AMZN - The AI Bubble And Irrational Exuberance V2.0

2024-06-26 15:10:19 ET

Summary

• The "Magnificent Seven" stocks have had seen a significant rally, but the AI-bubble may be coming to a close.
• Investors rushing to chase gains are, once again, driving prices up to well above their fundamental values, resulting in the S&P 500 being overbought.
• In this market, investors should pay close attention to the adage “caveat emptor” and comport themselves accordingly.

Yes, the rally in the "Magnificent Seven stocks" - the "Mag 7" - has been impressive. No, the rally is not over yet. Yes, this is a bubble - the "AI-bubble". And yes, the AI-bubble will end badly for many, many people. The only question is when. The phrase "this time is different" was, of course, made famous by Carmen Reinhart's and Kenneth Rogoff's book by the same name. However, the sentiment is hardly new or unique - the concept has been around for years. The eminent British financier Sir John Templeton even went so far as to remark that "this time is different" are the "four most dangerous words in investing."...

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