Yet another Hacker News

78 points madihaa 1 hour ago 58 comments

bell-cot 1 hour ago | parent

Similar to the old saw about you owning the bank $10 thousand vs. $10 billion, the "value" of stocks does not scale.

novaRom 1 hour ago | parent

Selling AI stocks before year-end makes sense, right? New Congress, new House take over in January. Cost of living so tax hikes next year. Better to lock in gains now than pay more later? Besides cash is now bringing more than 4% pa

hoppp 59 minutes ago | parent

End year sales are common. Black friday, Christmas whatever. People spend and taking profit feels good.

ThunderSizzle 33 minutes ago | parent

I expect Democrats to be as pro big business as they always have been - as long as they are "regulated" to be in sync with Democrats desires.

They'll be anti data centers until they are no longer the opposition party. Then suddenly both Republicans and Democrats will change while MAGA/America First and woke 2.0/socialists sides won't have changed at all.

Isn't the political party system great!

cpursley 10 minutes ago | parent

Datacenters of Democracy, aka USAIDS 2.0.

triceratops 30 minutes ago | parent

> Cost of living so tax hikes next year. Better to lock in gains now than pay more later?

Deliberately pay capital gains tax now on the off-chance taxes go up next year? You do you my friend.

hn_submit 55 minutes ago | parent

People the AIpocalypse is real!! Brace yourselves for a $10 Trillion wipeout.

Anthropic and OpenAI will disintegrate and vanish in the mist.

That's all folks!!!

drivebyhooting 51 minutes ago | parent

I hope not. I need my subsidized subscription and I’m not satisfied with argon

yread 49 minutes ago | parent

I'm already pushing my bathtub out so that I can catch all the GPUs that will soon start raining down from the clouds

throwaway384034 43 minutes ago | parent

Looks like the party is over, now for the hangover.

amelius 42 minutes ago | parent

Can I have my DRAM now?

silverFork 30 minutes ago | parent

LOL

SwellJoe 39 minutes ago | parent

As usual, I was right about the market but way too early. I sold all of my AI-exposed stocks last year, as I knew the investment going into it couldn't be recouped in a reasonable time. If I'd held longer, I'd be up about 2x on those shares even if I'd only sold in a panic yesterday.

But, it also means I can probably reinvest in some of those stocks now that a correction is in progress. There are some excellent tech companies with strong leadership and strong growth (e.g. ARM) that have been too expensive for a long time; still too expensive, but getting closer to reasonable.

cgeier 34 minutes ago | parent

Being early means you were not right, it‘s all about the timing.

curiousllama 28 minutes ago | parent

I know they'd be down 50%! I just didn't know they'd be up 500% before that.

gopher2000 18 minutes ago | parent

"I thought they'd be down 50% and they're up 450% so I was mostly right"

SwellJoe 16 minutes ago | parent

It's about timing and direction. Timing doesn't matter if it's not a well-run business.

Most of my holdings with AI exposure were and are well-run businesses; they were when I bought them, when I sold them, and throughout the AI-inspired rise. The problem was I didn't believe there was sufficient market opportunity to justify the stratospheric rise, and I think the market has now begun to catch up to that thinking. The market has begun to agree with the premise I based my decision to sell on.

I suspect the decline will continue and I will be able to buy back into at least some of the stocks I sold at a price better than what I sold them for.

So, yes, my post was to say I am frequently wrong on timing, even if the premise I based a decision on turns out to be true. I don't understand people, but I understand tech.

hagbard_c 29 minutes ago | parent

Yes, well, remember the dot-com boom/bust cycle? Lots of people lost a lot of money then but not all of those stocks ended up becoming worthless. Some held on to what they had and made a fortune once the internet-hype was over and the internet-era began. The same could happen with some - but certainly not all - of these 'AI-exposed' stocks. Once the 'AI' hype is over the 'AI era' will probably begin, especially if the dearth of RAM and matrix processing capacity is solved somehow.

