This article is approximately 337 words long. Click here if you would like to request a complimentary copy.
This article is approximately 248 words long. Click here if you would like to request a complimentary copy.
I rewatched ‘The Big Short’ the other day, a great telling of the shenanigans that caused the 2008 financial meltdown and how a few canny operators made a killing by short-selling mortgage-based securities that had risen to unsustainable levels. The Big Short got me thinking, what’s next? What stocks have risen to possibly unsustainable heights that might be worth a contrarian bet. But first, a word of warning. What follows is idle editorial speculation that in no way constitutes financial advice.
As readers of Oil IT Journal know I am a skeptic in most IT-related ‘breakthroughs’. A reader recently described one of my rants as ‘a well-crafted assassination attempt rather than a level-headed analysis’. I accept the ‘well crafted’ bit! But IT can and does get things very wrong*, as witnessed by the ongoing dreadful UK Post Office scandal. An interesting facet of the AI/GenAI hype is whether it will break the cycle of more-or-less failed IT projects. In the interest of editorial consistency I am bound to bet that it will not, that the wheels will come off the GenAI bandwagon as we approach and pass ‘peak AI’.
So where do we place our short bet? For companies like Google, Microsoft and Amazon, shorting AI will probably not get you very far. These companies all have many other irons in the fire and anyhow, for a software company in a downturn, it just has to let go a few thousand programmers and wait till things get back to ‘normal’. But what about a company that is up to its eyes in AI and has built up an empire of real-world, tangible hardware? You see where I am going (you are probably thinking ‘get on with it’). For yes, my hypothetical big short for the AI era is Nvidia.
Those of you who follow matters financial more closely than I do will probably be laughing their heads off at this. Shorting Nvidia is just too 2022, as a quick internet search** reveals. Pundit Jim Cramer called Nvidia a ‘loser’ in September 2022, advising his listeners to short the stock. The following year Nvidia shares rose 90% and it was the unfortunates who took Cramer’s advice that were the losers, to the tune of some $5 billion. Today (26 April), according to The Motley Fool, the Wall Street consensus on Nvidia stock is still ‘buy’. A chart from BNP Paribas of the price of an Nvidia short is particularly telling. An Nvidia short option cost around $4 mid 2023 before dropping precipitously as the strength of Nvidia’s growth became apparent. Today the same option it costs practically nothing. But before you rush out an place a bet (for around one third of a US cent) on an Nvidia short, remember, you will be in hock for around $200 if The Fool has it right!
So no, I will not be shorting Nvidia. But that does stop me from
imagining what will happen if the AI bandwagon hits the buffers. So
here goes for an outline script for The AI Big Short. Of course the
script needs a bit of a revamp. Lets have some more spicey financial
action – perhaps in the form of NFT-backed options on the options
all registered on a blockchain naturellement! ‘BlockShorts’ perhaps,
marketed with memes inspired by SpongeBob SquarePants. People buy these
beyond-speculative ‘instruments’ in droves. The GameStop
brigade pitches in but divides quickly into the ‘shorters’ and
‘short-the-shorts’ camps. Many are unsure which scenario they are
buying into ...
Fast forward to the denouement. The downturn in the AI business arrives. But, just like in The Big Short, that does not mean that short sellers just say thank you and cash in. Finance does not give up easily and erects multiple obstacles in the path of the short sellers. Accountants maintain a glossy outlook even though things are slipping away. They are helped by the banks who renege on various components of the BlockShort shorted shorts. Governments in countries that are building AI gigafactories chip-in (ha ha!) with taxpayers’ money to keep stocks pumped-up. Passing ‘peak AI’ heightens global risk which is conveniently shifted to the taxpayer. Those short sellers who have manage to hang-on get screwed as a foreign bad actor hacks the blockchain and walks away with remaining BlockShorts even though they aren’t worth anything anymore. Credits roll and we cut to a Caribbean island (or maybe a beach in North Korea) and watch the BlockShort influencers party as the world wonders what happened.
* Writing recently in the Financial Times, the UK Government’s former chief digital officer Mike Bracken, opined that ‘Big IT is a failed 90s model that has ruined too many lives.
** I say internet search because I have been using Ecosia just to see if one can exist without Google. One can!
This article is approximately 700 words long. Click here if you would like to request a complimentary copy.
This article is approximately 599 words long. Click here if you would like to request a complimentary copy.
This article is approximately 179 words long. Click here if you would like to request a complimentary copy.
This article is approximately 750 words long. Click here if you would like to request a complimentary copy.
This article is approximately 841 words long. Click here if you would like to request a complimentary copy.
This article is approximately 458 words long. Click here if you would like to request a complimentary copy.
This article is approximately 262 words long. Click here if you would like to request a complimentary copy.
This article is approximately 450 words long. Click here if you would like to request a complimentary copy.
This article is approximately 447 words long. Click here if you would like to request a complimentary copy.
This article is approximately 367 words long. Click here if you would like to request a complimentary copy.
This article is approximately 170 words long. Click here if you would like to request a complimentary copy.
This article is approximately 480 words long. Click here if you would like to request a complimentary copy.
This article is approximately 537 words long. Click here if you would like to request a complimentary copy.
This article is approximately 689 words long. Click here if you would like to request a complimentary copy.
This article is approximately 630 words long. Click here if you would like to request a complimentary copy.
This article is approximately 145 words long. Click here if you would like to request a complimentary copy.
This article is approximately 280 words long. Click here if you would like to request a complimentary copy.