The fact that he was even able to make that bet is incredible. How deluded do you have to be to think the AI bubble won’t burst? Keeping it going will require in ever-increasing amounts of money to paper over the gaping chasms that keep cropping up, and eventually the amount of money necessary to keep it going will cease to be feasible. Then, after taking gullible investor for all of they’ve got, the whole thing will fall over in the world’s most well deserved and predictable market crash.
The subprime mortgage collapse was inevitable only in hindsight, you had to have a good understanding of the market to see it in advance. To see the level of corruption and false promises that have to be made in order to make the mortgage bubble possible. But everyone can see the AI BS right out in the open, I’m not talking about the “how many Rs are in strawberry” questions either, I can sort of see why that’s not really a fair question. I’m talking about the fact that every single business that has ever tried to replace its employees with AI, has always failed, and failed almost immediately. Even Amazon couldn’t make it work.
Market is so fake and manipulated that I no longer have any interest in investing in it. Like always for decades now it is a transfer to the wealthy system.
My plan is to stay invested until dividends hit in December, and then I’m going to evaluate moving my investments into a money market or bonds. Amazon’s numbers show that consumers are still buying, and my assumption is that consumer spending will hold off the pop for now.
I 100% expect a massive crash, and when it’s just seven companies propping up an entire economy, the pop is going to be very bad. I’d rather lose a little value in the short term than have my portfolio drop to a calamitous degree and have to wait 5-10 years for it to recover.
*not a FA, just my personal plan
I stopped putting money into us equities and started to put them in purely international index funds. I havent sold anything though.
Yeah, this economy has given me the heebie-jeebies for the last quarter now.
Unless you’re a billionaire or on a signal chat in Washington, I don’t know how you can feel good about what’s happening.
I’m waiting for my sweet 200 in tax returns and rolling it into scratch tickets.
May the odds be ever in your favor.
Mid-Cap index funds should be fairly insulated from the damage as well, given they would exclude companies as large as nVidia.
Either way, biggest thing people is when the bubble pops, that is the time to buy in more, not the time to sell. The buy high-sell low strategy is easy to fall into emotionally.
that is the time to buy in more, not the time to sell.
1000000%
That’s the other side of my strategy, having my portfolio in cash means I can reinvest at the new fire sale prices.
I was able to pay off my student loans by buying oil stock at a 90% discount in March 2020 and then waiting a few years for the rebound. You don’t even need to be rich to do it, just patient.
The simple fact that somebody was able even to bet a billion is insanity that should never be possible to begin with.
Nobody should have a billion dollars, let alone have so much that you can just safely bet a billion dollars
Them he’s betting.yhst the economy will crash, basically, and we’re okay with that shit.
All of this should be illegal as fuck, and this guy belongs in a jail cell
Well I bet $997 billion that the world will end. Someday. Okay where’s my money
Some guy spending a billion dollars on pretty much nothing makes me deeply annoyed. Tax billionaires.
He famously isn’t rich. He manages the money of the rich, he himself is only well off. This isn’t his money he’s investing, it’s the money of the people he works for. So there’s obviously some market feeling that this is a good bet.
Good thing Burry isn’t a billionaire, he’s a fund manager.
You must be annoyed A LOT these days. It seems that spending a lot of money on nothing is the latest trend for these people.
But spending it on their own terms. They would spend $100,000 on lawyers and lobbying to avoid paying $20,000 of new taxes.
Capital gains are taxed. Profits from this are capital gains.
since his bet on the housing market he effectively lost money. all the public things he made can also be safety investments in case his secret hedgefund stuff he doesn’t have to disclose fails.
- this is what an ex-financebro told me yesterday
i LOVE LOVE LOVE the thought of the AI Bubble popping… but i don’t think this MF is the guy to trust
Yeah, my heart sank a little when I saw burry shorted, it was about the same time I opened a small short position. I am so screwed…
his fund, Scion Asset Management, bought $187.6 million in puts on Nvidia and $912 million in puts on Palantir (…) Palantir’s market cap is also up over 150 percent year-to-date. Its current valuation is upwards of 200 times its forward earnings, spreading fears that it may be grossly overvalued.
He knows which one is more likely to get really fucked in this bubble and it’s not the shovel seller
Burry similarly made a long-term $1 billion bet from 2005 onwards against the US mortgage market, anticipating its collapse.
Can we assume his puts aren’t for 2026, but at least 2028 or later?
As CNN points out, Burry’s track record isn’t perfect. For instance, he called in January 2023 to “sell” in a now infamous tweet
Something something irrational solvent something
Palantir CEO Alex Karp: “The two companies he’s shorting are the ones making all the money,”
One of the companies is making all the money and it’s not Palantir.
Can we assume his puts aren’t for 2026, but at least 2028 or later?
I don’t think you can buy puts that far out. The longest seems to be about 2 years, so I guess January 2027?
Its not a question of “if” but “when.”
and whether he has enough liquidity to maintain his margin during absolutely insane market distortions by hedge funds, big banks, and the government.
And when it pops it will be a big bang in the entire global economy from what i heared and read.
