There is always a new fad somewhere, see chart below. But for investors, it is challenging to figure out when bubbles start, when they peak, and when they end.
Put differently, a bubble is a narrative. And the latest shiny narrative is AI. However, a lot of questions remain unanswered, such as how useful will AI be, how long will it last, will it significantly change our lives, are the AI companies worth buying when they have already increased 50% in 2023 and have P/E ratios around 50?
The bottom line is that bubble chasing is not a good investment strategy.
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