Some guy spending a billion dollars on pretty much nothing makes me deeply uncomfortable. Tax billionaires.
The Big Short Guy Just Bet $1 Billion That the AI Bubble Pops
Submitted 6 months ago by tonytins@pawb.social to technology@lemmy.world
https://futurism.com/artificial-intelligence/big-short-michael-burry-1-billion-ai-bubble
Comments
chunes@lemmy.world 5 months ago
BombOmOm@lemmy.world 5 months ago
Capital gains are taxed. Profits from this are capital gains.
echodot@feddit.uk 5 months ago
He famously isn’t rich. He manages the money of the rich, he himself is only well off. This isn’t his money he’s investing, it’s the money of the people he works for. So there’s obviously some market feeling that this is a good bet.
merc@sh.itjust.works 5 months ago
Also, the way short positions work is that the people who are most successful at shorting a stock are the ones who have a megaphone to announce they’ve shorted the stock. They go on as many podcasts, news shows, interviews, etc. as possible to say things are going to crash. Because, the more people who hear about it, the more hesitation there will be to invest, which means the more chances of their prediction coming through.
So, he’s not just some guy who is betting on the bubble bursting, he’s a guy who is now heavily incentivized to cause the bubble to burst so he can make his investors a lot of money.
BackgrndNoize@lemmy.world 5 months ago
He’s a multi millionaire, that’s far more than just well off
sugar_in_your_tea@sh.itjust.works 5 months ago
Good thing Burry isn’t a billionaire, he’s a fund manager.
Gold_E_Lox@lemmy.dbzer0.com 5 months ago
true, lucky he is only worth hundreds of millions…
cley_faye@lemmy.world 5 months ago
You must be annoyed A LOT these days. It seems that spending a lot of money on nothing is the latest trend for these people.
dan1101@lemmy.world 5 months ago
But spending it on their own terms. They would spend $100,000 on lawyers and lobbying to avoid paying $20,000 of new taxes.
drmoose@lemmy.world 5 months ago
has bet over $1 billion that the share prices of AI chipmaker Nvidia and software company Palantir will fall
not a very tough bet to make tbh
dreadbeef@lemmy.dbzer0.com 5 months ago
are… you making that bet?
drmoose@lemmy.world 5 months ago
Nope can’t be bothered with any gambling - life’s too nice for crap like this.
PlanterTree@discuss.tchncs.de 5 months ago
Predicting the random market movements is … almost impossible, even for this “big short guy” imho.
Toneswirly@lemmy.world 5 months ago
Its not a question of “if” but “when.”
Tramort@programming.dev 5 months ago
and whether he has enough liquidity to maintain his margin during absolutely insane market distortions by hedge funds, big banks, and the government.
Goldholz@lemmy.blahaj.zone 5 months ago
And when it pops it will be a big bang in the entire global economy from what i heared and read.
tetris11@feddit.uk 5 months ago
I mean, the housing bubble burst and the government pulled 7 trillion out of its arse and handed it back to bankers, doubling the cost of current living from the knock-on inflation. Life went on, and not a single banker (except maybe some lackey in Iceland) was punished. The Rich got exceedingly wealthy after the crisis.
This time: the government will pull 700 trillion from its arse and hand it back to investors. Life will go on, no one will be punished, the cost of living will be a few times higher than what it is now, and the rich well get richer.
My interpretation: the big investors fully expect the bubble to burst and hope to win from the fallout/bailout
Fizz@lemmy.nz 5 months ago
I may be wrong but i thought this guy was not at all a respected investor and only made 1 good trade. So his opinion is kinda worthless.
CatAssTrophy@safest.space 5 months ago
TBF, an investor could make a thousand good investments and I’d still regard their opinion as worthless (here’s lookin’ at you, Buffet.) Being “good” at figuring out which stocks and companies you can exploit the most from the actually productive economy doesn’t make you smart or in anyway good.