SwellJoe 14 minutes ago | parent

That was the first time I was right but early. I sold out well before the peak to start a business with the money. I made money, roughly tripling my investment, but lots of folks made more money (and lots of folks lost a lot of money). In this case, I sold at a profit, but I could have made a bigger profit by being more slow to respond to my understanding of the market.

tjwebbnorfolk 10 minutes ago | parent

Tell me the difference between early and wrong

schnuri 38 minutes ago | parent

I always find these market cap numbers misleading. The US stock market isn't "worth" $2.5T less. If you multiply the marginal share price by the total number of shares, you get a number that's $2.5T lower. That is something different. E.g., if you tried to sell all Nvidia shares at once, you'd never get anywhere near ~$4.5T (just as buying them all would cost far more).

curiousllama 27 minutes ago | parent

2.5T sounds impressive, but less impressive next to 82T total market cap

adam_arthur 14 minutes ago | parent

What something's worth is what somebody is willing to pay for it.

And conventionally, we use the marginal buyer's bid as the measuring stick for public companies. e.g. the share price

Of course, the intrinsic value based on currently known data/fundamentals is unchanged.

But many market valuations are disconnected from that to begin with. Loans, options, warrants, many things are tied to the market cap/share price of a company. E.g. what is the LTV ratio when lending? What are my RSUs worth?

smallmancontrov 13 minutes ago | parent

> if you tried to sell all Nvidia shares at once

That is something different: liquidation value. Market cap tells you the sum total of the numbers next to this ticker symbol in everyone's brokerage account. It tells you the collective expectations about future returns and also the wealth effect that people feel based on their ability to individually obtain cash for shares.

It is true that neither of those things is liquidation value, but also liquidation value is neither of those things. If you expect a liquidation scenario, sure, use liquidation value. If you don't expect a liquidation scenario but want to measure collective expectations of and confidence in a stock, use market cap.

hacker_9 12 minutes ago | parent

I agree, its such a pet peeve of mine these sensationalist headlines. The price gets bid up, majority of shares were mostly bought at cheaper prices, but when there's a drop it's still 'new price x existing quantity' which means we lost X trillions.. Yet it never existed in the first place!

stinkbeetle 9 minutes ago | parent

That's basically the same as anything that could be bought and sold though. Your house is worth what you could sell it for tomorrow, not an impossibly unlikely tomorrow in which all house owners decided to also sell. I don't even know how or why you would try to value according to some crazy scenario like that, but it would be much more misleading IMO.

Everything is valued in prevailing conditions. Conditions change, and value changes.

danielmarkbruce 7 minutes ago | parent

People in finance have largely (and correctly) agreed that the marginal buyer and seller represent the best guess for the value of the business with very few exceptions. There are various flaws with this, but you won't come up with a better method, I can guarantee it.

ghshephard 7 minutes ago | parent

On the flip side - if you wanted to buy all of NVIDIA shares - you would have to pay more than $4.5T - likely 20-25% premium. So this cuts both ways.

The peer-comments about the market cap being representative of the expected value, or present-value of cash-flows with some discount / risk adjustment are on point. (which implies that the change in market cap might be a change in cash-flows, change in discount (typically FedRate) or risk)

curiousllama 31 minutes ago | parent

This is definitely scary, but not the end of the world (yet).

The S&P500 is still up ~7% YTD, and 5y CAGR of 9.4% before dividends, in line with historical norms.

This is primarily a decline in tech: week over week, the S&P is -4.5% (SPX), but the S&P excluding tech is +0.1% (SPXT).

Right now, this looks like speculation that tech will reduce capex after Q4 earnings (Nvidia, Micron, Sandisk, AMD all down >2x vs the S&P). But it'll take time to tell; most just announced Q3 a week ago.

All this to say: expect volatility, but no need to panic.*

*(Unless you're in TQQQ. Then panic.)

staticman2 24 minutes ago | parent

It's not scary at all unless you think stocks are a riskless asset expected to always go up and bonds and bank accounts are for suckers.

lachlanj 11 minutes ago | parent

Google got punished in the last few days for too much Capex. So what does the market want, less capex or more capex?

outside1234 4 minutes ago | parent

Less Capex, More Profit

masfuerte 11 minutes ago | parent

In case anyone else was wondering:

TQQQ is the only ETF (Exchange-traded Fund) that targets 3x the daily returns of the Nasdaq-100 Index.

Ouch!

foolswisdom 28 minutes ago | parent

For all the federal election related takes, remember that

1. Market price changes are changes from what was expected before compared to what is expected now. And not even only in regards to the asset itself, but with respect to comparative change in other assets as well. 2. conventional wisdom when the branches of government are divided, less change comes from the government, so you can expect that your expectations for the future will remain stable, and that confidence reduces risk aversion, resulting in higher pricing.

