Oct. 7 at 2:48 PM
$QQQ $SMH $SOXQ $MSFT $NVDA
I just wanted to add my thoughts in this area as it pertains to the re-shared post below.
Please note that my opinion has ABSOLUTELY NO IMPACT on the market as the institutions that drive stock prices don't even know I am alive, much less care about my opinion.
That said, I have posted a number articles recently including one written by Bethany McLean. Some of you may recognize that name as she became well-known for her writing on the Enron scandal and the 2008 financial crisis.
The title of the piece written by McLean was:
"AI will trigger financial calamity. It’ll also remake world."
As someone who lived through the dot com era (I actually worked for a dot com startup in 1999 and 2000), I personally agree with McLean's premise. That is, I believe AI is going to re-shape our world. However, I also believe unsophisticated investors, as well as even some sophisticated ones, well get crushed if/when the music stops.
By music stopping, I am specifically referring to history repeating itself...or, at least rhyming. If you do an AI search regarding "vendor financing" you will see what crashed the system during the dot com bubble.
Is the same thing happening again now? I don't know for sure but there are some existing examples that are certainly worth pondering. Along those lines, I have provided a couple attachments that should have investors seriously considering these questions. I now this is a different time and a different market. However, I don't believe these questions should be dismissed entirely.
Again, I am not suggesting there will be a "crash" or that I know exactly how this is going to play out. However, I am hearing knowledgable people (like Jeff Bezos, Paul Tudor Jones, Ken Griffin and David Solomon) warning us to think about the risks of a seemingly never ending move higher in the markets.
As someone working for a dot com start-up in 1999, I can tell you everyone of us who moved into the dot com arena (I left a Fortune 500 company to go work in that space) believed we were part of something that would change the world. And....it did.
However, I also lived through the bubble bursting and investors pulling their investments and their credit causing the whole thing to fold inward. For me, the lead investor of the company I worked for was Wells Fargo. When the music stopped in March of 2020, Wells Fargo took a multi-billion dollar loss and cut their investment in tons of startups they had invested in previously.
When they pulled out, so did our other investors. We were all called into an office meeting on a Friday and told the doors would be shutting on Monday. We were all at-will employees so there were no severance packages, no parting gifts, etc. All we got was a "Good luck to you" and the number for the unemployment offices to file a claim.
I am not sharing this to scare anyone and hopefully any financial calamity in the future will be limited. However, if history is any guide there will be calamities. I just hope the people I know don't take too much risk and aren't hurt too badly if the credit mechanisms funding these massive moves in company valuations begins to dry up. I can tell you, if it does then it will not be pretty.
As always, I wish everyone all the best!
