The Compound
Ask The Compound 196
11/4/2025, 4:37:05 PM
Economic Summary
- AI and related tech (AI, robotics, quantum) are drawing massive capex and could be a speculative bubble, but like the dot-com era the infrastructure buildout may produce long-term benefits and increased productivity.
- For young investors with 8+ year horizons, the expected frequency of future bear markets and bubbles argues for staying invested and dollar-cost averaging rather than attempting to time market manias.
- Very low mortgage rates (~3%) represent cheap real borrowing (below inflation) and paying them off removes liquidity; compare paying down principal versus holding equivalent cash in T-bills for flexibility.
- Cash equivalents and money market funds have regained appeal after recent rate rises, offering ~4% yields without interest-rate risk, but yields will fall if the Fed cuts rates.
- Historical context: markets cycle through bubbles (dot-com, housing, credit, meme/NFTs) and occasional eras where cash outperforms, so asset allocation and behavior matter more than timing.
Bullish
- AI infrastructure spending could create long-term productivity gains and durable value.
- Young investors with multi-decade horizons should stay invested rather than try to time bubbles.
- High short-term cash yields (money markets/T-bills) provide useful liquidity and dry powder.
Bearish
- AI/tech capex may be a bubble that could lead to large drawdowns for concentrated tech portfolios.
- Holding 30%+ solely in tech increases concentration risk and volatility for many investors.
- Paying off a low-rate (~3%) mortgage can be a poor financial decision due to liquidity and opportunity cost.
GME
Bullish
Occasional retail-driven rallies, but largely speculative rather than fundamentals-driven.
Bearish
Example of a meme stock giveaway; speculative and high volatility, not reliable for long-term investing.
ROCKET MONEY
Bullish
Personal finance app that helps cancel subscriptions and track spending; pitched as a consumer savings tool.
Bearish
Sponsor mention; not presented as an investment recommendation and corporate listing/ticker unclear.
People mentioned
Ben CarlsonMichaelMatt