"When the music stops ... but as long as the music is playing, you've got to get up and dance."
(Charles "Chuck" Prince, Citigroup CEO, July 2007, FT interview)
About 85 percent of US GDP. That has been the average total value of all US stocks since 1970. Warren Buffett once described this as "probably the single best measure of where valuations stand at any given moment".
On Tuesday,October 28, that value reached 220% of US GDP.
US stocks are trading at extreme levels, notes the Financial Times. Price to earnings ratios for the S&P500 are at a 25 year high; price-to-sales ratios are higher than before the dotcom bust.
AI companies are almost entirely to blame, with a focus on the Magnificent Seven: Apple, Microsoft, Meta, Amazon, Alphabet, Nvidia and Tesla. Microsoft, for example, took 35 years to reach a dazzling trillion dollar valuation, in 2021. Just 4 years later it trades at 4 trillion dollar. That valuation comes on top of impressive infrastructure investment numbers: Google, Amazon, Meta and Microsoft, for example, plan to spend more than $400bn on data centres in 2026, on top of more than $350bn this year.
Notes the article, wryly:
some investors seem to have discounted the notion that AI might prove anything less than earth-shatteringly revolutionary
(Score: 5, Touché) by https on Sunday November 02, @11:37AM
https://www.theregister.com/2025/10/29/forrester_ai_rehiring/ [theregister.com]
Offended and laughing about it.
(Score: 1, Insightful) by Anonymous Coward on Sunday November 02, @12:16PM (6 children)
The financial advisor I use offers various levels of risk. I go for one of the low risk options and what this amounts to is minimal or no money in volatile stocks like big tech and even automotive. There is also a good sized fraction in high rated bonds. Yes, I miss out on all the exciting upside...
It's pretty obvious a market crash is coming. Based on past performance it seems likely I'll also miss most of the big downside. Worst annual performance over the last 30 years has been something like -5%.
(Score: 3, Insightful) by Thexalon on Sunday November 02, @05:22PM (4 children)
Also, diversify, diversify, diversify. Don't rely on a single country's economy, a single economic bloc, a single industry, a single commodity, etc. It doesn't matter how good it is, there's always a very real possibility of it going belly-up.
Usually the moment I try to duck out is right around the time that commentators start claiming that is virtually guaranteed positive returns. They thought that about, say, mortage-backed securities right around August 2008.
"Think of how stupid the average person is. Then realize half of 'em are stupider than that." - George Carlin
(Score: 0) by Anonymous Coward on Sunday November 02, @05:35PM (1 child)
> ... around the time that commentators start claiming that is virtually guaranteed positive returns
... around the time that shills start claiming that is virtually guaranteed positive returns
ftfy.
(Score: 4, Informative) by Thexalon on Sunday November 02, @05:56PM
Tomato, tomahto. Yes, talking heads are a bunch of liars, unless David Byrne is involved.
"Think of how stupid the average person is. Then realize half of 'em are stupider than that." - George Carlin
(Score: 1) by khallow on Sunday November 02, @06:46PM
Especially if someone associated with your investment thought LLMs were free money. One of the things I learned long ago is that when there is a disaster, a lot of stuff can correlate to the disaster in unseen ways - the parties involved routinely hide what they're doing until things fall apart.
This Time Will Be Different. (TM)
(Score: 2) by quietus on Monday November 03, @03:56PM
Since 2015, index trackers -- investment vehicles which follow/are invested in the main stock market indices, like mutual-fund index funds and ETFs -- have expanded dramatically. In 2015, the 100 largest ETFs held roughly $1.5tn in assets; figures for 2024 total size (for passive index funds) topped 13 trillion. Similarly, Index‑based ETFs now account for about 48 % of assets in long‑term funds, up from just 19 % at the end of 2010.
Investopedia remarks [investopedia.com]:
Asking Lumo [proton.me], the figures for the amount of investment into the S&P500 through these index trackers were:
Note that the article linked in the sub opens with an increase in the value of the S&P500 last Tuesday -- but noting at the same time that 397 stocks in the same index lost ground.
