Why Smart Investors Feel Stupid + The $3.5 Trillion Market Bet On AI

Summary

The recent market downturn feels like a relentless barrage, making investors question their own intelligence, but the key takeaway is the importance of self-forgiveness and gentleness in investing. While AI and immigration are strong economic headwinds, the economy remains surprisingly resilient, leading to a K-shaped recovery where those with disposable income, like attendees of high-priced New York Knicks games, benefit from the AI revolution, while others struggle. Bitcoin has underperformed significantly, losing its narrative sponsorship and attention to AI, and even traditional assets like Chinese tech stocks have lagged the Nasdaq by over forty percent. The Relative Strength Index, or RSI, measures market momentum, and while a low RSI on Bitcoin suggests it might be oversold, a four-year cycle theory offers a potential bull argument, predicting a recovery in late twenty twenty-six or early twenty twenty-seven. Galaxy is pivoting from Bitcoin mining to AI data centers, constructing a massive sixteen-gigawatt campus in West Texas, a move driven by business-friendly policies and ample electricity. Despite rising oil prices, the economy isn't slowing down as expected, primarily due to the K-shaped recovery benefiting a segment of the population. The debate around taxing AI companies continues, with proposals for government equity stakes in AI firms like OpenAI, Anthropic, and XAI, though a broader, diluted equity contribution from all companies for public ownership is suggested as an alternative. Looking ahead, there's a bullish outlook on the AI energy trade outperforming chip stocks in the latter half of twenty twenty-six, as electricity demand for AI is projected to surge. Bitcoin's price is expected to test the fifty thousand to fifty-five thousand dollar range if it falls below sixty thousand, with eighty thousand remaining a significant resistance level. Finally, the New York Knicks are predicted to win the NBA championship.