Fade_Dance

Intuitively, kids are kids, and kids like to play.

That said, some kids across all income bases will take the opportunities that they didn't have before.

Traditional education isn't the main impact I was getting at though. It may be harder to measure and quantify.

For example, people that may have had little exposure to their political system now have a more access to exploring it, and organizing political action (see recent Gen Z protests worldwide).

Or perhaps an older teenager moves in with a friend across the country instead of only looking in their village area (the internet enabled me to do that anecdotally, years ago).

Coding and tech literacy will be much higher. Kids generally don't enjoy traditional education and won't sit down in front of math lectures of their own volition (some will!), but a more sizable cohort of kids will get into coding, make a website, moderate a forum/discord and build some scripts, build some game mods, etc.

The most impactful (and perhaps nebulous) change is that there is much more of a global community than there was. It's a different world for the new generations compared to how it was for most of human history. Instead of "American culture gets mass exported" it's much more of a global online community that nearly every kid gets hooked into to some degree. Obviously the Chinese firewalls of the world exist, online circles are tribal just like the real world, and top down algo feeds are clinging onto the top-down cultural export as hard as they can, but it's still a huge shift.

If the focus is on the developing world, some of the comments made in passing like video chat are huge. Going to the city to make money used to mean almost total disconnection from the old community. One of the problems with that is that these places can be "left behind", economically, and with demographic shifts worldwide, this is brewing into a bigger problem as many of these places have and have few young people. That's just one example. (Took that from China, which has a big initiative to improve that longstanding issue that has been building since the initial urbanization wave/birthrate collapse, and it involves phones and technology on many fronts.)

>limiting life outcomes of millions around the globe

The US is such a small sliver of the world population, as is the west to some extent. ACT scores and such are extremely US centric.

Smartphones were a positive revolution for so much of the world. Consider the hundreds of millions of children (more than the entire US population exclusively used in this argument) growing up in rural poor households surrounded by illiteracy. They suddenly had access to the wider world. They had the opportunity to take initiative in ways they didn't have before. They had access to limitless education, and an easy way to pick up a global language. When kids left the village for a city they could video chat with family instead of going months of no contact.

To some extent, I'm talking about the final leg of the internet revolution, not phones specifically, but in many areas of the world where electricity is intermittent, it was phones that finally drove wider internet penetration.

Are there downsides? Certainly. is smartphone addiction and social media a problem? Research says that it probably is, but for a long time I've felt that the positive impacts on a global scale are being downplayed, especially in the US. Not everyone who gained cell phone connectivity had a PC at home with a steady power supply as a baseline, and schools stocked with computers. We have a huge wave of new people growing up who had access to far more information than the previous generation. If I'm going to make a casual, broad-sweeping generalization of impact, I'll hazard to guess that the positive impact is being greatly underappreciated globally.

This seems to be a widespread practice lately, so there must be something going on here. Aside from the balance sheet/accounting angle...

Maybe they don't want to securitize their core assets and introduce a new favored class of investor. Ex: If they are securitizing their AI data centers as part of the initial capital raise, those investors would be higher up the capital stack. They would get the datacenter in a theoretical bankruptcy before the bond/equity holders got their cut of the liquidation. Intel securitized their new fab builds with Brookfield and Apollo and, as a shareholder at the time, it didn't feel great. No idea what the precedent is regarding Meta by the way, just a thought.

Maybe they think that the lenders are a bit "overzealous", and they want to push the risk of things like write down on GPU racks entirely onto external parties who are apparently all too happy to take the risk.

I'm guessing it's a mix of both, combined with the fact that we're seeing some copy and paste thinking. This is proving to be a way to get fast access to the huge private credit market. I would assume there must be some very wide deal flow pipes cranking currently, so why not tap into them if the demand is there in the other end.

The way the recent deals have been structured is that the capacity and thus revenue is pre-booked, which upgrades the credit quality in the eyes of the lenders. Blue Owl is private equity, so they are likely loading the special purpose vehicle itself with the debt (in a way that it off Meta's balance sheet, which is the primary objective), and then possibly funding the capital outlay through secondary markets (if not now, then perhaps later they can bundle it up and sell it - it's Meta adjacent so they will have no problem selling on that debt).