Therefore, the market going down cannot be attributed purely to a question of who is in charge, because the democrats can't pass anything unless they get a nice number of Republicans on their (possible I suppose, but I don't think anyone is expecting that right now). But it could be attributed to expectations of what Republicans would do vs now that they can't.

Besides, it's basically impossible (or at least for layman, who knows if you're a market maker?) to accurately attribute a day's market behavior to any event, with a compelling causal explanation (sometimes your attribution could also be explained to have the opposite effect than the one you're trying to explain) and not ignoring alternate possible explanations.

It's kinda annoying when even otherwise serious people invoke the market movement of a day as an meaningful event that can be explained (notwithstanding that by tomorrow the effect might have reversed). But unfortunately business news like CNBC promotes that kind of thinking.

foolswisdom 26 minutes ago | parent

It's still quite possible that all the non federal items on the ballot (lots of anti data center referendums, lots of democrat politicians in state office) matter quite a bit.

yojo 12 minutes ago | parent

State government leadership did change in unexpected ways, and they do get to pass laws. See: Texas

foolswisdom 5 minutes ago | parent

Yes. I actually hadn't read the article before commenting because initially the link was to the Reddit thread. The data center buildout slowing, with Texas (among others) blocking otherwise expected to be built data centers is probably a significant justification for re-evaluating the business.

mgh2 7 minutes ago | parent

Wait for 40% downside: https://www.youtube.com/watch?v=HfcDQ7JVnzQ

Nvidia can be down to 3-3.5T market cap from 5-5.7T heights

shevy-java 23 minutes ago | parent

They are pillaging.

It will be a long time required here, investigating all corruption that has been happening.

Inflation increase should be viewed as a mafia in charge of a country.

vladmk 20 minutes ago | parent

2.5 Trillion unfortunately is nothing compared to the debt we're in smh

dudefeliciano 18 minutes ago | parent

Interesting how the coverage of midterm elections was flagged with many users talking about how politics are not a hacker worthy topic but this somehow seems to be

huqedato 17 minutes ago | parent

Sell the dip! I'm buying cheap.

hacker_9 17 minutes ago | parent

April 2025, nasdaq enters bear territory: https://news.ycombinator.com/item?id=43587479

It's interesting reading the panic then in the comments, and yet now the nasdaq is up 65% from those lows, even with today's drop.

jrflo 16 minutes ago | parent

Sounds scary until you realize that this happens about once per year on average. If this happens again tomorrow and a few more times in the few couple weeks that would be bad, but as of now it's notable but not a huge deal.

zer00eyz 9 minutes ago | parent

Not really - today was a rare and large sell off - last time that was close was 2020 - for the pandemic.

The question one should ask is how far down does it go and if history is any indicator it's not gonna be up from here before the new year (and likely down a bunch more). There is a LOT of over valued stocks still to be cleared out - I suspect the cut is gonna be a lot deeper. The history on this is 2018 for Trumps last midterm and a pending rate hike. Sticky oil prices are gonna drive inflation and the fed raise's the market suffers.

ChrisArchitect 12 minutes ago | parent

Nasdaq plummets 4% into correction territory

https://news.ycombinator.com/item?id=50381623

silverFork 12 minutes ago | parent

Everybody knew it was coming soon.. Some were waiting for anthropic to IPO first. Markets could not wait because of public sentiment.

i_love_retros 8 minutes ago | parent

America desperately needs January to come around fast. We need some level headed sensible people running the country. We need to elect more socialists to knock these tech companies down hard. Power to the people and fuck all this AI shit.

draxen 6 minutes ago | parent

Americans are seeing this through a political lens but a generational lens is more accurate.

American zillennials are going to burn down the American financial system. J.D. Vance and Mamdani are to the left of Danish SocDems on key economic and trade issues.

European pension funds and sovereign wealth funds should pull out of the US immediately.

donohoe 4 minutes ago | parent

Relax. This happens 2-3'ish times a year.

outside1234 4 minutes ago | parent

Don't worry, tomorrow will be worse

MSM 4 minutes ago | parent

There's a lot of conjecture about how the midterms have caused the drop today but I can't help but think it may just be a convenient coincidence. Yesterday was one of the largest bumps of the year and by yesterday it was already known that Democrats were taking control.

Is this just the start of the fall that many people have been predicting for months? Did something materially change in the Democrats' stances or policies since yesterday? Or is something else unwinding entirely?