I mean, the housing bubble burst and the government pulled 7 trillion out of its arse and handed it back to bankers, doubling the cost of current living from the knock-on inflation. Life went on, and not a single banker (except maybe some lackey in Iceland) was punished. The Rich got exceedingly wealthy after the crisis.
This time: the government will pull 50 trillion from its arse and hand it back to investors. Life will go on, no one will be punished, the cost of living will be a few times higher than what it is now, and the rich will get richer.
My interpretation: the big investors fully expect the bubble to burst and hope to win from the fallout/bailout. It’s win-win for them.
True Edit: which government are you talking about with “the government”?
Any. If it happened under Obama, it will most certainly happen under Trump
Thats quite the US centered perspective
I’m from the UK/Germany. The dollar is a worldwide currency with far reaching impact
Germany had the same financial crisis around that time with a 70 Mrd € bailout as I’m sure you remember
I don’t like or trust the stock market and all of the back door manipulations that can, and have, been done, but this guy is not wrong.
has bet over $1 billion that the share prices of AI chipmaker Nvidia and software company Palantir will fall
not a very tough bet to make tbh.
very misleading title and literally no commenters could even read the first paragraph here lol. Man the AI hate is truly reaching the looms now
are… you making that bet?
I may be wrong but i thought this guy was not at all a respected investor and only made 1 good trade. So his opinion is kinda worthless.
TBF, an investor could make a thousand good investments and I’d still regard their opinion as worthless (here’s lookin’ at you, Buffet.) Being “good” at figuring out which stocks and companies you can exploit the most from the actually productive economy doesn’t make you smart or in anyway good.
I assume they meant opinions when it comes to investing not opinions in general.
A significant number of his best investments were based upon fuckery that the rest of us aren’t really able to enact, so “spite buy entire companies” or whatever isn’t really any sort of opinion I’d listen to, either.
If I had to make a guess, I say it probably will. The convenience of AI is probably here to stay, but the craze of replacing everything with AI will go out the door.
AI will become exactly what it should have been in the first place: an assistant. Not your friend, not your doctor, not your therapist, not a replacement for artists/authors/programmers, and not inside every piece of tech post 2025. It has a place. That place is over-embellished right now, not to mention unsustainable.
Main reason it can flourish as assistant in the first place is that Google search engine became shit
Just a reminder that the term “AI” stands for a category of systems that contains a lot more than just LLMs.
Sir, this is the stock market.
People order with their feelings, not facts.
I don’t know how this relates to what I said.
Once the ai bubble breaks for llms it will drag general machine learning down with it once panic sets in. People wil dump any stock that even faintly smells like ai.
Some actually valuable business may disappear, on the other hand those that survive and are undervalued may actually be a good investment opportunities.
This is not financial advice, to gamble your money is dumb.
Yeah, okay, but I still don’t know how this relates to what I said.
Um… You are aware you made your comment about ai being much more then just llm within context of a discussion on wether the ai bubble will burst or not?
Cause that’s what this post/thread is about.
The ai bubble will burst nonetheless. I was also playing on the “sir, this is a Wendy’s” meme. In a way joking that your comment is actually not relevant to the discussion.
True, true. In this context I mean the LLM craze. The GPU era of AI.
It will definitely burst, and might take out some fairly large companies with it. Potentially even one or two tech companies that have been around for decades depending on how large it gets before that burst. One or two companies will end up with the IP all of them are “building” and it will fizzle into the background of daily use just like the previous assistants like Alexa, Cortana, etc. have.
Potentially even one or two tech companies that have been around for decades depending on how large it gets before that burst.
Please be Microsoft, please be Microsoft, please be Microsoft.
Itll be
nvidia andopenai primarily, id have to imagineIt wont be Nvidia unless they play things incredibly badly, they’re the only ones making actual profit by selling shovels in the goldrush.
Yeah, but dont they also have the largest promisory debt? Havent they loaned the most most money that they dont actually have?
From a quick look they have ~40B USD in liabilities and make ~115B USD gross profit. Being able to pay off the entirety of their debt with 4 months of profit seems pretty healthy to me.
Cool, in a not super cool way. Nvidia is kinda scummy but the work they do is valuable. I appreciate you dropping the facts on me, but im not sure how to feel about them.
Yeah, but can they handle the collapse of going back to the company before the AI boom? They’ve increased in market cap 5000%, attracted a lot of stakeholders that never would have bothered with nVidia if not for the LLM boom. If LLM pops, then will nVidia survive with their new set of stakeholders that didn’t sign up for a ‘mere graphics company’?
They’ve reshaped their entire product strategy to be LLM focused. Who knows what the demand is for their current products without the LLM bump. Discrete GPUs were becoming increasingly niche since ‘good enough’ integrated GPUs kind of were denting their market.
They could survive a pop, but they may not have the right backers to do so anymore…
Definitely a possibility! But dealing with “only being a normal profitable company” is a very different problem to “oops, we were selling $10 for $5 and VCs have stopped giving us money to burn, and people are using self hosted models too”, which is the possible outcome for the big AI labs.
Microsoft already had a proven business model and established products and services before the AI boom. If a company goes under it would almost certainly be one focused almost entirely on AI such as Palantir.
