The financial markets, dear reader, are seldom driven by reason, but rather by a collective delusion, a sort of mass hypnosis dressed up in pinstripes. To believe that this time is different is, of course, the most persistent and profitable of follies. The S&P 500 (^GSPC +0.55%), having enjoyed a rather exuberant five-year ascent, now stands at a valuation that suggests either extraordinary prescience or a breathtaking disregard for history. One suspects the latter. It is a truth universally acknowledged that a market in possession of good fortune must be in want of a correction.
The Artificial Bloom
the shoemaker prospers while the emperor parades in borrowed finery.
OpenAI, meanwhile, is projected to burn through a staggering $17 billion in cash next year. A truly impressive feat of financial self-destruction. Their impending IPO promises to be a spectacle, a moment when investors are invited to peer behind the curtain and discover the alarming economics of the AI dream. They may not, one suspects, find the reality particularly enchanting.
Oracle, with its debt-fueled data center spending and lackluster performance, serves as a cautionary tale. A reminder that even the most established companies are not immune to the siren song of speculative investment. A gilded cage, however beautifully constructed, remains a cage nonetheless.
In the coming year, the market will undoubtedly grow impatient with AI spending that fails to deliver tangible results. And that impatience, dear reader, will likely trigger a rather unpleasant reckoning.
The Vanity of Valuation
The cyclically adjusted price-to-earnings (CAPE) ratio currently stands at a level not seen since the dot-com bubble—a rather ominous sign. It suggests that stocks are not merely expensive, but extravagantly, almost offensively so. It is a testament to the enduring human capacity for self-deception.
Historically, such inflated valuations have proven unsustainable. Prudence dictates a shift away from richly valued technology stocks—a retreat from the speculative fringes before the inevitable correction arrives. It is, after all, far more elegant to anticipate a fall than to be swept away by it. The market, like life, rewards those who possess both wit and foresight.
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2026-01-23 12:52