The AI Bubble Is Popping

Joseph Carlson (0:00)

Michael Burry and Ray Dalio are perhaps two of the most well-known investors of our time. They correctly predicted the 2008 market crash, and since then, they've had an enormous amount of media attention paid to them. Ray Dalio, of course, runs one of the biggest hedge funds in the world, if not the very biggest, which is Bridgewater. He's written best-selling books. He came out with his principles. He continually lectures and write posts that garner enormous amounts of attention.

We also have Michael Burry, who gained notoriety by shorting the housing market during the 2008.com bubble. It was featured in the Big Short, and he was played by Batman himself. This created an allure, an aura around Michael Burry, that to this day has only got stronger and bigger. Michael Burry, that goes by the screen name Cassandra on X, has gained enormous amounts of attention. His substack, which is an expensive substack at $50 per month, is now the second most popular substack in all of finance, only surpassed by Citrony. Both of these individuals have enormous audiences, enormous coverage. Whatever they say gets viewed by millions of people. Ray Dalio is continually on CNBC. Michael Burry would definitely be featured on CNBC if he made those appearances, but he makes himself a little bit more of a mystique figure, only talking through X and his substack. And both of them, while they have these massive audiences, have been somewhat skeptical of the market over the past years. Now, they've been skeptical, but they've also made some very definitive calls just recently. In fact, just a couple days ago, this was on the 5th, Michael Burry, under the screen name Cassandra, said, The stock market is quite obviously in its first stage of grief and denial. Per 2000 and 2008, this stage will last six to nine months. Burry is predicting a market collapse on the scale of the 2000.com bubble and the 2008 financial crisis. That seems pretty dramatic. That seems pretty bad. We also have Ray Dalio at the very same time, just this week, saying that we're nearing a point where the AI bubble may burst. Ray Dalio argues that because interest rates are going up during a time where there's money pouring into AI companies, that this will cause this bubble, which is going to break eventually to happen sooner than later, following with the same timeline that Burry himself picked out. So both of these massive individuals with huge audiences are now warning about a bubble at the exact same time.

And as I was looking at this, I thought it would be good to look over an entire review of the credibility of both of these figures, their track record, their history, when they get things right, when they get them wrong. And what does it mean when they're calling for a bubble? What does that actually mean we should do?

Should we sell our stocks? Should we sell some of them? Should we prepare in some way? What do these signals actually mean, if anything? Is there any value to them at all? What I've decided to do is look at a very exhaustive, comprehensive look at their overall calls for the past 15 years. Since the 2008.com bubble that made both of these figures have a huge amount of notoriety, we're gonna be looking at everything they've said, every call, all of their sentiment, and see how it's guided investors so far. I've done this same type of thing with Ed Zitron and his history. A lot of people thought that was very interesting, so I thought we would do it again here. Now, of course, we have some other news that we'll be getting to as well in this episode. For example, this week, I was able to go on to the Steve Iseman Playbook. That is his stub stack, Steve Iseman started one, and I was able to do a full interview with him. So being able to go on his own show and talk to him was a fun and interesting experience. So I'll give you some background on how this happened, my thoughts of the interview, and how I think it went. So we have a ton to get to in this episode. Now just a reminder, if you haven't already, you could consider trying out qualtrim.com. That membership gains you access to an entire Discord community, full of thousands of investors. We're having discussions all the time on stocks. I'm in the discussions frequently talking about stocks and other subjects, as well as you gain access to exclusive content. We have deep dives and different videos on different subjects. And you also gain access to the entire Qualtrim suite. You can try out qualtrim.com. It's included on iOS and Android. Now let's go ahead and move on here. We get to the main subject where as an investor, I'm trying to manage my portfolio, I'm trying to invest and make good decisions. And I basically just want to have good outcome over the next 10 or 20 years. I want to be sure that I'm doing the right thing, making good judgment calls.