stock market

AI: financial bubble, or the new big thing?

~ ianrandalstrock ~ Leave a comment

Financial discussion question: I’ve been watching the stock market indices flying, driven mainly by the AI trades: Nvidia, Intel, Micron—all the companies making the hardware on which AI systems run. And lots of AI companies are doing well. But what I’m not seeing is the case for the long-term profitability (or indeed, any profitability) for the companies that are creating the AI systems: ChatGPT, Gemini, Claude, and so on. Other than selling those programs to companies to use themselves to theoretically increase their efficiency (or to enable them to fire low-level workers), is there any real profit to be made in AI? An auto manufacturer makes and sells cars: there’s a clear product that will bring in profit, and there are clear add-ons and supplements that can increase that profit. A clothing manufacturer, ditto. Even the various software companies: give away an electronic game and sell in-app things. It may be fuzzy, but there’s a clearly defined product that can make money in a clearly defined manner with fairly clear parameters.

But when I look at internet-esque things which are given away for free, I think first of Google and the other search engines: they make their money through selling advertising. Ditto Facebook, Twitter, and all the others. Are we expecting the various AI engines to also be selling advertising? What is the income-making thing they’re going to be selling?

Or is the last several months of stock market gains nothing more than the AI bubble? The latest incarnation of Alan Greenspan’s Irrational Exuberance?

(Please note: this is not a request for the list of why AI is evil or how wonderful AI will be when it’s perfected. I’m looking at the business case for AI, if there is one, and if any of the money being thrown at it is rational, if it might logically anticipate a return of some sort.)

Pump-and-dump, the Trump way

~ ianrandalstrock ~ Leave a comment

While I’m glad President Trump wised up and paused the tariffs, I’d have been much happier if he’d canceled them outright. But the whole activity—indeed, the past week’s worth of financial news coming out of the White House—points out that we don’t have a thoughtful, considerate person sitting in the Oval Office. We have a capricious, egotistical fool. And while such a person is not normally dangerous, the fact that he’s the president of the United States gives his every utterance global import.

I have to wonder how much of his decision process was driven by a recognition of the global pain he’d caused, and how much of it was yet another misuse of governmental power for his own financial benefit. A week ago, he started a global trade war all on his own (on the flimsiest of reasons and with absolutely execrable math to justify it). He continued harping on his attacks for a week. Last night, he told us he was thrilled with how other countries were “kissing his ass” to negotiate lower tariff rates (all class, that president of ours, just not high class). And just after 9:30 this morning, he apparently truthed out [is “truthed” the word for tweeting on his proprietary Twitter competitor?] “THIS IS A GREAT TIME TO BUY!!! DJT.” He followed it up with “BE COOL! Everything is going to work out well. The USA will be bigger and better than ever before!”

Remember, this is the only presidential candidate in a generation to not release his tax returns, and the only president in memory to not divest himself of his non-presidential businesses. Will we ever know how well he and his super-wealthy buddies did today after he “paused” the tariffs and popped the stock markets more than we’ve ever seen before?

I don’t think he knuckled under, and I don’t think he’s stupid. I think he’s an excellent grifter, and he’s just pulled off a brilliant scam for himself and his friends. For those of you not seeing it: he depressed the price of almost every stock in the US by fifteen or twenty percent, in one week, giving his cronies a great chance to buy. And today, he popped those prices back up ten percent.

He’s in the Oval Office to steal as much as he can, and he’s doing a pretty good job of it.

TKAT: March 17, 2021

~ ianrandalstrock ~ 2 Comments

In the realm of “Well, that’s interesting (stock market edition),” take a look at the stock of Takung Art Co., Ltd., today. It trades on the American Stock Exchange with the ticker symbol TKAT. Takung operates an electronic online platform for artists, dealers, and collectors to buy and sell artwork primarily in the People’s Republic of China. It pays no dividends, and reports no earnings.

After trading between $1 and $2 a share for all of last year, it jumped at the beginning of this year to about $2.50, and has slowly been trending up the last two months. At the end of the day Monday, it jumped to $9, and then yesterday ranged between $6 and $7, closing at $5.99. Just after 11 o’clock this morning, somebody noticed it. Or perhaps a lot of somebodies. It peaked today at $24.90, and finished the day at $22.60. There are a total of 11,271,000 shares outstanding, and the 90-day average trading volume, until today, was just under 588,000 shares per day. Today, it traded just over 66 million shares. Put another way, every single share of the company in circulation changed hands six times today.

I don’t own it, and don’t feel any need to buy this stock (except, possibly, if I could buy it yesterday), but it is interesting to look at.

How big is small?

~ ianrandalstrock ~ Leave a comment

I’ve been watching the stock market, and specifically what’s going on with the Gamestop stock (GME). The media keeps saying “small retail investors” are driving the meteoric price change. I looked through WallStreetBets, the reddit feed where those “small retail investors” came together to plan and execute this action. Several participants post screen-shots of their stock positions, and I’m seeing cost bases/initial investments of $31,000, $94,000, and $142,000. Sure, there are many small fry with a few shares, but it seems the bulk of these “small retail investors” have pumped tens of thousands of dollars each into this stock. Should we be thinking of them as “the small guy,” or are they are just individual stock manipulators?