https://www.derekthompson.org/p/this-is-how-the-ai-bubble-wi... Goes into good detail on how the bubble has infiltrated everywhere. Like if you went into a REIT thinking it was safe from the bubble, nope a significant portion of your investment is in the data center buildout
It seems like an (ugly?) truth that if you don't want to be exposed to bubbles, you have to take lower-return investments, by definition. Because the bubble is raising the high bar of what kind of return people expect on investment, so if you try to get close to that, you're going to end up affected by the bubble.
The problem, of course, that no one wants to take a lower return on investment.
Yeah, but I guess the point is that it is so big you can't escape it, it's everywhere. So the fallout will not be limited to a segment of the economy, it's going to hurt everywhere.
And the reason nobody wants to take a lower return on investment is that doing so is trying to time the market.
Let's say you heard Trump's talk of tariffs, got spooked when he won the election, and moved your investments. The S&P 500 has gone up ~33% since election day. How much growth can you realistically miss before correctly hedging against a crash still net loses you money?
And that's assuming you pick the correct hedge. If the US economy well and truly crashes beyond return, to the point where the S&P 500 is actual garbage that will not recover in the next 5-10 years, that might bode poorly for the dollar, so that's it for your treasuries, money market funds, CDs, etc. Gold is always an option, until it's at an all time high because just as the economy is roaring along a ton of people are nervous. So, you can invest in gold, but it's expensive, which means it could actually dip if we get stability. Ok, so you invest in foreign markets - but the Global Financial Crisis was global, the Great Depression was global, everything was global.
What do you actually hedge in? Oil? Well, the rapid development of green energy might actually, finally render that an unsafe investment. Green energy? Think again, the president is on a crusade against it. There's literally nothing that's actually a safe investment, and even if you did find a safe investment, the big crash might not happen until everyone else riding the wave has doubled or tripled their investment, by which point they'll be on par or even above you post crash. I'm actually very happy I'm nowhere near retiring, since regardless of how else you feel of the current governing of the US, I think it would be hard to argue that they're fighting a war against conventional wisdom, and that makes investing very scary.
I can’t see the case where we won’t need more data centers in the future even if AI is a bubble as more work load is generated and even if it is a bubble. There are real world use cases where you will need ML and inference even if you don’t need to spend money on training.
