this post was submitted on 02 Aug 2024
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It's because the stock market is closer to a casino than a place where fair valuations of businesses are made.
Also, market cap is just the latest trade price times the total number of shares. It doesn't mean that anyone is willing to buy or sell the entire business for that amount, just that some shares were traded at a price that extrapolates to that.
It's kinda like getting an A on your first assignment in grade 1 and assuming that means you're a straight A student and will maintain that until you finish your doctorate. Or getting an F and assuming you might as well just drop out.
The closest thing to reality market cap really says is that investors who are making current trades believe that AMD will surpass Intel at some point. Or that they aren't comparing either company directly to the other and just go by feeling plus the price history. "I feel more confident in AMD today, therefore the price should be higher than it was yesterday. I feel less confident in Intel today, therefore the price should be lower than it was yesterday." It doesn't even really matter if yesterday's price was accurate, it's all just relative to itself and fed by fear and greed.
Preach. I'm just worried for when nvidia pops. The grumblings about the machine learning fad are starting to happen but that's a company that is incredibly likely to lose 80% of revenue in 5 years once businesses see how the huge investments flop.
There's some strange belief that chat bots being semi-coherent is going to turn into true AI and take over all the white collar jobs. The more popular chatbots become the poorer the data quality will be. It's inevitable that all the bots posting on all the social media sites will poison the datasets especially as more and more turn to chatbots to generate content.
Peoples imaginations are running wild. I think if 2% of the use cases pan out it will be a wild success but ML is not new and entire divisions have been scrapped for failing to turn a profit (looking at Alexa, for sure.) When the pop happens the drop will be so significant the ripples may cause a recession all by itself.