If Blue Owl is providing capital for an equity slice, they get huge leverage on their cut baked into the deal. Pension funds that may end up buying debt in the deal eventually don't want to actually fund the equity of the project and take the risk booting it all up while sitting at the front of the capital stack with corresponding risk of getting wiped out (even if it's a Meta partnership), they simply want securitized fixed income, and make it as vanilla as possible.

So the question is more "will Private Credit (or pension funds/institutions) take debt backed by datacenter collateral with long term service agreements with Meta" and the answer is yes. There is much lower quality stuff than that in the PC space.

VW had CARIAD, but it was a massive failure, and they moved on in spirit:

"Instead of developing software for cars independently, Cariad will act as a coordinator for externally developed technologies – primarily software from Rivian and Xpeng."

In my experience (portfolio manager who has been at this for a while) the broad brush reasons and explanations are mostly backwards-looking and don't accurately explain short term price moves. For example, if in another timeline BTC held up during the risk-off, you would be reading headlines along the lines of "Traders no longer fear seized crypto sales, proving the deeper liquidity of the crypto market as institutional adoption grows."

Not that creative narrative thinking doesn't have a place, but that's best left to the global macro space. In reality, there just aren't that many discretionary traders reading about a 20B BTC seizure in Cambodia and hitting the bid because of it. The underlying forces are waves of speculation that smash through smaller narratives, and systematic flows like robot trading, hedging, spread trading, you name it. Same thing happens in the stock market. There are vanishingly small amounts of discretionary news based traders outside of small caps. Most of the assigned reasons for moves don't have much to do with price moves in reality.

If I had to name a "reason" though, I think you are under-playing the recent carnage a bit. The speculative names are getting taken out to the woodshed in many sectors. Earlier today I covered a few quantum shorts that were down nearly 20%... from earlier mid-week, and these have been some of the leading thematics of the shorter term cycle. Volatility is getting fairly hot. The systematic vol trader who manages that stuff in my book went flat after a long while of shorting vol, and another 35 year pro who manages the active short vol stuff refused to even touch today and parked it until Monday. I was personally forced into selling BTC yesterday in order to hedge options positions as well, anecdotally. Remember, this was opex, so hedging flows dominated the market this week across all asset classes (liquidity is increasingly interwoven).

In the pure crypto space, crypto saw est 10 billion in forced liquidations. Leverage was too high in spec names across the board, including robot positioning (prime broker reports model systematic positioning, and they are pretty full of risk, with implied selling in most timelines, even in slightly down tapes). Silver also dropped 5% and is finally seeing some serious downside volatility. Across all asset classes, speculative narratives are getting hit hard, and crypto generally has correlation with that if it's stretched to the upside.

I think it's a bit late to the game to be pulling out the "gold is a better crypto" card as well. That's been going for months. I'm starting to get texts about how much money x person has made from gold miners, etc. Probably about time for that to unwind... Many areas in crypto were on that sort of bandwagon. Ex: Ethereum treasury had a typical speculative mania going on until the recent unwind. Occam's razor probably says just stick to that when it comes to explaining price. Or better yet, just be agnostic on shorter time-frames.

Nice knowing you.

We were a small affluent school district and the receiving school districts were much, much larger.

I'm not sure if the exact figures, but part of the issue is that it was a low tax jurisdiction in general, and presumably the program was implemented to patch the system and bring it up to par, which it only partly did. If the transfers were implemented on top of a system that wasn't already at crisis levels, no doubt net outcome would improve in kind.

Having had direct experience with a system like that, my anecdotal experience was that the affluent school still has more than enough money (anecdotal), while the poorer surrounding school districts were critically underfunded (not quite as anecdotal, newspaper stories from the time, etc).

That's not to say that the program wasn't helping, but the mere existence of such a program isn't enough to equalize that variable. Of course the points you bring up are important factors in education as well.

>Is the population too stupid to be permitted general purpose computers?

I'm strongly against this Android change (for a simple reason written below) but the answer to this is a resounding yes! The general population is a complete security disaster with unsigned software! The latest generations being brought up within abstracted mobile ecosystems are no improvement either on that front (probably worse).

