Why Andy Constan Says The AI Bubble is in Earnings, Not Price
Episode publishedPodcast: Monetary Matters with Jack Far...Monetary Matters with Jack Farley
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If we're in a bubble, why aren't we suing crazy PEs? It's not the p that's the bubble. It's the e. The S and P in in its entirety is expected to earn 400,000,000,000. Where's the GDP that can do that? Now it could come from everywhere else. It could come from small businesses, private businesses, other stocks, the expectations that can allow every stock to eat at its current expectations for growth. There's just no conditions where there will be enough pie for everyone. And so to me, that represents unsustainable expectations. Today's episode is brought
to you by the unlimited HFGM global macro ETF, ticker HFGM. Later in the show, you'll hear more about HFGM, currently the number one Morningstar rated fund since its inception in The US macro trading category. Let's get into it. Monetary Matters is now streaming daily as part of monitoring Join us live on x from four to 5PM eastern, Monday through Friday for live interviews and analysis breaking down the market's most important situations in real time. I wanna welcome Andy Constant, veteran macro trader of Damp Spring. Andy's had a long career Salmon Brothers Bridgewater, Brevenhauer, many oth
Hey, Jack. How you been?
I've been really good. Andy, tell us, you've been writing about how you think that we're in a bubble. Tell us what exactly you mean by that.
Yeah, so I've studied bubbles all my career. I've lived through what I really directly, four, one, two, five of them, and I think we're in the midst of a sixth. So what I'm describing is not so it has to be distinguished between something that I find particularly useless, which is top calling or bottom calling, but really trying to say, are we in a different regime? And if we are in a different regime, a bubble regime, what does that mean for investors?
Well, yeah, as a trader, when you see a bubble there's the famous quote, I think, from Soros saying, when I see a bubble, I buy. Are you the type of person who when they see a bubble, you're buying?
Right. So, I'm not George Soros. I don't think any of us that are listening on this are anything like George Soros, nor have any of the type of information that George Soros has or had. Even his protege, Stanley Druckenmiller, rushed in at the absolute wrong time. So when I hear that quote, I think of one thing: I'm not George Soros, and I cannot spot a bubble early enough to rush in.
But Andy, I agree that the two of us sitting here, Max, our viewers, are not George Soros in terms of skill, accomplishments. I think many people in the investment world are like George Soros in that they believe that framework and that they you know? So the I think many of the people invested in AI and semis are true believers. You know, we had on Matt Dratch, PM from Affirm earlier this this week who seemed like a true believer in AI. I think that is not 100% of the people who are long AI in semis. Some of the people think, yeah, this is a bubble. This is a total boom, but it's gonna last tw
Well, I think the most important thing to say is I don't know what George Soros' thesis is for every bubble he's ever been involved in, but I'm fairly confident he does not care at all about the fundamentals. Like, you're talking about whether somebody is a believer in AI or not, and those things have nothing to do with a bubble.
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