Based on Howard Marks' cycle theory, a market observer warns that AI-related stocks are exhibiting classic bubble characteristics: high valuations, media frenzy, excessive leverage, and ignored risks. The CAPE ratio has broken 40, and U.S. stock market cap reaches twice GDP. In contrast, Bitcoin offers reasonable valuation, wide margin of safety, and a position at the bottom of its cycle, making it a more attractive long-term asset. The author has already liquidated part of his tech ETF holdings and is gradually building a BTC position.
Market View: AI Bubble Has Arrived, Why Bitcoin Becomes the Better Bet?
Citing Howard Marks' theory of market cycles, a recent market commentary warns that the AI segment of the U.S. stock market is flashing classic bubble signals: inflated valuations, media hype, rampant leverage, and widespread neglect of risks. The cyclically adjusted price-to-earnings ratio (CAPE) has surged past 40, and the total market capitalization of U.S. equities has reached twice the country's GDP—a historical precursor to market corrections.
In stark contrast, Bitcoin currently offers a more reasonable valuation, a wide margin of safety, and sits at a relatively low point in its own cycle. The author argues that, from a long-term portfolio allocation perspective, Bitcoin presents superior risk-adjusted return potential compared to overpriced AI stocks. Acting on this conviction, the investor has sold off a portion of their tech ETFs and is gradually accumulating Bitcoin on a phased basis, signaling strong conviction in digital assets as a long-term holding.
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