Below are some of the most interesting things I came across this week. Click here to subscribe to our free weekly newsletter and get this post delivered to your inbox each Saturday morning.
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Edward Chancellor writes, “The people running these companies are locked in as intense a mimetic rivalry as has ever been witnessed. As the AI arms race intensifies, the ostensible object – to establish a profitable and dominant position in this new field – appears to be slipping away.”
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At the same time, “…like the collapse of Bear Stearns, Michael Saylor’s demise has the potential to be both the result of falling confidence and a contributor to a further decline,” writes Peter Atwater.
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And, as Groundbreaker reports, “There is a window – call it borrowed time – between the moment the second derivative rolls over and the moment the first derivative crosses zero. During that window everything looks fine… And the machine is already broken; it simply has not been told yet.”
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This is certainly not what markets have priced in. “The spread between forward and trailing P/E ratios is rarely this wide except at market extremes like back in 2000. It’s a sign that investors are really expecting a parabolic move in earnings in the coming year and any shortfall could cause a market pullback,” reports CNBC.
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That does not mean, though, that there is not opportunity to be found. As Nejat Seyhun tells Mark Hulbert, “Finance literature says that if insiders buy around corporate stock repurchases, that is good news for the stock’s price and it goes up even more.”
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