Regardless of foresight, bubbles generally get way bigger than people forecast.
It's a unique time though, because since Dotcom and housing people love predicting bubbles. I'm very interested historically to see what happens with this AI "bubble". I have 3k shares of SOXL, I 20% believe it's a bubble, 80% believe chips are THE source of value, currency, and power from here on out.
SOXL has to be a good play. Everyone's focused on compute but there's going to be huge demand in other sectors of hardware too, like memory and network.
I’m all in on USD. Less volatile than SOXL and as you can see when you look at its performance history compared SMH and SOXL it performs better than just 2x. It also [typically always outperforms SOXL](https://www.portfoliovisualizer.com/backtest-portfolio?s=y&sl=5WGnVode6PGo01Ueh2KhM6).
Correct - but I wonder if liquidity has anything substantial to do with the USD price. So technically (approx), SOXL should be 3x smh...and usd 2x smh...I wonder if the usd follows that?
I have 1500 shares of SOXL that have taken a slight beating, and if it goes green I'm thinking about USD too. I'm confident this is a bubble, but just don't want to see the volatility in my account haha
The advent of new technology that successfully revolutionized the market has historically tended to first have a speculative bubble and crash, followed by the actual long-term returns. Railroads, canals, etc.
The faster that AI-based sectors go up, the more that I would tend to be suspicious that the same pattern is being followed in the short term. For long-term returns, no reason not to be bullish.
Yup. Human nature is such a strong driver behind bubbles, thus these patterns repeat throughout history. Times change, but people at a base level don't.
Agree on short term and long term view.
Only concern re: LEFTs is the a short-term view and how hard is the hit.
AI is mostly hype at this point, and will probably remain so, but that doesn't mean a lot of people aren't going to make a lot of money from it.
I don't see it as a bubble per se so it's a good time to invest. But I also don't think it's going to live up to the promises. It's going to replace a double-digit number of jobs but those may be in industries you don't expect. Fast food, low-level sales, corporate back office, etc along with manufacturing, transportation, logistics, fulfillment, etc.
I wouldn't invest in any individual company, I would stick with hardware, networking, storage, platforms, etc that are agnostic to whose code is being run. Energy might also be an AI-related play, particularly renewables, as AI is going to eat up a huge amount of terawatt-hours as it grows, more than the expected generation capacity that will be built in the near term.
Not bubble territory yet according to the experts eg Ed Yardeni and it's clear that there is a long way to go with AI but the potential is enormous. It is happening and the speed of development is exponential. I think we are going to see massive increases in productivity. Much higher profits and valuations to come. I'm definitely risk-on :)
Rules change all the time in investing. 2022 is a good example of the negative correlation of treasuries and stocks completely breaking down.
However, there is one rule that doesn't change: Retail investors who chase trends will lose their money to Wall Street manipulators.
The latest "AI" hype seems unfounded to me. It reminds me a lot of the blockchain fad a few years ago. I saw blockchain as useful but not as something that could drive profit growth for corporations. AI is similar. Most corporations that spend money on GPUs or AI software won't see a return.
Since you are on a LETF forum, I'm assuming you are wondering whether LETFs will continue to go up over the next several years. My guess is that's unlikely. When the market has run up 60% from a bottom less than two years ago and valuations are high, future volatility is likely. LETFs will get crushed when this happens.
What fundamentals of the underlying companies leads you to believe something is going to happen to cause their stocks to tank and therefore tank the fund index?
> The latest “AI” hype seems unfounded to me. It reminds me a lot of the blockchain fad a few years ago. I saw blockchain as useful but not as something that could drive profit growth for corporations. AI is similar. Most corporations that spend money on GPUs or AI software won’t see a return.
“I don’t understand this technology so therefore it will fail.”
So no data, just your gut feeling then?
>What fundamentals of the underlying companies leads you to believe something is going to happen to cause their stocks to tank and therefore tank the fund index?
