market, was an unvirtuous cycle that fed itself.
I can’t speculate as to what will pop the current bubble, but more likely than not, it will be as equally messy as bubbles of yore. But much like the Big One – which here in California refers to another devastating earthquake to come – it’s not a question of if but when.
Until it (and the AI bubble popping) happens though, it is not within my power to do much about it, and so I’ll spend my time preparing. That doesn’t mean I’m off to move my retirement funds into S&P500 ex-AI though, since even the Dot Com bubble produced gains before it went belly up. I must reiterate that no one knows when the bubble will pop, so getting on or getting off now is a financial risk.
Preparation means to build resilience, to decouple my home from my job, to keep my family and community safe even when the shaking starts. For some, this means stocking food and water. For others, it means building mutual aid networks. And for some still, it means downsizing and making their lives more financially sustainable, before the choice is made for them.
This is a rollercoaster and we’re all strapped in, whether we like it or not.