everyone panic selling could spread over to people panic selling everything and trying to get their hands on cold hard cash so their entire life savings dont vanish in an instant, so market wide we could see big drops?
Yeah, that’s basically what happens in a major correction. In fact, stock prices are valid basically the result of how many prior people are buying vs selling; more buyers than sellers causes prices to go up, more sellers than buyers cause prices to go down. Stock prices tend to have momentum precisely because of this (people try to jump on the bandwagon on the way up and jump off on the way down). And that’s also why we tend to see a quick recovery afterward once all the facts come out.
I don’t think this is like the .com or financial markets of the 2000s. But let’s say it is. If I bought at the peak of the .com bubble (March 10, 2000), I would’ve gotten 5.3% annualized growth over that 25 years (so $1k would be $3900-ish), assuming I don’t sell. The impact would be limited long term.
The AI bubble popping wouldn’t be the catastrophy many are making it out to be. I think it’ll be closer to the 2020 correction.
I think Nvidia is overvalued. I don’t think the economy will crash if AI crashes.
Yeah, that’s basically what happens in a major correction. In fact, stock prices are valid basically the result of how many prior people are buying vs selling; more buyers than sellers causes prices to go up, more sellers than buyers cause prices to go down. Stock prices tend to have momentum precisely because of this (people try to jump on the bandwagon on the way up and jump off on the way down). And that’s also why we tend to see a quick recovery afterward once all the facts come out.
A 20-30% drop is a pretty big deal. It’s not anomalous though. There have been 19 major corrections (over 20% loss) over the past 150 years, meaning it happens every 7-10 years on average (150/19 ~= 7.8 years).
I don’t think this is like the .com or financial markets of the 2000s. But let’s say it is. If I bought at the peak of the .com bubble (March 10, 2000), I would’ve gotten 5.3% annualized growth over that 25 years (so $1k would be $3900-ish), assuming I don’t sell. The impact would be limited long term.
The AI bubble popping wouldn’t be the catastrophy many are making it out to be. I think it’ll be closer to the 2020 correction.
I think Nvidia is overvalued. I don’t think the economy will crash if AI crashes.