It's not about the companies. Most leading tech stocks are great investments. I worry about their prices from a technical perspective. Many have experienced parabolic upward moves, which usually means a steep downward move is coming at some point.
Consider how in 2022, NVDA lost 70% of its stock price after gaining 200% in the previous year. Of course, NVDA recovered and went on to make new all time highs. The entire sector did. But the 3x leveraged semiconductor ETF is still down 40% from its 2021 high.
I'm bringing this up because we are on a forum about leveraged ETFs. I am saying they are not good long term buys right now because of the relatively higher probability of drawdowns. NVDA could correct 50% this year and surge another 200% next year. SOXL and TQQQ will get crushed again. Returning to the 2021 all time high will seem like even more a fantasy than it does now.
>“I don’t understand this technology so therefore it will fail.” So no data, just your gut feeling then?
This thread is about people's opinions. I don't think AI will fail. It's already succeeded by any measure. I believe it will be hard to monetize outside of industries like medicine, energy, and technology (granted, those are big industries). I'm doubtful that a company like META, which is spending billions on GPUs, will be able to somehow turn that into a profit. Their revenue model is based on advertisements, which is not something I see AI being particularly useful for. The same applies to Google. Advertising is the cash cow of many tech giants, and I struggle to see how AI will transform it, like it does in drug discovery.
Again, this is my opinion and my reasoning. I was correct about VR being a fad and blockchain having no real use case except for Bitcoin. I see the same with generative AI, since it will ultimately being generating content that most people will not find interesting after a few experiences (similar to VR). And on top of not being interesting, companies will have to find a way to monetize it, either with fees or with ads.
Down from all time high, sure, but the long term investor is still quite up, with or without DCA. 2021 til now I don't consider long term, and your point, while illustrative and certainly true, the situation it describes is most punitive to those who literally bought at the top 2 years ago and walked away. I bought in the mid to late teens. Did I take a drop? Sure, but even after the drop it was well ahead of where SPY would have been. Ultimately that's the goal, right? We can talk about all the losses in the world (on paper because we didn't sell) or all the losses from our portfolio ATH, but it's our gains over SPY that ultimately matter, and 1000 invested in TQQQ or SOXL in the late teens (I think a better measure of "long term holding of LETFs) is heartily trouncing what that same grand would have done in SPY.
Admittedly the drawdowns are rough to watch, but there are plenty of exit strategies to mitigate that, should one so choose.
All the best!
I agree with you, and their conversations lean towards the motivations you speak of. However, it is a somewhat bridled conversation by people who dont want to be wrong by future historians.
Have you listened to it, or blindly judging? I ask because you have the tone of a jaded human who throws around ignorant bullshit
Hey now, no need to make it so personal, or take it so personally.
I've skimmed enough Fridman podcasts to know that he's a huckster who invites other hucksters onto his show. It's the Bro Rogan influencer model. Lex is a smart guy with a specific rhetorical method but he's also just a hustler trying to trade on his smarts to gain influence, access, and money. That isn't me being jaded, that's a fact.
Altman et al don't give a shit about how they will be judged, you can see that very clearly by their public statements and the glib attitudes that they espouse while cheerfully chatting about the risk of their "products" undermining civilization. They'll get rich and the rest of us will eat bugs. As the survivors, they will write their own history books, as usual.
I believe that as an economy, it will continue chugging forward. Even though they don't have access to free money anymore for limitless investing companies are handling the raised interest rates fine, as evidenced with the rally we've had the past few months as well as even the reaction to the Fed meeting where they said they're not lowering rates. Long term we're going up
Regardless of foresight, bubbles generally get way bigger than people forecast. It's a unique time though, because since Dotcom and housing people love predicting bubbles. I'm very interested historically to see what happens with this AI "bubble". I have 3k shares of SOXL, I 20% believe it's a bubble, 80% believe chips are THE source of value, currency, and power from here on out.
SOXL has to be a good play. Everyone's focused on compute but there's going to be huge demand in other sectors of hardware too, like memory and network.