CybranM@feddit.nu 5 months ago
I assume they meant opinions when it comes to investing not opinions in general.
supamanc@lemmy.world 5 months ago
This is a long term investment, predicting that the bubble will burst _at some point _. It doesn’t signify that he believes the collapse to be imminent. The market can remain irrational longer than you can remain solvent!
porcoesphino@mander.xyz 6 months ago
I think it’s a bubble but I’m also suspicious we’re near peak investment and think it could sustain for a while yet. I wonder what sort of range he’s projecting for the peak and timeframe
SaraTonin@lemmy.world 6 months ago
As an aside, you can tell how successful the rebranding of twitter as “x” has been, since even now more than 2 years after the rebranding news articles still have to add “formerly known as twitter” every time they mention it.
Klowner@lemmy.world 5 months ago
That dumbass throwing away the Twitter brand for a damn letter should be proof enough to anyone that he’s a moron
Jack_Burton@lemmy.ca 5 months ago
It blew my mind when he announced it. Brand recognition is one of the most important things companies hope for, and Twitter was in it’s own, very select brand recognition club at the top. Tweeting became part of everyday vernacular, in the same way that googling something became synonomous with searching online. It’s a company’s wet dream. No one says “gramming”, “threading”, “facebooking”, etc. Maybe Snapchat has snapping, I’m out of the loop but even I’ve used tweeting/ed in every day conversations.
That recognition is the stupidest thing to just throw away, especially to replace it with something that can’t replace it from a language perspective. Xing makes no sense in context.
Perspectivist@feddit.uk 6 months ago
Even Grok AI follows up with that reminder when it mentions X.
tja@sh.itjust.works 6 months ago
But I also still call it Facebook and Google
perspectiveshifting@sh.itjust.works 6 months ago
Those are changes in parent company names though while the services Facebook and Google still exist. The rebrand of Twitter to X continuing to not stick for people is a much bigger failure on their part than Meta and Alphabet not entering the general zeitgeist.
NecroticEuphoria@lemmy.ml 6 months ago
I still call it Twitter regularly.
To me, X is a windowing system.
Lucidlethargy@sh.itjust.works 5 months ago
And x.com is a place people should only go late at night, when they are alone.
RaivoKulli@sopuli.xyz 5 months ago
To me, X gon give it to ya
Rai@lemmy.dbzer0.com 5 months ago
I call it “Exxx, the everything app” sarcastically like Liz from TrueAnon does. I never used Twitter but I just find it funny to call it that.
wabafee@lemmy.world 5 months ago
X reminds me of a porn site and the X itself kinda associated for me as X rated.
Eyedust@lemmy.dbzer0.com 6 months ago
If I had to make a guess, I say it probably will. The convenience of AI is probably here to stay, but the craze of replacing everything with AI will go out the door.
AI will become exactly what it should have been in the first place: an assistant. Not your friend, not your doctor, not your therapist, not a replacement for artists/authors/programmers, and not inside every piece of tech post 2025. It has a place. That place is over-embellished right now, not to mention unsustainable.
RiverRabbits@lemmy.blahaj.zone 5 months ago
“convenience”? You mean CEOs being able to lay off workers with some magical technology that does nothing? Yeah, that’s surely convenient for the 0.1% of people in the world that doesn’t affect. Love that “convenience” for them.
Did it cup your balls during the last BJ or something? Fucking hell, what is it with randos on the web scaping for AI at every instance…
Eyedust@lemmy.dbzer0.com 5 months ago
Friend saw ‘convenience’ and that was it. No more reading, only fists. I thought I was quite neutral. Yes, convenience. I have been known to use a local LLM based on recipes to give me ideas what I could make based on my pantry.
I have a lovely recipe for absolutely delicious chocolate-chip cookies that use pancake mix.
SorryQuick@lemmy.ca 5 months ago
Are you trying to deny that AI is also convenient for regular people?
freebee@sh.itjust.works 5 months ago
Main reason it can flourish as assistant in the first place is that Google search engine became shit
Nollij@sopuli.xyz 5 months ago
It’s not that Google’s algorithms got bad, but the entire Internet turned to shit and they can’t compensate for it.
