The investor who bet against the US housing market in the run-up to the 2007 financial crisis has now placed a significant wager on the collapse of the artificial intelligence (AI) boom.
Nvidia
$4752 B Market Cap
$165 B Revenue
$100 B Earnings
$40 B Liabilities
$140 B Assets4752/100 = 47 years to pay up market cap
Palantir
$445 B Market Cap
$3.44 B Revenue
$0.79 B Earnings
$7.36 B Assets
$1.34 B Liabilities445/0.79 = 569 years to pay up market cap
He’s not wrong. It’s pumped more than in 1998
1998 didn’t have retail investors, meme stocks or Bitcoin. The entire market turned into a carnival, I’m not sure old rules apply. For fucks sake people are trading futures on NFT’s.
It’s the same game, different rules. People nowadays don’t care about the shit that made the companies picked by Berkshire Hathaway successful, like brand recognition or quality, they are about, what, glitter and noise? It’s naked gambling on how insane it can all get, and I think there’s even odds on the bubble going nuclear and us all getting paid with NvidiaBux a year from now.
Bitcoin is basically just gold but digital. It’s sucking away investment capital; one of the chief criticisms against it is that deflation discourages business investment.
Your investment in mutual funds is also an investment in Nvidia which is also an investment in OpenAI. But bitcoin/gold isn’t contributing to the value of anything else.
More tech companies :
Oracle
$713.58 B Market Cap
$59.01 B Revenue
$18.07 B Earnings
$180.44 B Assets
$155.78 B Liabilities713.58/18.07 = 39.48 years
Google
$3433 B Market Cap
$371.39 B Revenue
$140.07 B Earnings
$502.05 B Assets
$139.13 B Liabilities3433/140.07 = 24,51 years
Apple
$3991 B Market Cap
$408.62 B Revenue
$130.21 B Earnings
$331.49 B Assets
$265.66 B Liabilities3991/130.21 = 30,65 years
Microsoft
$3769 B Market Cap
$281.72 B Revenue
$123.62 B Earnings
$619.00 B Assets
$275.52 B Liabilities3769/123.62 = 30,48 years
Amazon $2674 B Market Cap
$670.03 B Revenue
$85.15 B Earnings
$682.17 B Assets
$348.39 B Liabilities2674/85.15 = 31,40 years
Meta
$1602 B Market Cap
$178.80 B Revenue
$81.23 B Earnings
$294.74 B Assets
$99.67 B Liabilities1602/81.23 = 19,72 years
Bank
JPMorgan
$848.45 B Market Cap
$175.65 B Revenue
$71.04 B Earnings
$4552 B Assets
$4195 B Liabilities848.45/175.65 = 4,83 years
You divided by revenue, not earnings like the others.
For consistency:
848.45/71.04 = 11.943 yearsEdit: same with your Microsoft calculation
Thanks, corrected Microsoft
AMD
$415.98 B Market Cap
$29.60 B Revenue
$2.47 B Earnings
$74.82 B Assets
$15.15 B Liabilities415.98/2.47 = 168,41 years
TSMC
$1522 B Market Cap
$88.34 B Revenue
$42.91 B Earnings
$239.88 B Assets
$81.82 B Liabilities1522/42.91 = 35,47 years
Aramco ( this one is below 10 yay )
$1671 B Market Cap
$461.56 B Revenue
$193.21 B Earnings
$659.66 B Assets
$212.28 B Liabilities1671/193.21 = 8,65 years
What’s the ETF or index to bet for AI bubble burst?
Pretty sure you give money to this guy
A billion? With what money? A quick search says he’s only worth 1/3 of that. If he’s shorting it he’s gonna be toast.
Isn’t his job to bet with other people’s money?
He’s highly regarded.
That’s offensive, he’s just artistic
Is it really a bubble?
A lot of the money is coming from the bank accounts of big tech not investors
A concerning amount of investor money in the market is riding on the wellbeing of a few big tech companies. And it got that way because the absurd valuations of those companies is built on speculation that AI will change the economy and company X will benefit from that for reason Y. When it becomes clear that either AI will not change the economy or that company X will not benefit greatly from said changes, that valuation will pop and investor assets will lose value. I’d call that a bubble
Expiration and strike price were not shared so unclear what his play is. For reference “the big short” was about 1.3 billion in total placed in 2005-2006 with an expiration around 5 years later around 2010-2011. It was somewhat standard for burry/scion capital and possibly still is so they could be playing this assuming the bubble will pop no later than 2030 (and paying 10s of millions a year to maintain those contracts) or they possibly have data to suggest an earlier expiration is worthwhile. They obviously won’t share this and public disclosures aren’t required
What’s an accessible way for a non-wealthy person to bet against the AI bubble?
