The argument is that retirement savings are being invested in different ways than before.

The defining thing about "high risk" is that risk part will happen and that creates a lot of loosers. That is the whole point!

But HN treats "high risk" as something that is expected to always give you reward.

The main reason we are seeing private equity now being offered in 401ks isn't that it's going to be great returns for your average mostly-self-directed worker, but because those managing private equity believe they will make more money if they managed more capital. There's no guarantee that they are making any choices there that provide good risk-adjusted returns. But the managers sure would be making more on fees.

> the $15 trillion held in private sector workers’ retirement accounts is now, for the first time in history, available to be invested in private funds.

The article acts as if this means there are $15T of funds that Coreweave can tap into at will, but all this means is that 401k plan admins are allowed to add private equity to the list of options in 401ks. I expect quite a small percent of plan participants to actually make use of said options even IF they are added, unless plan admins start changing the default investments to include them. Not saying that can't happen, but it hasn't happened yet.

Your 401K is invested however you choose, but the people with pension plans don't get any input on how those are invested. They have historically been cesspools of fraud and shady deals.

Note: you have to go out of your way. to make this happen. Most funds prefer to dump everything together, so they don’t have to make individual tough decisions.

In fact, it's arguably worse than deliberately investing in them, because you're completely indifferent to the soundness of their business model. The hope is just that through the magic of "efficient markets", someone else will arbitrage your errors away... or something.

The "in aggregate" is doing a lot of heavy lifting here. Active management holds concentrated positions in certain investments because they think they will outperform. Active folks believe they have found market inefficiencies, whereas passive folks lean towards the market being (relatively) efficient (enough) and chasing returns won't work (at least for most people):

* https://en.wikipedia.org/wiki/A_Random_Walk_Down_Wall_Street

"Active" and "passive" exist on a spectrum and are not binary:

* https://rationalreminder.ca/podcast/133

I forget the name of the yt channel, but they did an interesting interview with Vanguard reps. The reps said that active funds will often need to liquidate assets they will sell at a discount to an index fund directly that will buy it anyway. They don't want to sell to the public market as that would reduce the value of their assets still on the books. In this way a passive fund can take advantage of an active fund and is one of the reasons why many active funds struggle to beat a passive one year after year.

N.b. I wouldn’t recommend it for various reasons, but it exists.

https://www.reuters.com/legal/government/states-challenge-na...

https://www.washingtonpost.com/wp-intelligence/ai-tech-brief...

https://fortune.com/2026/06/04/spacex-anthropic-massive-ipo-...

https://www.nytimes.com/1981/05/18/business/reagan-cut-and-p...

Which generation of leadership did that benefit most? Trump and Co

Their only shtick is loot everyone else, save themselves; change the finance ratio so it all flows to them; see it with end of ZIRP, RAM and tech prices...

Americans still believing the oral traditions of The Dream despite decades of headlines about homeless vets being denied and endless "once in a lifetime" bubbles millennials have dealt with every 5-8 years since they became adults... fuckin gen pop dude... it's so clearly just wielding oral traditions on the part of the rich to serve their own biological imperative

Unless you want to claim that all your assets eventually become retirement assets... but then it's vacuous.

presently the Mag 7 alone make up 33% of the S&P500 total market cap

in 2007, the _entire_ S&P Financials sector (banks, insurers like AIG, brokerages, real estate firms) was only about 22% of the S&P500; the top 10 banks (with Lehman at #10) only made up 9%.

the S&P500 is now a dangerously non-diversified asset but still used by retirement savings inventors as a diversified one

AI companies and hyperscalers' kamikaze spending on data centers may not be profitable. But they seemingly have no choice because everyone else is doing it.

Would anti-data center measures be like an arms control treaty in this arms race? Maybe if they force companies to spend slower it'll actually be good for everyone's finances.

doesn't sound like valid reason

"The share price will tank if we're not seen as AI-forward" is a legitimate fear for many CEOs. It's the only logical explanation for tokenmaxxing and other behavior that only makes sense from a game theoretical perspective.

Clearly true though. “Not reveryone” is doing it. Most of the bubbly(?) trillions are.

If they admit the current pace is unsustainable, they die anyway. Might as well keep building and praying for a hail Mary.

Retirement savings are 401ks in the US and they're managed by _NOT_ the retirees, but random middle managers. Those are the people who are chasing whatever the bubble is producing because their "due diligence" requires them to be bootlickers.

The same can be said of many of the tech moguls who've sworn fealty to trump; if they didn't lick the boot, they could be considered acting against shareholders value.

