As a young journalist covering deal mania in the 1980s, I often wondered if junk bonds and debt-driven deals were a bubble. Then, I had an interview with Nobel laureate Kenneth Arrow, who said that for mergers and acquisitions to pay off for investors, two plus two must equal five – a mathematically impossible scenario. However, it took three years for investors to realize his calculations were correct.
Fast forward to today’s market frenzy, where cryptocurrencies, meme stocks, and alternative investments are gaining traction. The key is artificial intelligence (AI), which is critical because bubbles often emerge during periods of major innovations. Massive investments accelerate technological transformations, and excessive exuberance among investors can be part of the process.
Financial history suggests that we’re witnessing similar signs to those in the 1980s. Understanding these patterns can provide guidance for savers seeking to protect their retirement savings from market volatility.
Source: https://www.startribune.com/401k-investments-conservative-cryptocurrency-ai-risks/601444107