Regarding AI and math: the recent scandal with the Navier-Stokes equation has shown perfectly that AI does NOT solve these hard problems. They have just stolen other people's results. The AI bubble is very real, and peoplpe vastly underestimates the potential risk.
What people call AI is just the decades old term Machine Learning with a new name. It's a statistical model. We are not close to real artificial intelligence. Humans must still guide it for its output to be useful.
Some people say (eg. Musk) that in the world with advanced AI humans won't need to work anymore as things will be cheap and abundant as the cost of production will go down substantially. Also, that we won't need so much money anymore for these reasons. Supposedly this will happen in the not too distant future (say in the next 1-2 decades). So then, what are we investing in if no one will be working in the companies? What profit is being made by these companies? I have difficulty in reconciling all the information surrounding the future of humanity in the AI era and the logic of long term investment in stocks (ETFs etc)…Food for thought
Burry argumentation is much more convincing. AI circular deals, bookkeeping tricks, net earnings dilution by stocks based compensations. This will eventually crush, and will take also others with it. But nobody knows after 1 week, 1 month, or 1 year. Learn also from Buffett – keep some cash for a crush. I would add – not less than 50%.
It is simply not correct that AI firms value is driven by record revenues. The revenues are simply not there, which is the reason people predict an AI bubble collapse. The main reason people use AI tools is that they are often forced into it at work and because it is cheap. This high demand however creates exponential cost increase for AI firms who are still selling way way way below the real price of compute. The higher the demand becomes now, the more money the companies lose. The moment they start raising prices (this is already starting to happen), companies will start to reconsider spending on AI and will limit access to AI for their workers, dramatically reducing the demand. The secondary reason for the AI bubble collapse will be the fact that absolute majority (likely around 80%) of the compute is being spent on comment section botting and all kinds of slop with 0 value being generated. Once AI stops being dirt cheap, slop will disappear, again dramatically reducing the demand. That is the point where the absolutely INSANE amount of investment made by AI companies becomes irrecoverable and that will be the moment the bubble collapses.
An initial investment of €10,000 and monthly contributions of €800 to the Vanguard Global MSCI Index Fund – what do you think of this as a long-term strategy?
Hi Tom, what you say sounds good, but I was wondering if you might have some advice regarding investing in the Netherlands with the soon-to-be implemented tax on unrealized profits? The fact that I will have to pay taxes when my portoflio appreciates in value, even if I don't sell the shares really gives me pause when I think about investing further in stocks. What would be your advice here?
Nice video, but I dont understand one thing. If stocks in 70's crashed -20% and money -50%, wouldnt same money buy those stocks that crashed? Same 100 dollars should buy more stocks, because they crashed 20%.
on average capitalism produces a crash/recession/depression (however you wanna call it) every ~6 years. so you shouldn't be afraid of the crash, it will come no matter what. since timing the market is impossible, what you should have is a plan. is your investment long term enough that you will just weather the crash whenever it comes? will you continue your regular investment instalments during the crash? is the plan to move some eggs into a different product (bonds, fixed rate deposit, foreign currency, etc) when it comes? etc
Tom, what is your view on how passive investors are kind of this summer automaticly going to be buyers of SpaceX because of the enormous IPO cap (1.75 trillion dollar), while currently not being profitable. Is this a way of collecting my 'dumb money' by a clever millionaire who will in this way sell his shares at the highest price to all the faithfull passive Nasdaq 100 ETF shareholders (since SpaceX will end up in this list because of it's high valuation)? And is this a new possible emerging threat for passive investors (ballooning an IPO in an economic/politically friendly environment with the purpose of profitting from automatic demand from index funds and ETF trackers?
When AI is succesful and widespread in many industries, that will result closing white collar jobs in many industries. When robotics is succesful, that means the same closing jobs for blue collars. So as part – or as result – of the AI bubble, I rather wonder the effects of increasing unemployment rate in both white and blue collars – middle class? How that affect the stock prices? Also, what about the population stagnation across the whole world? There was a baby boom 1970-80 not only in the USA, but across the whole World too. That surely took part of boosting the GDP. Now, this is the opposite: average people start getting older and will start selling their investments soon in years. Not only in the USA, but even in the East or India. The only continent with increasing population will be Africa soon in 10 years. I would glad to see videos analysing this.
23 comments
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Regarding AI and math: the recent scandal with the Navier-Stokes equation has shown perfectly that AI does NOT solve these hard problems. They have just stolen other people's results. The AI bubble is very real, and peoplpe vastly underestimates the potential risk.
