Press enter or click to view image in full sizePhoto by Lanju Fotografie on UnsplashOversupply indicators and insider warnings.
When will this damn AI bubble burst? How many clear-as-day signals does the market need shoved into its face for this silly charade to fall apart? Without a functional crystal ball, we simply won’t know until it is too late. But the frustration of watching the market aggressively mash the accelerator rather than the brake in response to this impending car crash is palpable. Those paying attention, who know just how insanely over-inflated this industry is, are nervously twitching at even the slightest sign that the bubble will pop. But, over the past week, we have seen some major movements that absolutely should have popped this bubble.
How does a bubble burst?
Well, a bubble is driven by speculative demand, which fuels unfounded investment that pushes an asset’s price beyond its true value and spurs a huge increase in supply as investors rush to meet this demand. A bubble bursts when this speculative demand fails to materialise, and investors realise there is a supply-side glut that undermines the value of their investments. So, they flee and sell their positions to reduce their losses, only for this mass sell-off to crash the price of these overvalued assets.
From tulip mania to the dot-com bubble to even the US housing bubble, this dynamic has…