I am not an economist.
I am not well-versed at finances, investing, and business ventures.
I make YouTube videos and write sexy stories. I just want to put that out there in case anyone thinks I’m smarter than I actually am. I’ll also note that while I do have financial investments that include stocks and cryptocurrency, my approach is as basic as they come. I own only a couple hundred dollars in Bitcoin. And I only buy index funds/ETFs. So, when it comes to financial news and trends, I’m about as informed as anyone else with an internet connection and a news feed.
And if you’re in a similar situation, chances are you’ve seen headlines about a looming economic bubble. You might have even seen dire warnings that there’s a massive bubble surrounding the tech industry, fueled mostly by artificial intelligence. There are even a few people who actively cheer for this bubble to burst, as if that will somehow end all the disruptions that AI has caused.
It won’t, but people are free to indulge in their self-delusions. I doubt anyone could convince them otherwise.
But when it comes to actual economic bubbles, there’s one very important detail to remember. It comes back to the first lesson I learned from a professor in college in a global affairs class. These are his exact words.
Nobody knows ANYTHING.
Please read it over, say it out loud, and repeat it as often as necessary. I don’t care if you’re in finance, politics, or fantasy sports. This insight is as valid now as it was on that fateful day I attended class. Over the years, I’ve seen it vindicated time and again across multiple fields.
And when it comes to matters of economics, the vindication tends to come in droves. There’s an old saying about economists having predicted 10 of the last 5 recessions, but in the real world it’s no laughing matter. Economics, financial experts, and wannabe gurus on the internet issue dire warnings all the time. They see some economic data, draw some conclusions that may or may not be valid, and issue dire warnings.
The problem is that data is never complete. Those conclusions are never absolute. The warnings may very well be sincere, but they’re still just guesses about any given trend. The latest “bubble” surrounding AI in tech is no different. It’s very likely that there are some real problems with the current situation, just as there were with the dot-com bubble in the early 2000s. Even though that bubble turned out to be real, it didn’t destroy the internet. It just purged the market of assets that had no real value.
Sometimes it happens all at once, which is then reflected in a stock market crash.
Sometimes, it happens gradually over time, so much so that most people outside of finance departments notice.
I certainly won’t claim to know or even speculate what’ll happen with the current economic situation. Maybe there is a bubble and it’ll pop soon. Maybe there isn’t a bubble and the market will fluctuate like it always does. I don’t know. You don’t know. Even the best economist on the planet doesn’t know.
If you come across someone who claims to know, they’re lying and probably trying to sell you something.
If you come across someone warning you of a pending economic disaster, they may in fact be sincere, but they’re also dishonest. And chances are, they’re also trying to sell you something.
For people like me, who make no effort to understand the stock market or predict economic trends, the best we can do is keep investing and budgeting wisely. That means be frugal when possible. Invest for the long-term. And don’t try to beat or outsmart the market. Just keep investing in index funds or ETF’s so that you don’t lose to it.
That’s the only honest advice economic anyone can give. And I’m not even charging people for it. That’s how you know it’s probably wise.
Jack Fisher's Official Publishing Blog 