That said - and I think this is a key point in this debate - sideloading apps is already a fringe part of the Android ecosystem. The vast majority of average Android users will never interface with this functionality. Well there is still obviously a security risk as with any time unsigned software is offered, it doesn't seem to me to be a major issue in the ecosystem. This is clearly about control, not security. Let's say there is more antitrust action and Google loses more control over their preferred forced storefront monopoly within the ecosystem. With this change, at least according my understanding of it, they are still the arbiter of what is allowed on the platform and not even if an app comes from another app store.

The physical world is within regulated frameworks though. There is no regulatory body in charge of the Ethereum blockchain.

The prosecution is alleging that there was a "promise" to the victim, which would let the transaction breach the boundaries of the crypto universe and be classified as real world fraud between two individual parties, but I just don't see how there was any sort of "promise" made here. First of all, they traded against an automated trading bot. Second, a bid or ask and market liquidity is not a "promise". I trade for a living and market makers suddenly pull liquidity all the time when it suits them, on millisecond time-frames. Granted, what the brothers did is essentially "spoofing" or posting bids and asks with the intent to move markets, so the question here to me boils down to is crypto spoofing illegal or not. Perhaps that depends on the jurisdiction/and or decentralized nature of the exchange that they were posting the offers on. I would think that if they can get charged for this then the majority of trading on thousands of "shitcoins" is outright illegal activity by extension though.

On a much more simplistic level, if you're coding up in ethereum arbitrage bot, and it makes a bad high frequency arb trade... tough luck? I was under the impression that this was sort of the point of crypto markets, to escape regulations and be a freeform, decentralized trading venue.

BBC has a good audio series on this: https://www.bbc.co.uk/programmes/w13xtvt4

Granted, it's a bit drawn out, but certainly is a memorable story that perfectly encapsulates speculative behavior at every level.

Quite conversely, if your equity portfolio is going up tens of thousands of percent yearly, that's when you should be sounding the alarm...

You are being mindful of some real risks and concerns.

That said, there's no reason to have to feel like you need to take a stab at it totally by yourself. Heck, that's what I'm doing in the day to day - putting together a few of these portfolios for people. There are certainly advisors and managers who know the academic side of this and can diversify away from concentration risks and such.

There are also many great tools in the relatively recent future that have opened up for common investors to diversify smartly. You can get pure trend following wrapped up in an ETF. You can get 100% equity 100% bond wrapped up in an etf at half of the size, so you can fit Gold and Trend in a portfolio with no hassle (both are low return but great from a diversification standpoint, so most retail investors want to lever up a bit to get back to the standard SP500 return/variance profile).

If you don't or can't find someone who can math it out for your individual case, it's also an option to just pull a few of the best proven individual ideas, such as "have some international diversification". ETFs are easy to grab here. Even 10-20% can pad out some of the US concentration and dollar exposure a bit. Smallcaps, like you said, are another way to shift away from the "size factor" dominated index weighted ETFs. The Nifty 50 bubble in the 60s was a major catastrophe, and history rhymes, so why not hedge a bit while still sticking to a proven investment framework? No financial advisor is going to look at an equity slice of 80% S&P, 10% international-ex-US, and 10% smallcap and say it's a stupid idea. Actually, they will probably say it's a smart improvement over 100% S&P.

When it comes to smallcaps, the caveat is that the Russel2000 is filled with fairly low quality companies. High debt, value traps, you've got it all. That's diversification, but probably not the type you are seeking. That's why smallcaps are a great target to add some factor based investing returns. This is another diversified source of return in and of itself (AQR as 150 billion under management here), but why not overlay some Quality and Value factors on top of the smallcaps? Now you have a sprinkle of factor investing edge in the portfolio alongside the smallcaps, while not drifting too far from the status quo since smallcaps are a small allocation. Not going to toss out specific investment ideas but there are ETFs/mutual funds for this! Just stick to low fees and a long track record. A question like "I want 10% in smallcaps, but I want a factor overlay for Quality and Value", is a question that would actually get money out of a good advisor by the way.

Here's a good, slightly wonky, lecture on some of the esoteric yet quite "in your face" risks within a complex dominated by passive and index weighted flows. It's not at all a misguided though to think there are some risks out there in the left tails. This was a lecture from 5 years ago: https://www.youtube.com/watch?v=x-rJciYZmi0&t=1s

The global financial system has gone through successive iterations, each somewhat distinct from the previous version. Ex: post ww2 Bretton Woods to the aptly named "Bretton Woods II" post 1970 gold standard break.

