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Comment on The Big Short Guy Just Bet $1 Billion That the AI Bubble Pops

The fact that he was even able to make that bet is incredible. How deluded do you have to be to think the AI bubble won’t burst? Keeping it going will require in ever-increasing amounts of money to paper over the gaping chasms that keep cropping up, and eventually the amount of money necessary to keep it going will cease to be feasible. Then, after taking gullible investor for all of they’ve got, the whole thing will fall over in the world’s most well deserved and predictable market crash.

The subprime mortgage collapse was inevitable only in hindsight, you had to have a good understanding of the market to see it in advance. To see the level of corruption and false promises that have to be made in order to make the mortgage bubble possible. But everyone can see the AI BS right out in the open, I’m not talking about the “how many Rs are in strawberry” questions either, I can sort of see why that’s not really a fair question. I’m talking about the fact that every single business that has ever tried to replace its employees with AI, has always failed, and failed almost immediately. Even Amazon couldn’t make it work.

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silasmariner@programming.dev ⁨3⁩ ⁨days⁩ ago
I think the idea is that, whilst shorting, you get squeezed. The question is not ‘if’ but ‘when’ and if it takes too long and you’re $1B deep you can lose your shirt

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- DragonTypeWyvern@midwest.social ⁨3⁩ ⁨days⁩ ago
  Yep. The market can stay irrational etc
  
  The thing is though as long as it goes down that’s usually all you need. You don’t need a total collapse.
  
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  - sugar_in_your_tea@sh.itjust.works ⁨3⁩ ⁨days⁩ ago
    That’s the thing though, options are generally relatively short in duration, with most being a few months. The longest options are around 1-2 years out.
    
    Could AI stay keep its hype for 1-2 years? Probably. Will it? Who knows!
    
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    some_kind_of_guy@lemmy.world ⁨2⁩ ⁨days⁩ ago
    I assume he has enough funds to buffer and roll it forward if it takes longer than he thinks.
    
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CrabAndBroom@lemmy.ml ⁨3⁩ ⁨days⁩ ago
I think, AI quality aside, it’s mostly a matter of timing - IMO the AI bubble is obviously going to pop, NVIDIA’s market cap is now 16% of the entire US GDP and OpenAI is trying to IPO at a trillion dollars, which seem like ludicrous numbers to me. But I learned from the last few years that you can also never really underestimate society’s ability to just say fuck it and kick the can even further down the road.

And of course, SOMETHING is going to have to be the final straw that brings it all down, and it could very well be this. But I also didn’t think we’d get this far - the 2008 crisis didn’t do it, COVID somehow didn’t do it, but these things are are also all compounding as we don’t deal with them properly. And if AI is going to be the last straw, how long can we put it off for? Could it pop next year or can we still hold it off for another decade with even more ludicrous number-fuckery? I think that’s where the trick is going to be.

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- sugar_in_your_tea@sh.itjust.works ⁨3⁩ ⁨days⁩ ago
  The market can remain irrational longer than you can remain solvent.
  
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  - someacnt@sh.itjust.works ⁨2⁩ ⁨days⁩ ago
    Uh oh, I can stay solvent for quite longer
    
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- aesthelete@lemmy.world ⁨3⁩ ⁨days⁩ ago
  
  And if AI is going to be the last straw, how long can we put it off for? Could it pop next year or can we still hold it off for another decade with even more ludicrous number-fuckery? I think that’s where the trick is going to be.
  
  The thing that boggles my mind in all of this is the possibility that Trump installs some absolute tool bag in at the Fed and then just has the federal reserve bail out all of the bad investments. It’d mean probably hyperinflation, but who cares about normal shmucks trying to live a life? It’s much more important to pay the genius, scammy billionaires so they can keep their mega yachts gassed and assed.
  
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rekabis@lemmy.ca ⁨3⁩ ⁨days⁩ ago
everyone can see the AI BS right out in the open

To me it is four things in particular:

How AI use erodes skills in the subject AI is being used to assist in. This is a 100% occurrence, from software developers to radiologists.

How AI use shuts down critical thinking, and makes users more stupid. This is a 100% occurrence, and has been clearly demonstrated by MRI scans of the prefrontal cortex.

How AI use makes the user slower. This is the only user point that is not 100%, as only less than 2% of the most senior and skilled users show a slight increase in work completed… after more than 12 months of using AI. Projections have been made on the other 98%, and over 90% of them will never work faster with AI than without it, regardless of training or experience.

The gratuitous hallucinations, which are only increasing in scope and severity with every AI generation. It arises entirely from the constraints the AI are rewarded with - providing no answer is weighted just as negatively as a wrong answer - and anywhere from 60-80% of all responses are hallucinatory in some fashion, depending on the current model.

In prior generations, any industry with such performance would be laughed clear out of the boardroom.

But because capitalism is desperately seeking a solution to what they perceive as a problem - how to obtain labour without having to pay said labour - AI is being adopted hand-over-fist.

After all, the underlying purpose of AI is to allow wealth to access skill while removing from the skilled the ability to access wealth.
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- tonytins@pawb.social ⁨3⁩ ⁨days⁩ ago
  Ugh… Minor rant.
  
  My aunt is into tech like me. She dived head first into the AI in the middle of the hype instead of during IoT era when machine learning (the foundation of modern GPT models today) was part of a larger SDK for building smaller tasks. Now she won’t stop pushing it onto my mom like a salesman by saying she should do this and that with ChatGPT or whatever, and it’s so freakin’ annoying.
  