If you think that you're diversified because you invest in index trackers, or some hybrids of these, you might want to think again. Those with longer memory might remember that the same story -- the risk is spread through the instrument we use -- was also the great selling point for CDOs, back before 2008: the Great Moderation [wikipedia.org].
(Score: 2) by driverless on Monday November 03, @03:05AM
I go for stocks in TBTF enterprises that will get bailed out by the
governmenttaxpayer no matter what they do.(Score: 4, Insightful) by turgid on Sunday November 02, @12:45PM (7 children)
Greed gets you in the end. I had made over £100 profit with my crypto "investments" a couple of years back over the course of two or three years. Then I read Rich Dad, Poor Dad, took the cynical capitalist's advice and lost all my profit and some of my capital. Guess whose side he was on? Not the purchaser of the book.
Don't be greedy. Keep an eye on the market, thing long-term and be wary of the bubbles. I bought some precious metals earlier this year. They're now worth double. I have made another £100.
It's gambling. Call it what it is.
I refuse to engage in a battle of wits with an unarmed opponent [wikipedia.org].
(Score: 2) by c0lo on Sunday November 02, @02:25PM (3 children)
European defense industry is the thing**, then. Unfortunately.
** from the "objectifying the thinking" saga. Or just practicing zen on John Carpenter's 1982 flop. I can't decide which
https://www.youtube.com/@ProfSteveKeen https://soylentnews.org/~MichaelDavidCrawford
(Score: 2) by turgid on Sunday November 02, @02:57PM (1 child)
You spotted the inevitable inadvertent lysecksick tripo. Congraulations!
I refuse to engage in a battle of wits with an unarmed opponent [wikipedia.org].
(Score: 1) by khallow on Sunday November 02, @06:38PM
(Score: 4, Touché) by turgid on Sunday November 02, @02:58PM
Regarding the defence industry, the least said, the better. Try not to think about it. Otherwise you'll think heating your house by burning piles of £20 notes outside in the garden is a great idea.
I refuse to engage in a battle of wits with an unarmed opponent [wikipedia.org].
(Score: 3, Insightful) by khallow on Sunday November 02, @06:27PM (2 children)
My take is that all such self-help books need to be taken with some skepticism. They're usually based off the author's limited life experiences and spun to sell more books (and reviews for "RD,PD" aren't impressed). OTOH, if your finances are a mess, even a so-so financial self-help can self-help. Call it a variation of the placebo effect, if you will.
(Score: 1, Interesting) by Anonymous Coward on Sunday November 02, @09:51PM
Most advice books of any kind, social media sites, podcasts, etc. are part of a parlay. You have success in a particular area, perhaps obtain a highly sought after credential such as a PhD from a well-known institution and you parlay that success in to media. Of course they aren't all necessarily bad. People who achieve such things often have meaningful, even valuable things to say. Some of them are just parlaying their success though. The most egregious example is the books that former office holders "write", or their speaking tours.
(Score: 1, Funny) by Anonymous Coward on Sunday November 02, @10:13PM
Lottery winner writes book. Bull market investor writes book. Kaching!
(Score: 3, Interesting) by HiThere on Sunday November 02, @02:21PM (8 children)
Is clearly stupid. AI as it currently exists is going to be "earth-shatteringly revolutionary", even if all development stopped a week or so ago. But it takes time to figure out how to use new technologies well. Expect about an 80% failure rate (where failure just means "didn't make things better" for whatever meaning of better was intended). But it's the 20% of successes that are going to cause massive shifts. If somebody tells you "you need to plan what you're going to do and how you're going to do it carefully", believe them. In a decade that will be less true, as the lessons will have become obvious.
And that's if all development stopped a week or so ago.
Javascript is what you use to allow unknown third parties to run software you have no idea about on your computer.
(Score: 3, Touché) by Anonymous Coward on Sunday November 02, @03:39PM
I predict 10x the amount of spam.