So, like most things in America: the people are not in control of their actual power. Not in retirement funds, not in healthcare, and not in education. They've all been turned into bizare economic dependent indirect funding programs.

401ks are self-managed, though many stick with the default investments.

The author claims two things:

1. AI company valuations dropped because of fears that Democrats would restrict data center construction.

2. The AI industry is doomed because of unsustainable spending on data centers.

If 1 is true then investors clearly believe that the current level of spending is appropriate and any restrictions on it are harmful to long term returns.

If 2 is true and unsustainable spending continues despite a lack of RoI, then "arms race" is the only explanation for the irrationality. It is driven by the fear that if you don't spend big, you'll be part of the permanent underclass of companies.

This in turn implies a data center construction moratorium is a blessing in disguise. Everyone has an ironclad excuse to reduce financially-irresponsible but mania-driven data center investments.

Bottomline:

"Data center restrictions are bad for the industry"

and

"Data center spending is unsustainable"

are polar opposite viewpoints and imply vastly different outcomes of the current buildout.

I don't know which one is true. And like most things, I suspect the truth is in the middle. But they can't be simultaneously true.

1. is claimed to have happened because INVESTORS in AI companies rerated their investment due to a threat of construction restriction 2. is a prediction about the future of how the industry will turn out

Someone who believes (2) is less likely to have been an investor to begin with and therefore didn't participate in the price rerating for (1)

I do agree with your point that a reduction in spending would have a positive outcome overall if we turn out to be in an "arms race" with a lack of ROI.

(Before anyone mentions nuclear, the amount of nuclear warheads grew a lot after the non-proliferation treaty. Historically that was how collaborative big countries were.)

The non-proliferation treaty was mostly to prevent non-nuclear states from gaining nukes. It had a section about disarmament but that was mostly aspirational.

>Are we on the brink of the next financial crisis? Last Thursday, there was a “bloodbath in tech stocks,” as the stock market lost $3.2 trillion in a single day.

Sounds bad, until you take a closer look and see that this was just a 4% decrease.

>In the longer term, with enough political will, we can redirect our retirement savings towards productive investment, such as building out affordable housing and funding the renewable energy transition. For example, NYC Comptroller Mark Levine announced a $4 billion affordable housing initiative in April. Pension fund trustees could follow his lead rather than direct money towards Blackstone, one of the country’s largest landlords and a major fund manager for public pensions.

The slop bells are deafening. I suspect that the author is driven more by political motives than a sincere belief that the AI industry is financially doomed.

> I'm not convinced the AI bubble exists

a few days ago?

https://news.ycombinator.com/item?id=50418975

Anyway yeah this entire article is left-progressive slop. If you go to the About page (https://lpeproject.org/about/) you will find the text "We believe that developments over the last several decades in legal scholarship and policy helped to facilitate rising inequality and precarity, political alienation, the entrenchment of racial hierarchies and intersectional exploitation, and ecological and social catastrophe." These are all left-progressive political shibboleths.

The crux of the argument relies on this unsubstantiated claim here:

> "Thanks to recent efforts by the Trump administration, $15 trillion held in private sector workers’ retirement accounts is now, available to be invested in private funds".

Making these investments allowable doesn't mean that $15 trillion, or any fraction of it, goes to building AI infrastructure. It's up to the stewards of these funds to decide where these funds go, and the author provides no evidence these stewards are fueling the AI bubble. The author implies a causal link to which he cannot prove.

You would only lose your retirement if 100% of your savings was invested in company(s) that eventually went to zero.

Even if you're 100% equities, and concentrated in (e.g.) the S&P 500, that would mean that the five hundred largest companies in the US would have to go to zero before you would "lose" your retirement.

One could also go for a total US market fund (Russell 3000, $VTI) or total world market fund ($VT). Further, having a bit of bonds (10-20%) would allow you to be cushioned for things like the '00s, where the S&P 500 returned 0% for the decade:

* https://www.forbes.com/sites/advisor/2010/09/13/its-not-real...

If your retirement savings went down by 20% and you had to put off retirement by 5 years, but then you died after 5 years, you've lost your retirement!

Checkmate.

Of course, if a public pension fund is run this poorly, they will almost inevitably be bailed out at the cost of younger generations. Betting it all on one sector and refusing to blink when it looks like a bubble might be popping is not what I'd call competent management. That's just too much risk in the mix for a fund that needs to be there. If pension funds are overly exposed to one volatile sector, some really dumb people are about to lose their jobs, and rightfully so.

The literal advice repeated everywhere is "diversify". If you did the opposite, congratulations on being a case study.

Why are we assuming a market is an inherent good and its needs are to be prioritized?

>This account doesn’t exist. Try searching for another.