  Luckily, I’ve told my mom straight up to buy into it.
  
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  - silasmariner@programming.dev ⁨3⁩ ⁨days⁩ ago
    Huh. Never noticed the MLM parallels of the current AI hype so much before. Literally levenschtein distance of one, should’ve spotted it.
    
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- OsmerusMordax@sh.itjust.works ⁨3⁩ ⁨days⁩ ago
  Do you have references for these claims? I believe you, but I’d like to know more.
  
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- AnyOldName3@lemmy.world ⁨2⁩ ⁨days⁩ ago
  Investors have been happy to incentivise companies to hire idiot CEOs and managers who say the right buzzwords but reduce output by making bad decisions and only hiring people who don’t think they’re bad decisions, so an automated buzzword-dispensing idiot isn’t necessarily going to seem to investors like a downgrade compared to what they think most workers are. They’re just as likely to think AI lets them invest in companies where even the lowest tier employees are potential CEO material, and continue not noticing that the per-employee efficiency keeps going down. Data showing that layoffs nearly never pay for themselves doesn’t stop stock prices soaring whenever one happens, so I wouldn’t expect data showing AI makes companies less profitable to stop stock prices going up when a company announces a new dumb way they’ll use it.
  
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- iAvicenna@lemmy.world ⁨3⁩ ⁨days⁩ ago
  All this you listed is the reason why we are fucked if we keep depending more and more on “this” AI and don’t get a revolution in the AI field to replace the current one with AGI. Because in ten years we risk losing a big chunk of expertise and if we don’t have an AI that can really replace the current one with something that can actually replace experts then there will huge infrastructure problems across multiple industries.
  
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Juice@midwest.social ⁨3⁩ ⁨days⁩ ago

inevitable only in hindsight

I’m not so sure. I’m still friends with a guy who told me emphatically “you dont understand what we did, we destroyed the global economy” and then explained the whole subprime mortgage scam to me, back in like 2007. Lots of downstream businesses, new home builders, paint and drywall companies, building materials stores, started folding several months before the official crash as well. I wasn’t nearly as aware of things then, I was a grown adult but not yet 30 and with little formal education, but there were definitely huge flashing signs. Only the media, based 100% on the words of the banks and insurance companies, thought that a crash was undetectable.

I’m not sure quite what it would look like yet, but I’m willing to bet if you look where these data centers are being built, when the cash runs out to keep the whole scam afloat, these big companies will stop paying their bills. The smaller companies providing services and supplies will run out of money before the huge mega corpos start showing signs, so that is one of the metrics I’m watching closely. I just happen to live in the shadow of these data centers so I’ll be pretty close to it, that is if I’m right.

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- Rivalarrival@lemmy.today ⁨3⁩ ⁨days⁩ ago
  One of the first deals I did in real estate (~2006) was a sale at 115% loan-to-value, no money down, seller-paid closing costs. The buyers received $2500 at closing. Nobody batted an eye.
  
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- aesthelete@lemmy.world ⁨3⁩ ⁨days⁩ ago
  I remember the news reporting about record breaking amounts of loan defaults in like 2007 as well. The signs were all there, but people were too oblivious or high on their own supply of farts to see them.
  
  Anytime people are like “we couldn’t see this coming” I never understand why they are allowed to pass that obvious lie off in public.
  
  The AI bubble signs are in plain view literally everywhere you look right now. If (or much more likely when) it bursts everyone will be talking about how they couldn’t possibly see it coming again.
  
  If people say they couldn’t see this shit coming, maybe their myopic asses shouldn’t be in charge of things ever again.
  
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- AnyOldName3@lemmy.world ⁨3⁩ ⁨days⁩ ago
  There was quite a lag between the variable-rate mortgage rates going up and everything noticeably exploding, so lots of people who were aware there was a real risk of things going tits up decided that it hadn’t and therefore wasn’t going to and had stopped looking for signs by the time they started to appear.
  
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partial_accumen@lemmy.world ⁨3⁩ ⁨days⁩ ago
The fact that he was even able to make that bet is incredible. How deluded do you have to be to think the AI bubble won’t burst?

Nobody believes the AI investment/growth trajectory we have right now will continue for infinity. What nobody knows is: when the correction will occur.

Do you pull your investments out now and sit on the sidelines waiting for the fallout while your principal loses value daily from inflation?

What does the correction look like when it happens? Does all the value evaporate on day 1, the first week, a month? This is important to figure out for this strategy to know when to go back in.

This is the info/decisions you’d need as an average investor. What Burry is doing is the riskiest type of investments with shorting the market. If growth continue to occur he and his fund will have to pay for the growth to those whose shares he borrowed to short.

In summary, its not enough to know that a bubble exists, but to profit from it you have to figure out when it will burst and when the full burst is done.
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DeathsEmbrace@lemmy.world ⁨3⁩ ⁨days⁩ ago
Rich dumbasses found a place to waste all their money instead of the government taxing them and using that money for important things they let them waste it on some climate change accelerator

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unit327@lemmy.zip ⁨2⁩ ⁨days⁩ ago
Everyone can see it coming, but they believe the AI companies’ hype that the AGI breakthrough will be here “soon”. Which if actually true, might be worth the bet.

For my money they either hit AGI and then we all die, or there is a crash before that. Yay.

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