Yes I understand that this is tantamount to gambling.
Sell your index funds and tech stocks.
Buy Berkshire Hathaway (who’s sitting on a big pile of cash for crash buying, as they do), Walmart, and bread and butter ones, companies that make things folks would still buy in a recession (like groceries).
Don’t mess with shorts. You don’t know when the bubble will burst, and these companies will make you money even if it never does.
Puts on nvidia and palantir is what he bought, basically, with palantir:nvidia at 8:2 ratio so he has far more confidence palantir will blow up (in a bad way).
Note that if you don’t know what this means, or if your only knowledge of “buy puts” is buying them via an app like robinhood, keep in mind you don’t know nearly enough about the risk involved and this could blow up in your fucking face real bad.
Especially in the unlikely scenario AI crashes extremely hard (eg palantir goes to 0) and you have a naked put - using today’s closing price of $190 if you chose a strike of $180 your max profit is $285 per contract but your max theoretical loss is like 18,000 per contract if it drops to 0 (again, unlikely, but a more realistic scenario wherein it drops to say, $150 - you’re out almost $3k per contract). With a naked put your goal is for the price to hit the target, basically, so the closer to 180 the better (without dipping below) and this wouldn’t be a good idea for what you’re asking, but just an example of how the wrong play could lose you tons of money. A naked call goes the other way and as a result can be infinite loss. Retail investors (ie you) have lost six figure sums playing with this, life ruining shit, avoid avoid avoid
Options that are safer if you don’t want to get this involved in what is ultimately literal gambling: take a degree of separation. Instead of puts directly on nvidia or palantir puts on qqq, xlk, aiq, or some other etf that is made up of AI bullshit. Spreads risk but limits payoff. Use the strategy this nerd used: long dated puts. Keep in mind this is more expensive up front and for the retail investor you’ll generally max out 6-12 months realistically. He did 4-5 years out but that came with additionally complexity (especially for the billions in contracts he held) which meant tens of millions in payments to secure the contracts each year, which made his investors furious (though they ended up eating shit because he made them 730 million and over 100 million for himself on top of that).
Just keep in mind that options trading has ruined many people who know what they’re doing and it’s ruined way way more who have no fucking clue but think they do (I’m in this category). For every dipshit that makes millions off of gamestop there’s probably a hundred people or more like the people from reddit that post shit like this
Don’t end up like that person. There are so many of them on reddit. They succeed with a few trades, get up 5k, 10k, 50k, then get greedy and have mad hubris and believe they’re now “elite traders” so they piss it all away, often in a handful of trades over a few days/hours because the loss causes them to panic and try to recover with foolish long shots. The sad thing is you’ll read some where it’s like “I’ve been poor my whole life and I finally got a 30k inheritance, got it to 45k” and then a screenshot like that where they pissed it all away in a day to functionally hand it to some 1%er nepo baby hedge fund manager who is worth 15 million and has never wanted for anything in their life. Then they talk about all the debt they could’ve paid off and it’s like “what the fuuuuuckkk duuuudeee”
Don’t buy naked puts and absolutely do not ever buy naked calls, which have unlimited risk, though I don’t know why you would in this scenario (or ever really). If nothing else please at least read this part.
What?
Lot of confusion in this post.
Buying a call or a put always has limited downside, which is the amount you used to purchase the contract. Now, it’s still super easy to lose your shirt, but far from the “infinite loss” (it’s not infinite, just unbounded) parent mentions.
It is much riskier to sell options. Don’t sell options. The one scenario that possibly has “infinite loss” is if you SELL a naked call. Many brokers will not let you do so.
But most of that is besides the point. The way that you would make this play as a retail investor is buying puts. On Nvidia or what you expect to crash directly. If you think the whole market, then SPY. DO NOT BUY OPTIONS ON ALREADY-LEVERAGED INSTRUMENTS LIKE QQQ. It doesn’t work out like you would hope - it’s not extra leverage, you just get eaten by decay.
Yeah, WSB was wild in its heyday. The loss porn was crazy.
GME completely ruined WSB.
While I don’t think it’s good to encourage what is basically glorified gambling, it was mental to watch from the sidelines the crazy shit people did on there pre-GME. After that it all went a bit conspiratorial and “get rich quick!”…
I don’t follow your reasoning on large losses when buying options, even naked ones. When you own an option you have a right but not an obligation. Do you mean selling options?
I think they meant selling, yes. But also, most brokers for the commoner won’t let you trade options without specific interest/understanding, yet alone sell naked options.
