After a massive Q1 and Q2 and a flat Q3, we are now entering what is allegedly bear market territory. I say allegedly because I don’t think investment theory, or the language around it, has caught up with the excessive mix of leverage, automation and gambling that now drives financial markets.
If you dabbled in the mysterious lands of crypto before the casinofication of the industry, extreme volatility with no meaningful trigger is neither a surprise nor an emotional event.
As most retail moved to trading stocks with leverage, helpfully enabled first by Robinhood and then by most of the industry, it walked straight into the algorithmic PvP arenas where hedge funds hunt, and that has reshaped how those arenas behave.
The AI bubble narrative has dominated sentiment this year, and it is one of the most illogical, and frankly dumb, attempts at putting a value on an industry. The core bear arguments boil down to:
It’s bad for the biggest players (the Mag 7), with the most liquidity and borrowing power, to use it to lock in compute dominance.
Compute demand outstripping supply for at least the next three years is really bad, and hardware companies using that to charge higher margins is definitely bearish.
Capital moving around the industry is weird and unusual, because the only acceptable circular economy runs from liquidity providers to financial institutions to big bonuses to escorts and Bimmers. Anything else is a red flag for an unhealthy dynamic.
Unfavorable polls and elections will suddenly lead to a complete ban on AI and all the compute getting thrown in the ocean, rather than the obvious flood of lobbying money and revenue sharing or higher taxes to pay off local communities.
Here’s how the last month played out for the Infra Play portfolio companies (not financial or marital advice):