For anytime not time-sensitive, try adding “before:2023” to your search. I’m being the quality of your results will skyrocket.
Perspectivist@feddit.uk 6 months ago
Just a reminder that the term “AI” stands for a category of systems that contains a lot more than just LLMs.
Eyedust@lemmy.dbzer0.com 5 months ago
True, true. In this context I mean the LLM craze. The GPU era of AI.
webghost0101@sopuli.xyz 5 months ago
Sir, this is the stock market.
People order with their feelings, not facts.
Truscape@lemmy.blahaj.zone 6 months ago
Dotcom groundhog day for the tech sector.
halcyoncmdr@lemmy.world 6 months ago
It will definitely burst, and might take out some fairly large companies with it. Potentially even one or two tech companies that have been around for decades depending on how large it gets before that burst. One or two companies will end up with the IP all of them are “building” and it will fizzle into the background of daily use just like the previous assistants like Alexa, Cortana, etc. have.
Venator@lemmy.nz 5 months ago
the real danger is it will cause another great depression when it pops…
makyo@lemmy.world 5 months ago
I am having trouble seeing how OpenAI survives without investment cash. What exactly is their moat? I know they are hoping to power the AI behind everyone else’s tech but that is more and more untenable as the others develop AI models of their own.
neukenindekeuken@sh.itjust.works 5 months ago
Depends on when the bust happens. If its in the current admin? All those tech companies are getting bailed out.
SnotFlickerman@lemmy.blahaj.zone 6 months ago
Potentially even one or two tech companies that have been around for decades depending on how large it gets before that burst.
Please be Microsoft, please be Microsoft, please be Microsoft.
Eyedust@lemmy.dbzer0.com 6 months ago
Agreed. Probably where it should have stayed in the first place. Not that its not interesting, just that the scope of AI has widened beyond what it should have.
Kissaki@feddit.org 6 months ago
Burry similarly made a long-term $1 billion bet from 2005 onwards against the US mortgage market, anticipating its collapse. His fund rose a whopping 489 percent when the market did subsequently fall apart in 2008.
We may have to wait for another three years.
I looked into the article to find out how long a timeframe he is betting. Unfortunately, it does not say.
merc@sh.itjust.works 5 months ago
We may have to wait for another three years.
Which is also a clue that he isn’t short selling.
There are two ways of making money when a stock goes down. One is to sell the stock short. The other is to buy a put option.
A short sale is extremely risky. Say the shares are at $50 and you think they’re going to go down, so you sell 1000 shares you don’t own (short selling) and agree to buy them back by some date in the future. If you’re right and the stock tanks to $20, you can buy the shares and pocket $30,000. But, if the stock doesn’t sink, you might have to buy the shares for $60 each, so you lose $10 per stock, or $10,000. If there are tons of people shorting the stock, you can get a short squeeze, where everybody needs to buy shares to close out their short position, and because everybody needs to buy, the stock price rockets up, so you get people having to buy a stock that used to be $50 for $200, leading to $150,000 in losses for a 1000 share short where the maximum possible gain was only $50,000.
An option is much safer. There you’re buying the option to sell the shares at a certain price at some time in the future. Say you think a stock is going to crash. It’s currently trading at $50/share. You can buy 1000 put options at a strike price of $40 with a date 1 month in the future. It will cost you something to buy those options, say $1 per share, so $1000. If the stock goes up or stays at $50, your bet didn’t work out. You don’t have to sell the shares, you just tear up the options contract. You’re out whatever you paid for the option, say $1000 here. But, say the stock tanks and it’s now at $20/share. Now your bet did pay off. You can buy 1000 shares at $20 each for $20,000, then immediately exercise your option and sell them for $40,000, netting you $20,000. With put options the upside is significantly smaller, but the potential downside is tiny. It’s just the cost of the options.
