Key insights
- The article expresses a highly bearish outlook on the US equity market, citing excessive retail leverage, government-fueled tech investments (particularly AI), and a disconnect between stock market valuations and underlying economic realities. It highlights stagnant global GDP, low consumer confidence, rising debt, and geopolitical tensions as significant risks. The author suggests the current market prosperity is an illusion driven by speculative behavior and artificial stimulus, warning of an impending downturn.
Many retail investors are desperate to make a buck, x10 leveraged positions, 2nd mortgage on home, whatever that gives them a shot to make it big as most people completely lost hope with the system and has No way to retire or feel financially secure without winning big in stock market casino. Governments investing in AI/tech companies, granting government contracts and even outright promoting political allies. Insider trading and corporate buy back of company shares plus excessive amount of free/low cost money (after 2008) in circulation contributed to today's reality or rather illusion of abundant prosperity in stock market. When will the music ends, not sure if it matters. Outside stock market most economies are stagnant, GDP growth rates keep dropping, there are fewer and fewer good jobs, as a result of cost of living crises consumer confidence is at all times low, 10% of top earners are now responsible of 60% of consumption, all over the world birth rates are plummeting, First time in over a century new generation is financially worse off, less healthy and less intelligent (at least on paper) than their parents, disability rates are skyrocketing whereas job participation keeps dropping, political division and partisanship on raise, international tensions have never been so high in last 20-30 years. In last 3 years all gdp growth in US and 90% of increase in stock market valuations were driven by AI/data center related circular investment among tech companies. Government debt in western world is now higher than WW2 levels and budget deficits keep going up. CEOs of tech companies that were underdogs, and champions of little people in 2000s are now viewed and act as feodal tech overlords. Companies with zero net profit and only few billion dollars revenue are valued at multi trillion dollars.