864
The air begins to leak out of the overinflated AI bubble
(www.latimes.com)
you are viewing a single comment's thread
view the rest of the comments
view the rest of the comments
this post was submitted on 06 Sep 2024
864 points (97.4% liked)
Technology
59674 readers
3225 users here now
This is a most excellent place for technology news and articles.
Our Rules
- Follow the lemmy.world rules.
- Only tech related content.
- Be excellent to each another!
- Mod approved content bots can post up to 10 articles per day.
- Threads asking for personal tech support may be deleted.
- Politics threads may be removed.
- No memes allowed as posts, OK to post as comments.
- Only approved bots from the list below, to ask if your bot can be added please contact us.
- Check for duplicates before posting, duplicates may be removed
Approved Bots
founded 1 year ago
MODERATORS
The broader market did the same thing
https://finance.yahoo.com/quote/SPY/
$560 to $510 to $560 to $540
So why did $NVDA have larger swings? It has to do with the concept called beta. High beta stocks go up faster when the market is up and go down lower when the market is done. Basically high variance risky investments.
Why did the market have these swings? Because of uncertainty about future interest rates. Interest rates not only matter vis-a-vis business loans but affect the interest-free rate for investors.
When investors invest into the stock market, they want to get back the risk free rate (how much they get from treasuries) + the risk premium (how much stocks outperform bonds long term)
If the risks of the stock market are the same, but the payoff of the treasuries changes, then you need a high return from stocks. To get a higher return you can only accept a lower price,
This is why stocks are down, NVDA is still making plenty of money in AI
There's more to it as well, such as:
September is pretty consistently more volatile than other months, and has net negative returns long-term. So it's not just the Fed discussing rate cuts (that news was reported over the last couple months, so it should be factored in), but just normal sideways trading in September.
We already knew about back to school sales, they happen every year and they are priced in. If there was a real stock market dump every year in September, everyone would short September, making a drop in August and covering in September, making September a positive month again
It's not every year, but it is more than half the time. Source:
S&P 500 up this September officially
Woo! We're part of the 44% or so. :)
45% now since the data only goes back 100 years