Someone predicting a crash within 3 years isn’t going to short sell the shares. Between now and then the shares could continue to rise for a while, and they’d be on the hook for a huge payout in that case. If they buy options the down side is much smaller. They may have to re-buy new options a bunch of times. But in the worst case they just have to let the options expire unused and eat whatever cost they paid for them.
For the coming AI crash, I don’t think it will be very soon. I think there will be a crash. But, I think the government will try to keep the bubble from bursting. Too much of the US economy is now invested in AI. So, even under Biden, or Harris, or Obama they’d try to prevent a catastrophic crash by using taxpayer money to prevent the most damaging bubble burst. With Trump, there’s going to be even more government interference in the market. His backers are crypto bros. They’re the ones making him billions on his meme coins. They bankrolled JD Vance’s political career. If they demand that he rescues their failing companies, he’ll do it. And, since the GOP does whatever Trump wants, they’ll just fork over literal trillions in taxpayer dollars to keep things from crashing. But, eventually there will have to be a crash, because there’s just not a sustainable business model in any of this, at least not at anything like the current scale.
someacnt@sh.itjust.works 5 months ago
It is interesting that stocks began going down though. Whether it continues, we should see.
Nomad@infosec.pub 5 months ago
A short is not only a bet on a direction but also a timing issue. You need to know roughly how long (time) to keep the option.
three_trains_in_a_trenchcoat@piefed.social 5 months ago
How the hell did he do a long term bet against the market? Aren’t shorts short-term and they’re forced to pay after a set period of time? Even the inverse indexes will steadily make your money simply vanish.
ylph@lemmy.world 5 months ago
You can keep a short position for a long time, as long as you can maintain margin, which gets bigger if the stock price continues increasing, and pay margin interest. Sometimes the lender who loaned you the stock can ask for it back, and if you can’t locate any more shares to borrow to replace the returned shares, you might be forced to buy the shares back and close the short, but this is not common, at least during normal market conditions.
BombOmOm@lemmy.world 5 months ago
I never got into options investing, but I believe you keep re-upping them. Every time you do so you pay a small price. So, the game is: ‘can you stay liquid long enough for the bubble to pop’.
sugar_in_your_tea@sh.itjust.works 5 months ago
The longest term seems to be about 2 years.
bryndos@fedia.io 6 months ago
You'd think the timing should reflect the typical terms of loans and loan volumes - so that sounds plausible.
When the default rate of those loans begins to creep up and become notable to investors, then people will get edgy.I just hope it comes before our much loved and overpaid layers of incompetent management have destroyed all their manual production processes and replaced them with snake oil. If not a general economic downturn might start well before the ai bubble bursts.
Helix8o8@lemy.lol 6 months ago
Lol well, wonder where he gets his information. Seems sus. I am familiar with who he is. Just curious what piece of information was the “tipping” point. People don’t put money down like that unless they have insider knowledge, IMO.
wewbull@feddit.uk 6 months ago
Well he found out about the sub-prime mortgage fiasco by looking at the public filings that nobody bothers reading. All of the companies involved are public companies that have to file accounts. He’ll be tracing what’s going on and painting himself a picture.
justsomeguy@lemmy.world 6 months ago
Yeah they do though. His bet before the 2008 crash was similar. It’s where the market is pointing. Publicly available data suggests there’s a big ass bubble. The timing is essentially a bet. Last time it almost wiped him out because he was a bit early. We’ll see how it goes this time.
ook@discuss.tchncs.de 6 months ago
Good
Twongo@lemmy.ml 5 months ago
since his bet on the housing market he effectively lost money. all the public things he made can also be safety investments in case his secret hedgefund stuff he doesn’t have to disclose fails.
i LOVE LOVE LOVE the thought of the AI Bubble popping… but i don’t think this MF is the guy to trust
liuther9@lemmy.world 5 months ago
You sure about that?
someacnt@sh.itjust.works 5 months ago
Yeah, my heart sank a little when I saw burry shorted, it was about the same time I opened a small short position. I am so screwed…