Sunday, October 26th, 2025
Laramie, Wyoming
Sad news this Sunday. We heard it through the grapevine that one of our old friends—a stalwart contrarian, independent thinker, and overall curmudgeon—has succumbed to the AI hype. He’s shed his bearish disposition, drunk the tech Kool-Aid, and publicly declared fealty to the bull market.
Long live the bull!
I might be exaggerating a little bit. But the capitulation of the bears, often in a kind of ritualistic confession/humiliation, is one of the non-technical indicators you get closer to the top of a stock market mania. I remember seeing it first hand in late 1999 and early 2000.
On the cusp of being validated for their prudence and caution, some famous bears just couldn’t take the pressure any more. They joined the crowd…and suffered their fate. And of course if you’re a money manager trying to out-perform the indexes, you’re almost compelled to buy what’s going up the fastest even if the valuations have long ceased to make any sense.
Will it end differently this time? Doubtful. What we still don’t know is when it will end…and what will be the proximate cause. But we’ll be on the case as usual this week, including the November Monthly Strategy Report, which will be published on Wednesday by Investment Director Tom Dyson.
In the meantime, below is a summary of all the research we published this week. Enjoy!
Dan
P.S. A little bonus research for those interested in AI, although fair warning…it’s pretty dense. Economists at MIT and Harvard speculate that autonomous AI agents might become so efficient at negotiating and executing transactions that it will remove all friction from the business world. They call it the ‘Coasean Singularity.’
It’s an idea named after an economist named Ronald Coase who published a paper in 1937 called The Nature of the Firm. Coase won the Nobel Prize in Economics in 1991 for his work on how the price mechanism works in business. The AI crowd have picked it up to suggest how AI agents could collapse prices by eliminating inefficiencies through better information, analyzed and processed more quickly than a human ever could.
I’ll read the paper more closely today. But with respect to the stock market, there’s no such thing as perfect pricing. That’s because people have different values and preferences. They can look at the same business and reach a different conclusion about the present value of its future earnings.
One other point…if the stock market were to become populated and dominated by autonomous AI agents, it would not lead to everything being perfectly priced all the time. It might, in fact, lead to ‘correlated crashes’ because all the AI agents act in the same way (unless you created a malicious Agent designed to create instability and chaos). In any case, more to think about and digest this weekend!
How I'd love to have an AI "agent" to delete my spam, negotiate with the chatbot that can't answer my questions, and fill out the information my doctor's system asks for every single damn time I try to make an appointment. Betting these things aren't number 1 on BigTech's list though.
I remember an interview with Stanley Druckenmiller where he said he couldn’t resist not participating in the tech stock boom after being cautious and finally jumped in, only to lose billions.