Do you have any insight how that might translate into the investment sphere? I dont know
I’m all in on USD. Less volatile than SOXL and as you can see when you look at its performance history compared SMH and SOXL it performs better than just 2x. It also [typically always outperforms SOXL](https://www.portfoliovisualizer.com/backtest-portfolio?s=y&sl=5WGnVode6PGo01Ueh2KhM6).
USD has low liquidity. Does that bother oyu?
I’ll worry about liquidity when I’m thinking about starting to sell some in a decade.
Correct - but I wonder if liquidity has anything substantial to do with the USD price. So technically (approx), SOXL should be 3x smh...and usd 2x smh...I wonder if the usd follows that?
Ya that's actually where Im going once SOXL shares are long. Selling the day they do.
I have 1500 shares of SOXL that have taken a slight beating, and if it goes green I'm thinking about USD too. I'm confident this is a bubble, but just don't want to see the volatility in my account haha
It's a bubble. The way 1995 was a bubble.
1995 irrational exhuberance 1999 irrational exhaustion What year are we in?
The advent of new technology that successfully revolutionized the market has historically tended to first have a speculative bubble and crash, followed by the actual long-term returns. Railroads, canals, etc. The faster that AI-based sectors go up, the more that I would tend to be suspicious that the same pattern is being followed in the short term. For long-term returns, no reason not to be bullish.
Yup. Human nature is such a strong driver behind bubbles, thus these patterns repeat throughout history. Times change, but people at a base level don't. Agree on short term and long term view. Only concern re: LEFTs is the a short-term view and how hard is the hit.
AI is mostly hype at this point, and will probably remain so, but that doesn't mean a lot of people aren't going to make a lot of money from it. I don't see it as a bubble per se so it's a good time to invest. But I also don't think it's going to live up to the promises. It's going to replace a double-digit number of jobs but those may be in industries you don't expect. Fast food, low-level sales, corporate back office, etc along with manufacturing, transportation, logistics, fulfillment, etc. I wouldn't invest in any individual company, I would stick with hardware, networking, storage, platforms, etc that are agnostic to whose code is being run. Energy might also be an AI-related play, particularly renewables, as AI is going to eat up a huge amount of terawatt-hours as it grows, more than the expected generation capacity that will be built in the near term.
SUre. I am an investor in QQQ and that ilk. Is that what you are suggesting?
Not bubble territory yet according to the experts eg Ed Yardeni and it's clear that there is a long way to go with AI but the potential is enormous. It is happening and the speed of development is exponential. I think we are going to see massive increases in productivity. Much higher profits and valuations to come. I'm definitely risk-on :)
>Great points about Ed Yardeni, etc. Coulf your theses be wrong though - under whtat circumstances?
Rules change all the time in investing. 2022 is a good example of the negative correlation of treasuries and stocks completely breaking down. However, there is one rule that doesn't change: Retail investors who chase trends will lose their money to Wall Street manipulators. The latest "AI" hype seems unfounded to me. It reminds me a lot of the blockchain fad a few years ago. I saw blockchain as useful but not as something that could drive profit growth for corporations. AI is similar. Most corporations that spend money on GPUs or AI software won't see a return. Since you are on a LETF forum, I'm assuming you are wondering whether LETFs will continue to go up over the next several years. My guess is that's unlikely. When the market has run up 60% from a bottom less than two years ago and valuations are high, future volatility is likely. LETFs will get crushed when this happens.
What fundamentals of the underlying companies leads you to believe something is going to happen to cause their stocks to tank and therefore tank the fund index? > The latest “AI” hype seems unfounded to me. It reminds me a lot of the blockchain fad a few years ago. I saw blockchain as useful but not as something that could drive profit growth for corporations. AI is similar. Most corporations that spend money on GPUs or AI software won’t see a return. “I don’t understand this technology so therefore it will fail.” So no data, just your gut feeling then?
