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'Exactly how the dot-com bubble burst': A market research firm says keep an eye on this AI warning sign (www.businessinsider.com)
submitted 4 months ago by to c/technology@lemmy.world
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[–] 8 points 4 months ago (6 children)

You're talking about from buildup to crash, though. As if everyone just looking at literally any large investment and saying "it's a bubble!" is dong anything other than being a broken clock right twice a day.

I follow conspiracy theories extensively, and people have always predicted a huge, massive economic collapse next year - every year. On Art Bell, it was a constant, reiterated prediction every year from 1994 until 2013. It's only the ones that happened to say it in 2006 or 2007 that rode the credit of "actually predicting the 2008 crisis!" Even the ones saying it before the Dot Com bubble didn't get it right because their doomerism made all predictions "end of the world" level.

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  • [–] 2 points 4 months ago (1 child)

    I haven't heard this much bubble talk ever. It's not the same prediction made by the same people again this time. I don't even know anybody irl who likes vibecoding (myself included) who thinks this is sustainable.

    Even the ones saying it before the Dot Com bubble didn't get it right because their doomerism made all predictions "end of the world" level.

    I don't know what you're trying to say. People had bad takes about that bubble so all bubble scepticism is discredited? But it popped, which means all these investors had bad takes as well. So...

    Nobody worth listening to thinks this bubble is going to be worse than the dotcom bubble. It's simply not that big to begin with. I guess there's some wishful thinking too, but what's the alternative to this investors-expected AI growth? Everything except the AI market crashes?

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  • [–] 1 point 4 months ago* (last edited 4 months ago)

    I haven’t heard this much bubble talk ever.

    Exactly. And you know who's bad at predicting things? Large groups of people.

    It's a fractional bubble at best. Unlike the Dot Com bubble, which invested in things like URLs that no one wanted and WorldCom's fiber layout, the buildouts and investments being done on spec aren't of the kind that are single-use. Data centers are always in demand, anyway. Storage and cloud compute are always in demand. Electricity is in demand. If AI flops tomorrow, other than 3 over-valued companies employing....a few hundred people, and idiot investors in those companies, the entire economy isn't yet entirely dependent on LLMs exactly because they suck at most of what they do anyway. Government contracts are stabilizing the whole industry anyway, something absent from the Dot Com era.

    Edit: You know who IS a risk? All the dipshit startups that think putting a wrapper on a CustomGPT was a good business model, and took out loans for that rather than split equity. That's going to be your first indicator to look for, and it's wavering because, as it turns out, 99.999999% of those ideas are stupid.

    History is the best teacher, and a detailed look shows these are only alike in that they are tech-related.

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  • [–] 1 point 4 months ago* (1 child)

    I wonder if there's a name for this fallacy...

    As if everyone just looking at literally any large investment and saying "it's a bubble!" is doing anything other than being a broken clock right twice a day.

    Suggesting that something isn't true simply because a lot of people are saying it's true (with or without evidence, doesn't really matter). "I keep reading about this being a bubble, so that means it can't be true"

    It's like the inverse (converse? I forget. It's been years since I took a logic course) of an appeal to the masses.

    Regardless, it's fallacious reasoning.

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  • [–] 2 points 4 months ago

    You're not getting the full picture of the reasoning, or intentionally ignoring parts, I dunno.

    • Large groups of people are historically bad at predicting financial markets. Very few people ever correctly predict a bubble ending, and considering that a large group of people are traumatized by 2008 and can read Wikipedia well enough to see the Dot Com bubble, they've erroneously put 2 and 2 together and think all large investments in tech will equate to a bubble. Regardless of the structure underlying it.

    • Structural differences between Dot Com bubble and AI investments are numerous and extensive. Structurally, they're similar anecdotally at best. Yes, there are problematic parts. Data center demand will never be met by anything other than a few janky fly-by-night centers and ramshackle kludge-hosts in Serbia or Brazil where they're not regulated like the US or EU.

    • The circular investment issue isn't just actual cash trading hands, it's assets and stock as well. In previous bubbles the majority of the bad investments were over-leveraged financing. Loans. There's actually very little in terms of loans going into these companies, which is a notable difference between this and literally every other bubble in history.

    • I think the bubble will be 2 or 3 smaller bubbles that falter, but the mass of the overall industry will fail to full tip over because there's enough parts that can be scrapped and reapplied to other issues anyway, that demand won't ever evaporate as it did for $2 million URLs in the Dot Com bubble, or railway lines to nowhere in the 1840's.

    • This does not ignore or assume no problems from layoffs and job displacement. That's a very real and huge threat, and AI will only enhance this problem by trying to claim it can manipulate and bilk poor people better than Google can.

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