Subject: Re: The AI build-out
While there are many many things that might pop the bubble, this was interesting:

https://archive.ph/oxMSl

We’ll begin to see weakness in the AI story after the fact, whether from cancelled orders or failure to convert technology into profits. Will short-sellers be able to spot the reversal in time to place some quick bets and turn a profit? Yes, says Mr Left, “but only after missing the first 15-20%.” Then, the main sign that a prolonged bear market has begun would be companies cutting spending, or “big firms saying they’ve experimented with AI and it’s not been transformational.”

For Mr Block, meanwhile, the key indicator that the cycle has turned would be a sharp rise in unemployment. He thinks a crucial driver of the bull market has been the monthly flow of retirement savings into passive index funds, which buy shares in the biggest firms regardless of their price. An abrupt rise in joblessness would reduce that flow, and with it support for share prices to keep rallying.

Whenever the next bear market begins, there is no shortage of reasons to worry about its impact. Mr. Left points to the radical uncertainty over how AI will develop, and which companies will end up exploiting it most profitably, as a significant source of potential losses for shareholders. Then there is the question of who, eventually, will end up paying for firms’ vast AI-related capital expenditures. Big tech firms, for instance, are set to invest $5trn between now and 2030; JPMorgan Chase, a bank, estimates they will need additional revenues of some $600bn a year to make these worthwhile. “It could [come from] businesses or consumers,” says Mr. Left, “so which one is it? Do you really want to be the person trying to guess?”

The second reason to fear a bear market is that American households have more to lose from one than ever before. Stock ownership now accounts for over 30% of their total assets, the highest since the Federal Reserve started collecting such data in 1945 (see chart 2). At the peak of the dotcom bubble the equivalent figure was 27%.
Moreover, Mr. Chanos sees evidence that retail traders have concentrated their bets on the riskiest assets. He notes that the average account on Robinhood, a popular trading app, holds around $12,000. After adjusting for deposits and withdrawals, he estimates that account values dropped by 7% in October and November—a period during which the stock market wobbled, but ultimately recovered. That balances nevertheless fell suggests they were “way out there on the risk spectrum”, invested in stocks that dropped more and recovered less than the wider market.

Just remember - it's only a game :-)

Jeff