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Is the Recent Surge in AI Stocks Heading Towards a Painful Crash?

 
  •  Nama.Cohen
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    Nama.Cohen  Nama.Cohen
     
      
     
     
     

    Nama Cohen is a highly experienced professional with over 20 years of experience in the finance industry. She has a deep understanding of corporate finance and global-macro research, which she leverages to provide valuable insights to her clients. Nama is an accomplished buy-side trader who has a proven track record of generating significant returns for her clients.

     
 
 
 

The older investors and traders among us have already experienced Wall Street trends. The latest trends were green energy, medical marijuana, electric vehicles, food-tech, online life at home, metatowers. Perhaps the metaverse trend is closest to AI. For a while it seemed that we would all move to a world of virtual reality and now the enthusiasm has calmed down and Facebook is back to selling likes.

 

All these trends were brewing for many years before the jump in stocks and will continue to brew for many years after the jump in stocks. For example, computing processes called artificial intelligence have been around for many years. Then comes a company, product or service that lights the spark. Many times this also happens in a vacuum looking for the next Wall Street story. The industry needs topics to write about, to offer basket funds and options to issue shares at inflated prices. Two more oils are added to the green fire that the spark ignites:

 

FOMO

 

Investors who are afraid of missing the next Wall Street party and not holding the stocks that will jump tens and hundreds of percent. If you look at the troublemakers I mentioned, each of them had a period of such surges (and later slumps).

 

The Industrial Revolution

 

The thought that this time it is "the" industrial - technological revolution that is going to change the world. Like the internet and the thoughts that were on blockchain.

 

Guess just by reading these things you get a feeling of something like: "That's right, that's exactly how it was with each of the trends I mentioned. It's called cycles."

 

The Three Stages of a New Global Trend

 

The first stage in the cycle is the cooking stage of the product, technology or service and the second stage is the spark and enthusiasm that allows many stocks to jump to dream prices and real and ad hoc companies to raise funds at inflated stock prices.

 

The third stage is a combination of economics and psychology. The economy shows that it takes many more years to profit from a new global trend and certainly in relation to inflated stock prices. Psychology teaches that at some point we all lose interest and long-term patience and look for the next thrill-bet. Then the stocks crash and some companies disappear.

 

As mentioned, the thought that this time is different fuels all the bubble blowing. Here is your place to choose between it and understanding the cycles.

 
 

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Please note that the article should not be considered as investment advice or marketing, and it does not take into account the personal data and requirements of any individual. It is not a substitute for the reader's own judgment, and it should not be considered as advice or recommendation for buying or selling any securities or financial products.

 
 
 
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Disclaimer: The Score performance whether actual or indicated by historical tests of strategies, is no guarantee of future performance or success. The results reflect performance of a strategy not historically offered to investors and does not represent returns that any investor actually attained. The results reflect performance of a strategy not historically offered to investors and does not represent returns that any investor actually attained. The Readiness Indicators, Sentiment Indicators and total score are calculated by the retroactive application of a model constructed on the basis of historical data and based on assumptions integral to the model which may or may not be testable and are subject to losses. Active trading is generally not appropriate for someone of limited resources, limited invesment or trading experience, or low-risk tolerance. Your capital may be at risk.

Please note that no offer or solicitation to buy or sell securities, securities derivatives of future products of any kind, or any type of trading or invesment advise, recommendation or strategy, is made, given or endorsed by StocksRunner including any of their affiliates ("TS").

This information is provided for illustrative purposes only. You should not rely on any advice and/or information contained in this website and before making any investment decision. we recommend that you consider whether it is appropriate for your situation and seek appropriate financial, taxation and legal advice.