(Score: 0) by Anonymous Coward on Sunday November 02, @03:47PM
Fortune cookie agrees:
(Score: 2, Insightful) by khallow on Sunday November 02, @06:36PM (3 children)
Sorry, I disagree. The current industry is not that earth-shatteringly revolutionary AI. And the valuation is extreme even if it were. One of the lessons we should get from this is that there is nothing so earth-shatteringly revolutionary that we can't have overblown expectations for it.
(Score: 2) by HiThere on Sunday November 02, @09:00PM (2 children)
OK. That's a reasonable point to disagree on. As it's a counterfactual it will never be possible to test it. And it's true the current state of development is well over-valued...but I'm not certain it's future effect (after more development) isn't undervalued.
Javascript is what you use to allow unknown third parties to run software you have no idea about on your computer.
(Score: 2, Insightful) by khallow on Monday November 03, @12:19AM (1 child)
Give it two or three years. The collapse of present day AI won't be counterfactual then.
(Score: 1) by khallow on Monday November 03, @12:31AM
(Score: 2) by quietus on Monday November 03, @04:23PM (1 child)
( It is perhaps a sign of the times that I really can't distinguish anymore whether a post is written in a tongue-in-cheek mode, or not, so I beg forgiveness. )
Could you please elaborate on this statement? The applications I could imagine have to do with pattern matching [and not with reasoning]:
Just a starting point for discussion.
(Score: 2) by HiThere on Monday November 03, @06:27PM
OK. Mainly it would to act an an auxiliary to things like authors, musicians. It seems as if it might be able to replace many actors. It could learn to point out common errors in both code and legal documents. It could do tweening for video games. Those are off the top of my head. Notice that in each of those minor errors wouldn't be significant. Finding a few false positives in code wouldn't matter if it sped up debugging.
I'm sure that there are lots of cases that just didn't occur to me, and having a good use case doesn't imply that there aren't closely related cases that are negative. I'm remembering the early days of widespread computer use. Most attempts to use them were expensive failures, but the ones that weren't were the ones that we remember. And we're still living with some of the "successes" that weren't long term successes, like COBOL. (And some of the "failures" were just out-competed, like "PL/1", which I really liked...but it only ran on IBM hardware, and was rather expensive.)
Oh, I left out technical support and sales calls (cold calls). Even currently AI *could* improve those...though not if all you did with it is cut costs. It should act as a preliminary filter, to solve the obvious problems, before passing the "interesting" ones on to an actual "expert". (An AI should be able to talk to someone who doesn't know the right words to fit the script.)
Javascript is what you use to allow unknown third parties to run software you have no idea about on your computer.
(Score: 0) by Anonymous Coward on Sunday November 02, @06:12PM (2 children)
They pumped all that money into Wall Street, and the inevitable happened. As long as we can keep people adequately entertained with more sequels and updates, the bubble will just get bigger.
We are in CrazyLand.. Let's enjoy our creation
(Score: 1) by khallow on Sunday November 02, @07:28PM (1 child)
I think it's pumping federal funds from somewhere, but that's a long lag for QE (which has been going on since 2009). I think the early phase money came from covid funds, and the current stratospheric rise probably has help from the Trump administration.
(Score: 1, Informative) by Anonymous Coward on Sunday November 02, @08:08PM
The "current stratospheric rise" has been going on for decades of mergers, acquisitions, buybacks, and now "AI". The "Covid funds" misnomer began with the repo markets bailout in 2019 [wallstreetonparade.com]
And see First Brands [theguardian.com] for future possible bailouts, if that hasn't happened already. And "AI", well, we're already paying for that
This is a story of coke and hookers, straight out of a Hunter S. Thompson "Fear and Loathing.." novel
(Score: 2) by jb on Monday November 03, @07:07AM (1 child)
Sounds more like the seven deadly sins...
(Score: 2) by gawdonblue on Tuesday November 04, @06:12AM
Not sure that Tesla should be in that group. Its share price is about what it was 3 years ago.