You can’t “generally” bet against it with any reasonability. You need to be specific.
If you want to gamble on WHEN the AI bubble will pop, you buy large amounts of cheap puts on big-tech at a price substantially lower than where it is today.
If you have positions in companies that are overvalued due to the AI bubble, you can sell them or better yet place a stop loss. That way you can still benefit from the bubble further inflating, with less risk that you hold the bag at the end.
Other than that, invest in unrelated companies/ETFs with less weight on these companies. You’ll still crash with the rest of the market but should recover faster than those in the AI bubble.
Don’t try to do anything fancy. You’ll have to gamble to time the pop and even if you’re right, you may still get outperformed by someone with just an S&P500 ETF over that time.
Less risky: sell stock you hold in nvidia or other AI heavy companies. Invest in non AI.
Risk to the max: short nvidia stock. Each month they don’t crash, your wallet hurts.Just know that Burry is more confident in Palantir crashing than Nvidia (considering how much he’s shoring each).
If you’re in the US, that’s just part of daily life at this point. Employment? Food? Water? Shelter? Sanity? Hope? 🤷🏼♂️ Pick three, and roll’ em!
For me those stats are very low, can I roll perception instead?
Do you want ennui? That’s how you get ennui. (Pfft. Rolling Perception in a dystopian blightmare. This guy. Ha!)
Animal Handling or Performance, your choice.
While I want both to be true, he’s betting against governments wanting actionable intelligence on each and every citizen (although the moat there is shallow, easy for someone else to start a race to the bottom) and massively parallel processors becoming less valuable (remember how smoothly they switched from crypto to AI?, remember when you could buy a gaming video card for less than the rest of your computer, likely another bubble in the wings) plus the whole circular investment is propping up the entire US economy situation, the epitome of too big to fail (without the whole US economy going tits up, which given the current situations is distinctly possible). Actually 8:2 sounds ballpark, but I doubt he’s not hedging his bets.
While I want both to be true, he’s betting against governments wanting actionable intelligence on each and every citizen
Not at all… governments can keep that even if ALL commercial AI disappears today. The gov wanting this would keep the tech alive but not commercially viable at all; if anything, the gov would prefer to have it all to themselves and keep whatever advantage it’s supposed to provide.
AI, in and of itself, if not more privacy intrusive than: cellphones, facebook, google suite, etc
being against governments wanting
A thing they already had and this doesn’t help with
but the infra!
That burns out in like two years
but the ponzi scheme can’t collapse!
…
I was just watching some videos about China’s system they’ve already been exporting for a tenth of the price
Also the anerican system they had a decade ago.
Governments that think AI can reliably automate this don’t understand the technology.
Nobody who thinks this has a broad use case unferstands it
They don’t care about the “reliably” part.
Well, kinda. To be more specific, he’s mostly betting that Palantir is overvalued, which it probably is. Peter Thiel is a nut case.
Well, he’s right about the Antichrist. Peter Theil knows about the Antichrist.
He’s right about that - 100% right, but there’s SOOOO many things overvalued right now and it doesn’t seem to matter. Like, whatever is good on paper doesn’t necessarily correlate with reality in this market.
This guy does nothing but bet that the market will crash. Not to say we aren’t in a bubble, but this doesn’t mean it’s about to pop
He’s predicted 12 of the last 2 market crashes
I don’t know if this is a typo or a sick burn
I like those odds! ALL BETS ON BLACK!!!
He also lost big on Teslur
Something something irrational
What could realistically pop the bubble? Afaik, it’s a bubble because everyone is buying buying AI stocks, the goverment and every investment fund including pension funds are invested on it. How does this ever burst if theyre all in on this? Could the withdrawal of an investment fund with a large % of ownership cause a snowball and pop the bubble?
If there’s no profit being made companies won’t keep spending. A large part of this bubble are the plans tech companies have to build out more AI. If these companies blink and reduce their plans it will begin the selloff. They’re still all in on forcing AI down your throat, because they need you to be used to using it so they can start charging you a monthly subscription.
There is a big media event now to post scary news about the stock market, and push bitcoin and tech stocks down.
Happens now and then when the big investors want to get in cheaper.
Ive seen this dance a lot of times now.
Well then they should post more because it doesn’t look like prices are dropping.
Probably now it will drop a bit, this week, due to negative news. Today is also down it looks like.
But normally its forgotten the week after. :)
Do you know who this guy is?
Yeah, and The Big Short is one of my favorite movies in that genre.
Welp, I just shorted a bit. I guess bears think alike, or something…
Ruh roh Raggy!