The current iteration is almost certainly a phase, not an end point.

The system itself can be viewed through the lens of a sort of technology that is evolving like any other technology, and concepts like "paradigm shifts" can apply to the monetary system as well.

This particular system that we have is stable (perhaps only) within the context of a stable US centered world monetary order. Usually the conversation quickly veers into the decline of the US, etc, but that's not my point here to be clear. The current system is based on offshore dollars (eurodollars - confusing name, nothing to do with the euro currency) bound together in a 20 trillion dollar eurodollar derivatives market, which essentially takes Fed policy and propagates it through basis trades to the global Eurodollar system that is technically entirely outside of US jurisdiction. When the Fed does something like change interest rates, which is apparently quite important if you look at Bloomberg/Reuters etc, ask yourself what exactly is happening when interbank lending rates change. Map it out, it may be surprising. What's even more surprising is the lack of discussion about what things like rate changes actually mean technically, despite the vast mainstream discussion around these topics.

Since 2020 we have seen first hand that the world is actually quite isolated from the traditional banking space in many ways, on a first order basis. It's the higher order effects (such as policy propagation into global markets which are quite disconnected from Fed policy) that matter. The matter to note is that this is increasingly vestigial in nature, and evolution tends to eventually drop the vestigial remnants.

(I know these conversations tend to veer into doom and conspiracy, that isn't the intent at all. I think most would be surprised if the current system as it stands persists for another 100 years, if not 50, and that's a standard idea to have.)

That's a severe oversimplification. The world isn't black and white.

Take free speech, which has certain restrictions in most societies. Some societies draw the lines further than others.

Likewise, when it comes to elections, the election process is controlled to some degree. One can't, for example, broadcast misinformation about mail in ballots, because that would threaten the integrity of the democratic process itself.

There are countless ad absurdum arguments that could be made here, but that one will suffice. Say a foreign entity broadcasts misleading information about mail in ballots as part of a wider campaign to convince certain sections of the population that the post office is changing votes. Would banning that activity change a society from a "free" state to a "controlled" state like some sort of binary switch? Of course not, and typing "Period. End of story" is a completely asinine and amateur argument to support that. Devolution into semantics.

What I'm highlighting is that in most democracies, there is a sacrosanct ring around the democratic process itself - arguably necessary to at least some extent - and in the context of misinformation/state meddling/etc that would fall under the category of "election interference" if a certain bar is cleared. Ideally a high bar, so the red tape is as minimal as possible, but when it comes to state intelligence agencies specifically targeting an election itself, there is not just a coherent argument for it, it's the way it is in most democracies worldwide.

The sweet nuclear summer glow from the back porch is an ambiance simply unequaled.

I agree, which is why it's plausible that there is a scenario where the bluff is called.

>why the heck is so much money pouring into the sector - including Tesla and Facebook

The names you pulled out have Size factor in common, and with the modern market cap weighted index/futures dominated market, flows into Size factor have a close correlation with overall liquidity flows. That's a broad phrase, but if you're talking about the narrative over the past 6 months (most human readable market narratives are bunk, but some are sound) you mainly watched the system deleverage and then releverage, which constitutes a major flow of liquidity. With 7% daily real moves, extreme implied volatility, and more concrete geopolitical uncertainty, portfolio risk metrics from any angle light up and risk has to be taken down. Not just hedge funds and traders (although they exert significant influence), but the more broad equity space as well, such as say pension funds who are in portfolios that target a yearly volatility band (vol targeting), or trend followers (500 billion and highly levered), and of course regular people who for either emotional or other reasons can't take the heat.

Since the tariff shock, realized and implied volatility have come down, which mechanically drives a bid from the vol-targeting world, and gives more buying power to any entity who has a volatility budget (and to some degree everyone does), and that forms trends which bring traders and trend followers back in, and of course allows the construction of new narratives which most humans always like to have before committing capital.

The points of extremely high leverage and extremely sharp deleveraging (panic selling) are often excessive in nature. It's a cycle that repeats, in an ongoing auction and price discovery process that never ends. Better to just look at longer term averages if you want to strip those aspects out. But that does beg the question of why this cycle continues to persist, and the answer is quite simply that dynamically targeting exposure can be profitable even with the obvious drawbacks. Selling volatility makes money. Following trends also makes money, and in trend following most of the profit comes from the extreme moves that you would think are the most dangerous (ex: gold recently, or equities themselves - mechanical trend followers have been increasingly net long equities until exposure started coming down within the past few weeks).