What people call AI is just the decades old term Machine Learning with a new name. It's a statistical model. We are not close to real artificial intelligence. Humans must still guide it for its output to be useful.
Some people say (eg. Musk) that in the world with advanced AI humans won't need to work anymore as things will be cheap and abundant as the cost of production will go down substantially. Also, that we won't need so much money anymore for these reasons. Supposedly this will happen in the not too distant future (say in the next 1-2 decades). So then, what are we investing in if no one will be working in the companies? What profit is being made by these companies? I have difficulty in reconciling all the information surrounding the future of humanity in the AI era and the logic of long term investment in stocks (ETFs etc)…Food for thought
Burry argumentation is much more convincing. AI circular deals, bookkeeping tricks, net earnings dilution by stocks based compensations. This will eventually crush, and will take also others with it. But nobody knows after 1 week, 1 month, or 1 year.
Learn also from Buffett – keep some cash for a crush. I would add – not less than 50%.
It is simply not correct that AI firms value is driven by record revenues. The revenues are simply not there, which is the reason people predict an AI bubble collapse.
The main reason people use AI tools is that they are often forced into it at work and because it is cheap. This high demand however creates exponential cost increase for AI firms who are still selling way way way below the real price of compute. The higher the demand becomes now, the more money the companies lose. The moment they start raising prices (this is already starting to happen), companies will start to reconsider spending on AI and will limit access to AI for their workers, dramatically reducing the demand.
The secondary reason for the AI bubble collapse will be the fact that absolute majority (likely around 80%) of the compute is being spent on comment section botting and all kinds of slop with 0 value being generated. Once AI stops being dirt cheap, slop will disappear, again dramatically reducing the demand.
That is the point where the absolutely INSANE amount of investment made by AI companies becomes irrecoverable and that will be the moment the bubble collapses.
An initial investment of €10,000 and monthly contributions of €800 to the Vanguard Global MSCI Index Fund – what do you think of this as a long-term strategy?
your bio is not updated, should say 19 years right? just saying
Hi Tom, what you say sounds good, but I was wondering if you might have some advice regarding investing in the Netherlands with the soon-to-be implemented tax on unrealized profits? The fact that I will have to pay taxes when my portoflio appreciates in value, even if I don't sell the shares really gives me pause when I think about investing further in stocks. What would be your advice here?
Nice video, but I dont understand one thing. If stocks in 70's crashed -20% and money -50%, wouldnt same money buy those stocks that crashed? Same 100 dollars should buy more stocks, because they crashed 20%.
on average capitalism produces a crash/recession/depression (however you wanna call it) every ~6 years. so you shouldn't be afraid of the crash, it will come no matter what. since timing the market is impossible, what you should have is a plan. is your investment long term enough that you will just weather the crash whenever it comes? will you continue your regular investment instalments during the crash? is the plan to move some eggs into a different product (bonds, fixed rate deposit, foreign currency, etc) when it comes? etc
Index and etfs funds are a terrible idea now with the SpaceX ipo about to rob them blind.
eu is still buying via third countries
The title of the video has nothing to do with most of it’s content
Tom, what is your view on how passive investors are kind of this summer automaticly going to be buyers of SpaceX because of the enormous IPO cap (1.75 trillion dollar), while currently not being profitable. Is this a way of collecting my 'dumb money' by a clever millionaire who will in this way sell his shares at the highest price to all the faithfull passive Nasdaq 100 ETF shareholders (since SpaceX will end up in this list because of it's high valuation)? And is this a new possible emerging threat for passive investors (ballooning an IPO in an economic/politically friendly environment with the purpose of profitting from automatic demand from index funds and ETF trackers?
Paldies! Tieši tas, kas šobrīd vajadzīgs.
brilliant as always
And DCA!
Don't invest your entire €1200 at once, invest €100 every month (in etfs). That way, if it crashes, you buy cheap. If it rises, you are on board.
Stunning!
When AI is succesful and widespread in many industries, that will result closing white collar jobs in many industries. When robotics is succesful, that means the same closing jobs for blue collars. So as part – or as result – of the AI bubble, I rather wonder the effects of increasing unemployment rate in both white and blue collars – middle class? How that affect the stock prices? Also, what about the population stagnation across the whole world? There was a baby boom 1970-80 not only in the USA, but across the whole World too. That surely took part of boosting the GDP. Now, this is the opposite: average people start getting older and will start selling their investments soon in years. Not only in the USA, but even in the East or India. The only continent with increasing population will be Africa soon in 10 years. I would glad to see videos analysing this.
“Excellent analysis, especially the way you explained the market movement.”
Do you believe that Warren Buffet is wrong this time?
Great video!