Lol, Palantir isn’t going anywhere.
And the AI bust will hit primarily generative AI, and Palantir does things a bit differently.
agreed palantir is on the government tit
if boeing fuckups can kill people palantir is not foing anywhere
Nah, they already converted all their business clients to recurring revenue and are, relatively, not very exposed to the LLM thing. Sure they will have overspent a bit on datacenters and nVidia gear, but they continue to basically have most of global business solidly giving them money continuously to keep Office and Azure.
In terms of longer term tech companies that could be under existential threat, I’d put Supermicro in there. They are a long term fixture in the market that was generally pretty modest and had a bit of a boost from the hyperscalers as ‘cloud’ took off, but frankly a lot of industry folks were not sure exactly how Supermicro was getting the business results they reported while doing the things they were doing. Then AI bubble pulled them up hard and was a double edged sword as the extra scrutiny seemingly revealed the answer was dubious accounting all along. The finding would have been enough to just destroy their company, except they were ‘in’ on AI enough to be buoyed above the catastrophe.
A longer stretch, but nVidia might have some struggles. The AI boom has driven their market cap about 5000%. They’ve largely redefined most of their company to be LLM centric, with other use cases left having to make the most of whatever they do for LLM. How will their stakeholders react to a huge drop from the most important company on earth to a respectable but modest vendor of stuff for graphics? How strong is the appetite for GPU when the visual results aren’t really that much more striking than they were 3 generations of hardware back?
Depends on when the bust happens. If its in the current admin? All those tech companies are getting bailed out.
I think that might actually send the US into a debt spiral that would require leaning into printing and inflation. Net interest for FY25 is $933 Billion putting servicing debt as the third largest federal expenditure. Any bailout will either be insignificantly small or will tank the dollar.
I’m not saying you’re wrong, but it would be an incredibly stupid thing to do.
I am having trouble seeing how OpenAI survives without investment cash. What exactly is their moat? I know they are hoping to power the AI behind everyone else’s tech but that is more and more untenable as the others develop AI models of their own.
Agreed. Probably where it should have stayed in the first place. Not that its not interesting, just that the scope of AI has widened beyond what it should have.
Dotcom groundhog day for the tech sector.
As an aside, you can tell how successful the rebranding of twitter as “x” has been, since even now more than 2 years after the rebranding news articles still have to add “formerly known as twitter” every time they mention it.
That dumbass throwing away the Twitter brand for a damn letter should be proof enough to anyone that he’s a moron
It blew my mind when he announced it. Brand recognition is one of the most important things companies hope for, and Twitter was in it’s own, very select brand recognition club at the top. Tweeting became part of everyday vernacular, in the same way that googling something became synonomous with searching online. It’s a company’s wet dream. No one says “gramming”, “threading”, “facebooking”, etc. Maybe Snapchat has snapping, I’m out of the loop but even I’ve used tweeting/ed in every day conversations.
That recognition is the stupidest thing to just throw away, especially to replace it with something that can’t replace it from a language perspective. Xing makes no sense in context.
I still call it Twitter regularly.
To me, X is a windowing system.
Xitter is the proper rebrand.
X reminds me of a porn site and the X itself kinda associated for me as X rated. Kinda dumb why they changed it from Twitter.
That’s why though. He’s incredibly immature.
muskrat loves his x-rated shit publicly visible to everyone
Wayland, formerly known as Twitter
Even Grok AI follows up with that reminder when it mentions X.
But I also still say Facebook and Google instead of Meta and alphabet
Those are changes in parent company names though while the services Facebook and Google still exist. The rebrand of Twitter to X continuing to not stick for people is a much bigger failure on their part than Meta and Alphabet not entering the general zeitgeist.
Burry similarly made a long-term $1 billion bet from 2005 onwards against the US mortgage market, anticipating its collapse. His fund rose a whopping 489 percent when the market did subsequently fall apart in 2008.
We may have to wait for another three years.
I looked into the article to find out how long a timeframe he is betting. Unfortunately, it does not say.
How the hell did he do a long term bet against the market? Aren’t shorts short-term and they’re forced to pay after a set period of time? Even the inverse indexes will steadily make your money simply vanish.
You can keep a short position for a long time, as long as you can maintain margin, which gets bigger if the stock price continues increasing, and pay margin interest - there is no set date when the short has to he closed, it’s indefinite. Sometimes the lender who loaned you the stock can ask for it back, and if you can’t locate any more shares to borrow to replace the returned shares, you might be forced to buy the shares back and close the short, but this is not common, at least during normal market conditions.
I never got into options investing, but I believe you keep re-upping them. Every time you do so you pay a small price. So, the game is: ‘can you stay liquid long enough for the bubble to pop’.
The longest term seems to be about 2 years.
You’d think the timing should reflect the typical terms of loans and loan volumes - so that sounds plausible. When the default rate of those loans begins to creep up and become notable to investors, then people will get edgy.
I just hope it comes before our much loved and overpaid layers of incompetent management have destroyed all their manual production processes and replaced them with snake oil. If not a general economic downturn might start well before the ai bubble bursts.