The recent selloff had about 150 billion in forced selling from realized and implied volatility exposed entities: "Taking a look at Nomura's estimated "Index Rebalancing Projection” proxy which is an aggregation of SPX Options Dealer positioning / Greeks hedging, Leveraged ETF rebalancing and Vol Control deallocation flows: -$88.9B for Spot ~-2% move (which nearly doubles to -$151.0B in a -3% slide... which is pretty much where the Nasdaq is right now)." (from Friday)

Ex: The portfolio I run has a volatility selling component, and it's been cranking on that for months now with fine results. Typically as this goes on, human fallacies creep in. Look at incentives, which are usually defined in yearly terms, which leads to traders and portfolio managers feeling like they have "house money" to gives back when they have high profits somewhere. Then you also have the greed and fear of missing out that builds up as well. AI being "hot" and the gold narrative are headline stories now.

The flows above can be modeled: https://ibb.co/zW3PNMYw.

Also remember that modern markets are surprisingly illiquid, which effects both on the downside and the upside. Be careful about assigning a few shares trading at a price to the "price" of the entire bulk of shares. This especially applies to the Teslas of the world that you named, and many of the AI names. People like to extrapolate when they maybe shouldn't be.

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You have some other topics you're bringing up. Some of it can see some pushback: I remember thinking Google was dirt cheap 4 months ago. The popular narrative was that AI was going to destroy Google Search, etc, but I thought it was fairly likely AI search blurbs would not be a catastrophe, and then of course Gemini/Google's in house AI prowess was almost entirely ignored despite fairly excellent execution, and more importantly Google Cloud growth was downplayed at the same time it was hyped up at every other cloud company (that's a spread that seemed unsustainable), and then finally YouTube growth and recent expectation beating aspects of the business were downplayed as well. (This was my biggest equity position if you couldn't tell, although it no longer is since the business seems more in line with peers now).

Then you have some obvious statements that the market is making about currency debasement. Equity markets generally perform very strongly in nominal terms during inflationary periods, and many debasement trades like Gold are through the roof. Perhaps the market is just expecting further concentration of wealth at the top and more asset inflation, rather than goods inflation. Another angle of this is that bonds are not looking attractive to people, and there seems to be some desperation for alternatives (I'd say that explains some of the gold run, especially if you personify foreign central banks this way as well, which is arguably true).

I'm not sure this is a plausible brink. The initial "tariff board" situation was 10 times more severe than this, and additionally this is a repeat of the same playbook.

This won't be the start of (further) major decoupling unless it's what China wanted in the first place, and they needed another 6 months of preparation before committing to the path. If China says "Go ahead and tariff us 100%. All rare earth exports and re-experts to the US are banned", then that's when to expect changes that won't be reversed any time soon. Everyone knows that Trump will blindly auto-escalate in response, so China saying so would mean "this is the outcome we prefer" and all that follows from there.

Semiconductor design pipeline software.

Baidu Apollo Go is conpletes millions of rides a year as well, with expansions into Europe in the Middle East. In China they've been active for a long time - during COVID they were making autonomous deliveries.

It is odd how many people don't realize how developed self-driving taxis are.

Sure, but there's a difference in intent and degree between "foreign influence is manipulating our voters" via political content on TikTok vs a targeted state sponsored campaign run by intelligence agencies.

There are some common sense guardrails around elections in a democracy, and foreign influence targeting the actual election process is generally viewed as over the line of acceptability.

It raises taxes but arguably impacts GDP in a very direct and equal way, so it mostly nets out. The argument that follows from there would be that taxing the rich would have less of an impact on GDP.

The development of the Global financial system is an ongoing narrative though. It was never going to continue indefinitely. The modern euro dollar system is fairly new, spawned in the 70s. Before that you had a huge shift with the Sterling losing dominance. Then go back another 50 years and you have swarms of independent banks issuing their own currency.

It's a mix of a constantly churning "history rhymes it doesn't repeat" cycles (ex: stablecoins being rehypothecated/used as base level collateral with which to generate leverage is somewhat of a modern version of the late 1800s bank currency cycle), combined with what may be best described as technological development as theories and tools and ecosystems develop.

