I read an article comparing today’s AI mania to 1929.
It unsettled me.
I keep feeling like we’re in a game of musical chairs—except the music hasn’t stopped yet. But you swear it’s gotten quieter. And if you’re wrong about when it cuts out… it might cost you everything.
The Babson Problem
The article told the story of Roger Babson.
In 1929, he warned of a coming crash—months in advance. He was right. And it didn’t matter.
The market dipped a few percent, then roared back higher. They even named the dip after him: the Babson Break.
Imagine being that guy.
Watching the party rage on while your P&L bleeds. Wondering: Am I early… or just wrong?
Every trader who’s ever faded momentum knows this ache. The tape whispers—then shouts—that you’re an idiot.
It’s isolating. It chips away discipline and confidence.
Today’s Market Feels Faster—And More Dangerous
When I started trading, retail behavior was messy. People made mistakes independently. That randomness created edges.
Now? That randomness is gone.
Everyone watches the same feeds, follows the same influencers, trades the same instruments. The herd doesn’t wander—it surges in unison.
Momentum builds too fast. Collapses happen faster.
Rallies skip levels. Crashes gap through support like it’s made of air. What used to be “tail events” now show up on random Tuesdays.
A generation raised on social media doesn’t build positions—they buy lottery tickets.
Probability? Irrelevant. Risk? Abstract. The downside? Invisible.
CoreWeave—a company that was mining crypto in 2022—just raised $7.5 billion in debt to build AI data centers. Billions borrowed to buy hardware that depreciates, to build infrastructure for customers who may never come.
That’s not fraud. It’s faith.
And faith, when leveraged, has a habit of turning brittle.
This isn’t new. Every infrastructure boom ends this way.
The Question That Actually Hurts
The article was convincing.
It spoke of crashes of “unimaginable proportions”—of bubbles finally paying their debt to gravity.
But it never answered the one question a trader can’t escape:
When?
Tomorrow? Next year? Three years from now?
Where Skepticism Turns Into a Trap
The real danger isn’t being bearish.
Permabears don’t just miss rallies—they start rooting for collapse. Their theories become personal. Their portfolios become hostages to their worldview.
By the time the crash finally comes, they’ve been cut to pieces before the real cut ever happens.
The market can stay irrational longer than you can stay solvent.
But here’s what’s worse:
There’s no clean exit.
Short too early? You lose your shirt.
Exit to cash and miss the final rally? You watch everyone else get rich while your confidence erodes permanently.
Stay in and wait for confirmation? The turn happens so fast you’re caught flat-footed.
Every path has a cost. You’re not choosing between right and wrong—you’re choosing which regret you can live with.
Staying Near the Exit
I told myself: “Don’t stop dancing. Just stay close enough to the exit.”
Then I realized—I have no idea what that even means.
Do I hedge? Reduce size? Go to cash and watch? Or go short?
Near the end of the article, Carlota Pérez argued that real progress only comes after debt is forced to face consequences.
We haven’t had that moment since 2008.
Every wobble gets smoothed. Every lesson gets deferred.
This Isn’t a Prediction
The music hasn’t stopped.
But it doesn’t sound as loud as it used to.
I’m not calling a top. I’m not going to cash.
I’m just trying to make sure that when the song finally changes—tomorrow or three years from now—I’m still in the room.
Liquid. Disciplined. Free to act.
Because that’s the only edge left when you can’t time the crash… but you know it’s coming.
