Never forget, this time it’s different pic.twitter.com/EkdDMLydI8
— Michael A. Arouet (@MichaelAArouet) March 22, 2024
Recent trends in household financial asset allocation are raising concerns reminiscent of past market bubbles, particularly the infamous dot-com bubble of 2000. With 48% of assets allocated to equity, 15% to debt, and 15% to cash, households’ heavy reliance on stocks mirrors the conditions preceding the dot-com bubble burst.
In times of economic uncertainty, companies often tighten their belts, cutting expenses such as consulting and business travel. This trend has become evident with Accenture, a prominent IT and consulting firm, witnessing its worst day of trading since June 2013 after revising down its full-year guidance. The company attributed this downturn to clients’ hesitancy to spend amidst macroeconomic uncertainties.
Similarly, tech giant Apple has experienced significant underperformance against the S&P 500, with its shares lagging since mid-2023. This disparity raises questions about the sustainability of the profitability bubble, as reflected in the massive sales multiples of tech companies.
While AI presents promising opportunities, history suggests that Wall Street’s pursuit of profit often leads to excesses and eventual market corrections. Just as with past bubbles like the housing and tech bubbles, the allure of quick gains can overshadow rational investment decisions.
Investors must exercise caution, particularly in the AI space, as for every success story like NVIDIA ($NVDA), numerous speculative AI ventures may turn out to be failures. It’s essential to approach investment in this sector with a discerning eye and a long-term perspective.
In times of uncertainty companies always cut consulting and business travel spend first. pic.twitter.com/bRvb5SCmHP
— Michael A. Arouet (@MichaelAArouet) March 22, 2024
#Apple has had one of its biggest days of underperformance against the S&P 500. The share has underperformed since mid-2023. pic.twitter.com/gpEj2ZhnkN
— Holger Zschaepitz (@Schuldensuehner) March 22, 2024
Never forget, this time it’s different pic.twitter.com/kpP4YcDln5
— Michael A. Arouet (@MichaelAArouet) March 21, 2024
AI shows lots of promise but Wall St will suck it dry and spit it out before moving onto the next thing.
Thats how the street works. For every $NVDA there will be 10 scam AI companies that will end up being zeroes.
Be careful if you invest a lot in this space
— QE Infinity (@StealthQE4) March 22, 2024