The Anatomy Of A Bubble — And Why The Next One Won’t Look Like The Last

Group 1 - The core issue in the current market is not just in AI stocks or cryptocurrencies, but in the overarching confidence that liquidity will remain abundant and technology will sustain productivity growth, leading to inflated valuations [2][3] - The market has shifted towards a belief system where analysis has been replaced by faith in the "Everything Works Narrative," resulting in a concentration of investments in a few mega-cap companies [2] - Risk models are based on the assumption of low volatility and permanent liquidity, which are illusions, indicating that the market structure itself has become a bubble [2] Group 2 - Despite advancements in algorithms and quantitative models, market bubbles are still fundamentally driven by human emotions such as fear and greed, which have now been automated [3] - The current market dynamics involve investors chasing successful trends, now framed in modern terminology like "AI multiples" and "liquidity rotation," but fundamentally reflect the same cyclical behavior seen in past bubbles [3] - Technology has not eliminated bubbles; rather, it has industrialized the process, allowing emotional instincts to influence vast amounts of capital at unprecedented speeds [3]