I think both are kind of inevitable with bubbles like the dotcom, 2008 and the present one.
You get a positive feedback loop where the industry hypes their thing which causes the pubic to buy in which causes stocks to go up and the industry to hype more and the public to buy more. Then people point out prices are too high and capital misallocated but that doesn't stop the feedback loop so it goes on longer.
It has to stop at some point though, often because the buyers run out of money to buy with.
Then it goes into reverse - falling prices put off buyers, the industry doesn't get new cash flow to pay for its commitments to GPUs/office leases/mortgages, some of them go bust which puts off buyers even more. Then eventually, after around three years it level out.
I'm a believer in the internet, housing and AI but during the bubbles you get money misallocated on stuff like pets.com or maybe OpenAI spending zillions on data centers to provide free idle chat to the public. Money on fundamental AI research is probably good but all those data centers... dunno.
You get a positive feedback loop where the industry hypes their thing which causes the pubic to buy in which causes stocks to go up and the industry to hype more and the public to buy more. Then people point out prices are too high and capital misallocated but that doesn't stop the feedback loop so it goes on longer.
It has to stop at some point though, often because the buyers run out of money to buy with.
Then it goes into reverse - falling prices put off buyers, the industry doesn't get new cash flow to pay for its commitments to GPUs/office leases/mortgages, some of them go bust which puts off buyers even more. Then eventually, after around three years it level out.
I'm a believer in the internet, housing and AI but during the bubbles you get money misallocated on stuff like pets.com or maybe OpenAI spending zillions on data centers to provide free idle chat to the public. Money on fundamental AI research is probably good but all those data centers... dunno.