The zeitgeist is very much that it's about time for the Eurodollar (offshore dollars/Eurodollars bound by the 20 trillion dollar Eurodollar derivative market) to fade, but as of yet there haven't been any good alternatives.

It's a big burden to export your monetary policy and backstop global economic fragility, because it becomes your responsibility. Ex: that doesn't work with a system like China because they don't like putting their own people last in a loud and public way, while in the US the average person regularly and obviously comes away worse off during big interventions. It's also a bit of a trap to step into this, because central banks have mandates to protect systemic stability, yet by unwinding this sort of arrangement, capital flows reverse en-masse which is a clear threat to bond markets (and asset markets in the US's case, since it is so hyper financialized). That's something that is often missed in this conversation. It's a service that has to be provided, and it has costs.

Or perhaps we will attempt to give a system with no bank/regulator of last resort a go again. Probably a "history rhymes" style outcome, but you never know.

A leading thesis in the macro space is that the general response to interest burden is for policy to naturally shift to financial repression, or using monetary tools and regulations to suppress real interest rates and devalue the debt stock while dropping interest payments.

Ex: after 2020 debt to GDP went down in real terms despite the massive increase in liquidity.

Of course that just enables more deficit spending and shifts the world more towards a modern monetary policy model, where inflation is the limiting factor.

It's a plausible view. Just as governments that can print their own money will not default, they will print to pay, they will also generally avoid going into a crushing crisis due to interest payment burden. It's politically easier to use the currency as an outlet.

Interest rate payments are supposed to limit the extent of deficit spending (and government budgets getting squeezed by interest is arguably partly deflationary, in that it can spur deflationary crisis and bad real economic environments), but in practice increasing interest payments creates more of a phase shift where the system shifts to forced debt haircuts, and that flows in kind to extra pressure on the currency.

Just look at the current environment where Fed independence is being breached like never before, with the aim of forcing interest rates down without consideration for data driven risk analysis...

These sorts of outlooks are notoriously hard to predict.

Paul Tudor Jones (one of the most successful investors of our time) is of the mindset that if anything we are about to see equity appreciation far in excess of what we have seen for decades.

https://fortune.com/2025/10/07/paul-tudor-jones-hedge-fund-b...

If that's the case, right when you're looking to rebalance your portfolio, you're going to be looking at a much more difficult decision, having already missed out on price appreciation that would be quite useful in padding downside risk...

Perhaps just step away from market cap weighted index funds as a long term adjustment. That's something that with a proper basic framework is advisable as a general portfolio management approach as well. (I have some SMLF - Smallcap Quality/Value, Berkshire, generic Global Equity exposure, not for outright returns, but to lower exposure to the concentrated passive market cap weighted indexes and diversify risk exposures).

Trend Following exposure is a great add as well, since it is negatively correlated with risk assets in many macro/market regimes.

Probably healthier to address your very real concern with modifying the long-term portfolio design rather than take a short-term market timing approach which is more of a negative expected value.

The part that I think may have some credence is that it may be a way to prop up huge profit margins that may persist for longer than they would otherwise in lieu of further commoditization and competition.

If NVIDIA has a stake in the company, they are less likely to do something like start brewing inference chips in house with the help of the foundry partner and a provider of vanilla chip designs. The company also gets a huge cash injection that is somewhat contingent on not doing that, and hey, they have a fresh pile of cash for cutting edge chips so whatever, right? My first thought was that these deals had more to do with that than anything else.

That aspect may end up being a bit illusory in the end. But then again, Nvidia has been proven to be quite skilled at building out and defending their ecosystem, sometimes through ruthless means, so maybe it persists (and I'm not sure that's a good thing). China certainly isn't a threat to throw a wrench in this situation... the entire US geopolitical complex will ensure that is the case.

I would be convinced that he's some sort of super well calibrated financial article AI engine (due to consistency of output and breadth of coverage), except that I've been reading his column long before LLMs were on the scene.

It may affect them. I stand by that.

Since this is hackernews, I'd imagine there are a decent amount of people with low float tech stocks. Those things can be impressively squirrely. I've moved a billion dollar company 5% with a $100,000 order by being a klutz.

Granted, these situations are usually in times of market stress, but these are times when for better or for worse people do need to raise personal cash on occasion.