Jeff Guo

That's a bubble.

That's a bubble.

And with a bubble, that price just keeps going up and up and up until one day it pops.

The price comes crashing down to reality and a lot of people lose their money or lose their jobs.

Yeah, it's pretty hard to get irrationally exuberant about ankle socks.

Whereas AI, on the other hand, AI is new and exciting and no one really knows how big of a deal it's going to be.

There's all this uncertainty.

And that uncertainty also makes it genuinely hard to tell if we're in a bubble or not.

Right now, investors think NVIDIA is worth $4.6 trillion.

That is 22 Disneys or five JP Morgan chases.

Economists call it a bubble when the delusional narratives have taken over the market.

And economists have come up with all kinds of theories about why investors might be a little delusional or over-optimistic.

But it's really hard to tell when the market is being delusional when you're in the moment.

Yeah, this is one of the big challenges in economics.

How do you detect a bubble before it's too late?

And this challenge is so humongous that one of the most famous economists in the world is skeptical about whether bubbles even exist.

His name is Eugene Fama.

He's kind of a big deal.

He won a Nobel Prize for his theory that markets are mostly efficient.

Fama was like, sure, it's easy to call something a quote-unquote bubble after the thing has already popped.