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points by fauchletenerum 1 day ago | 0 comments

The crashes seem be getting smaller and more frequent

I think that's just you noticing smaller blips in the market as you pay more attention. Markets are random walks so they exhibit a fairly fixed distribution of different sized crashes. If they deviated, someone could notice that pattern and trade on it, returning the market back to a random walk.

[–] eru 1 day ago

> Markets are random walks so they exhibit a fairly fixed distribution of different sized crashes.

Market prices being unpredictable random walks doesn't mean that the volatility or shape needs to be constant. To make the notation more precise, you need to talk about (sub-) martingales.

> If they deviated, someone could notice that pattern and trade on it, returning the market back to a random walk.

This is true, but "fairly fixed distribution of different sized crashes." doesn't follow at all.

[–] fauchletenerum 1 day ago

Or it could be a sign of a greater amount of financial intervention to preserve the value of the stock market after crashes, particularly since most people are largely counting on their 401k/IRAs to maintain their value in their retirement years

[–] therein 1 day ago

When does it give birth to a new market?

[–] eru 1 day ago

Which would be progress.

A small sell-off is just business as usual.

[–] lifeisloving 1 day ago

Who called this small? Datacenter stocks are largely down 50% this month.

[–] fizwidget 1 day ago

The further you narrow down to specific industries/companies the more volatile things get. That’s hardly surprising.

The discussion here is around broader stock market indices.

[–] lifeisloving 1 day ago

Who said this conversation was about broader stock market indices?

The title literally has AI in the title, the conversation is centered around an "AI selloff", as its been labeled, that happened this week.

Roughly 40% of stock market gains since 2023 are tied to less than 10 companies with massive AI investments.

The entire conversation is about this sector, and most of the gains in the "broader indices" that nobody was discussing, are largely attributed to AI invesment and speculation.

[–] fizwidget 1 day ago

The article is all about movements in the S&P 500 though. Yes it’s an “AI selloff”, but looked at from the perspective of the broader stock market.

[–] zardo 1 day ago

The cheap debt is drying up for neoclouds. New bonds are going to be at payday loan rates.

[–] ion_trapper 1 day ago

The beauty of increasingly efficient markets.

[–] adrianN 1 day ago

I don't think the efficient market hypothesis says anything about the convergence time or the path to convergence, but I'm not an economist.

[–] pedro_caetano 1 day ago

As someone not in finance, what actually leads to this pattern (of smaller blips followed by faster recovery)? Is this a consequence of central banks knowing more than before? Algorithmic trading?

My intuition is that financial markets seem increasing dissociated from any correlation with street level economy or the financials of traded companies?

[–] ctmlr 1 day ago

If it's so efficient how come we can't seem to build enough houses... or build anything anymore for that matter?