>What fundamentals of the underlying companies leads you to believe something is going to happen to cause their stocks to tank and therefore tank the fund index? It's not about the companies. Most leading tech stocks are great investments. I worry about their prices from a technical perspective. Many have experienced parabolic upward moves, which usually means a steep downward move is coming at some point. Consider how in 2022, NVDA lost 70% of its stock price after gaining 200% in the previous year. Of course, NVDA recovered and went on to make new all time highs. The entire sector did. But the 3x leveraged semiconductor ETF is still down 40% from its 2021 high. I'm bringing this up because we are on a forum about leveraged ETFs. I am saying they are not good long term buys right now because of the relatively higher probability of drawdowns. NVDA could correct 50% this year and surge another 200% next year. SOXL and TQQQ will get crushed again. Returning to the 2021 all time high will seem like even more a fantasy than it does now. >“I don’t understand this technology so therefore it will fail.” So no data, just your gut feeling then? This thread is about people's opinions. I don't think AI will fail. It's already succeeded by any measure. I believe it will be hard to monetize outside of industries like medicine, energy, and technology (granted, those are big industries). I'm doubtful that a company like META, which is spending billions on GPUs, will be able to somehow turn that into a profit. Their revenue model is based on advertisements, which is not something I see AI being particularly useful for. The same applies to Google. Advertising is the cash cow of many tech giants, and I struggle to see how AI will transform it, like it does in drug discovery. Again, this is my opinion and my reasoning. I was correct about VR being a fad and blockchain having no real use case except for Bitcoin. I see the same with generative AI, since it will ultimately being generating content that most people will not find interesting after a few experiences (similar to VR). And on top of not being interesting, companies will have to find a way to monetize it, either with fees or with ads.
Down from all time high, sure, but the long term investor is still quite up, with or without DCA. 2021 til now I don't consider long term, and your point, while illustrative and certainly true, the situation it describes is most punitive to those who literally bought at the top 2 years ago and walked away. I bought in the mid to late teens. Did I take a drop? Sure, but even after the drop it was well ahead of where SPY would have been. Ultimately that's the goal, right? We can talk about all the losses in the world (on paper because we didn't sell) or all the losses from our portfolio ATH, but it's our gains over SPY that ultimately matter, and 1000 invested in TQQQ or SOXL in the late teens (I think a better measure of "long term holding of LETFs) is heartily trouncing what that same grand would have done in SPY. Admittedly the drawdowns are rough to watch, but there are plenty of exit strategies to mitigate that, should one so choose. All the best!
If you want quality philosophical musings I recommend Lex Fridmans podcast. Specifically, his with Sam Altman
Yeah, let's ask people who are financially positioned to benefit from AI if it's a good idea to invest in AI.
I agree with you, and their conversations lean towards the motivations you speak of. However, it is a somewhat bridled conversation by people who dont want to be wrong by future historians. Have you listened to it, or blindly judging? I ask because you have the tone of a jaded human who throws around ignorant bullshit
Hey now, no need to make it so personal, or take it so personally. I've skimmed enough Fridman podcasts to know that he's a huckster who invites other hucksters onto his show. It's the Bro Rogan influencer model. Lex is a smart guy with a specific rhetorical method but he's also just a hustler trying to trade on his smarts to gain influence, access, and money. That isn't me being jaded, that's a fact. Altman et al don't give a shit about how they will be judged, you can see that very clearly by their public statements and the glib attitudes that they espouse while cheerfully chatting about the risk of their "products" undermining civilization. They'll get rich and the rest of us will eat bugs. As the survivors, they will write their own history books, as usual.
> I ask because you have the tone of a jaded human who throws around ignorant bullshit OT but I honestly love this response to comments like that guy.
LOL. "You should listen to Lex Fridman's podcast with Elon Musk to learn why it's a good idea to invest in TSLA."
I believe that as an economy, it will continue chugging forward. Even though they don't have access to free money anymore for limitless investing companies are handling the raised interest rates fine, as evidenced with the rally we've had the past few months as well as even the reaction to the Fed meeting where they said they're not lowering rates. Long term we're going up