Bucking bubbles

If you were to take a cursory glance at the news, you’d be forgiven for thinking we’re in an era of bubbles. 

The most commonly cited bubble is around AI. There is increasing concern that tipping untold amounts of cash into helping everyone write personality-free emails at a slightly quicker rate isn’t quite delivering a return on that investment.

In fact, Howard Marks, the billionaire Wall Street investor and (according to the AFR) “world’s greatest bubble hunter”, is “terrified” of what happens when the music stops.

It’s not just AI. The sound of popping is apparently just around the corner for a whole host of things. 

There’s gold, with the punters queuing in Martin Place to cash in on soaring prices, inflating the balloon still further with every trade of Grandma’s old necklace.

There’s housing, with Sydney ranked in the top 10 of global real estate bubble risks. If anyone has a giant lance for that particular bubble, an entire generation would thank you. 

It may even be happening on Substack, with celebrities and brands flooding to the platform, bringing the familiar mix of quality dilution and troll-driven hate speech with them.

Bubbles have always existed. Something gets overhyped, money and attention is poured into it in response, before excitement fades and cold, hard reality bites.  

But, as with seemingly every trend,  it's becoming a faster and more noticeable cycle. The potential AI bubble is moving at a greater pace than its dot com predecessor. Substack is only eight years old. 

Labelling something a bubble is also a great storytelling mechanism. It has a beginning, a middle, and a big, explosive end. 

But in reality, a bubble popping is usually just a return to the mean after a period of fervent FOMO, which - unless you have your life savings staked on it - is a good thing. Looking at you, Sydney housing market.