Gongol.com Archives: July 2025
July 16, 2025
Investment management firm Apollo has shared a commentary from their chief economist under the headline, "AI Bubble Today Is Bigger Than the IT Bubble in the 1990s". Considering how explosive the dot-com bubble turned out to be, that's quite the bold claim. ■ Apollo, with its emphasis on "alternative investments", might have a conflicting incentive that would encourage them to speak warily of publicly-traded stock markets. But it's also possible to have skin in the game and yet still speak the truth. ■ With technology moguls jockeying for position on wealth rankings at the quarter-trillion-dollar scale and tech firms paying to have nuclear power plants restarted just to fuel their artificial intelligence programs, the atmosphere certainly has the whiff of bubble about it. ■ But it would also be madness to predict when any such bubble (if real) might pop, because the timing and triggers behind economic events are almost never predictable. Conditions that defy rational sense can go on for maddeningly long times, and the things that can bring them to a halt often come straight out of left field. ■ The only thing reasonable people can do (other than to invest strictly in broad-based index funds) is to deliberately seek out a sensible valuation for each company based upon explainable factors and to buy shares in those companies only when the market price is at or below that sensible valuation. Such a strategy is effectively mania-proof, which means it will often keep the investor from benefiting from the hot streaks going up, but it also keeps the money largely out of harm's way when bubbles pop.