1 https://www.youtube.com/watch?v=YB3XE8mWNF0

2 https://www.youtube.com/watch?v=w1dRDj1QRks

2019: That bond bailout you didn't hear about

2020: COVID bailout

2022: Various credit/liquidity facilities and the slow-walked rate hikes

2023: Bank bailouts

I dunno what happens this time. So many cards have been played out and a lot of entities seem to be white-knuckling it.

The boom-and-bust cycle is a natural consequence of running an economy on debt: margin leads to speculation which leads to overheating, and then it has to cool off. It is entirely possible to guarantee the public's welfare during busts; you just have to sacrifice not having a ceiling on earnings/wealth.

Would be even really really good if we would start breaking through barriers regarding state spending and allowing more to do so in a way that inflation is not affected.

Like allowing every state on the planet to 'spend' money on certain things like renewable or teachers or care workers.

If a recession was started because someone else is taking your retirement fonds and putting them in companies overvaluated to move money from retirement fonds to random other people, and this is closer to gambling than investment, regulators should step in.

> someone else is taking your retirement fond

> and putting them in companies overvaluated

> to move money from retirement fonds to random other people,

> and this is closer to gambling than investment

1) "I vaguely disapprove of this framing for reasons I choose not to explain?" Or do you mean,

2) "Each step violates any reasonable duty, and wouldn't be taken in a world that punished people for taking wild risks with the money of retirees, or in a world that expected the "risk" that people took when investing in stocks to actually be "risky" instead of ultimately backstopped by the taxpayers?"

I suspect 1.

If they blindly invest in random companies even with P/Es in 3 digits, thats overvaluated.

The move happens because your retirement is getting less in a crash, but that money was moved around because you bought shares and someone else sold them.

What will be the margin? if its a healthy one, its not gambling its investment. If its good, it becomes gambling.

Thirteen since WWII or roughly two per decade.

For some reason the people who hate him the most are the ones most inclined to completely ignore the topics he actually talks about.

They all get hooked on anthropic screeching about ending humanity or some other nonsense and forget that this is a business. A business which is losing gargantuan stacks of cash and is running on the fumes of hype and cope.

Huh? His predictions on both the financial and technical sides (see https://danluu.com/zitron/) have been spectacularly wrong.

If any boosters can provide the type of evidence that Zitron has I’d love to see it.

Even if OpenAI goes bankrupt, someone will buy their models in bankruptcy to run them. Also, other companies will be able to hire the people who are laid off to apply the same techniques to get similar models.

So from the point of view of technological / AI progress we'll be fine.

Some investors might lose some money, but humanity will keep going forward.

They’re not banks which would wreck the economy by collapsing and they’re nothing like General Motors which needed a bailout to save 1.2 million jobs.

I’m spending quite a bit of money on subscriptions and API tokens and so are many people like me. The revenue numbers in the prospectus and what is known about AI revenue across the industry is real and significant revenue. Yes the capex is big but also exaggerated as they report 10 year numbers on contracts that have flexible cancellations etc.

I have no idea why people think AI will need a bailout. It appears to be one of the most rapidly profitable and expanding businesses we have ever seen.

For retirement savings, index funds are hard to beat, and it's hard to say whether tech stocks should be over- or under-weighted compared to the index. Tech stocks went down recently, but maybe it's a good time to buy? People who invested in 2008 did well.

(Also a reminder that target funds are expensive and will sometimes be over-allocated towards hot industries depending on the retirement year "target".)

So index funds are no solution, unfortunately. They'll lose deposits if they sit on the sidelines (as people compare 8% returns to 15+%), so their incentives are not aligned with avoiding the bubble.

The perfect scam, er virus, lives well enough to spread but doesn't kill quickly.

I feel pretty safe that if the AI stuff underperforms for whatever reason, that excess capital will flow back into boring things like Walmart. Or if AI eats the world, well, owning an index means I still have a piece of the pie.

You're assuming within-pie transfers.

US equities in 1990's were 40% of the world market; now they are 80%. It's pretty easy to imagine them going back to 40% or less as capital moves elsewhere. But owning indexes across currencies and markets is another layer of risk.

With the Chinese shadowing AI and now in the process of shadowing memory, oh boy… and to top it off, you’d have Taco and the mad Hatter…

Retirement funds or not, big tech companies have diversified to the point that investors cannot assess their risks (except for Apple).

There's ordinary non-market factors (esp. electric subsidies and their secondary markets), mark-to-market income on cross-equity investments, debt load and contracts off the books, etc.

The cross-investment is usually somewhat stabilizing, since it e.g., aligns nvidia with its customers' success; that's how keiretsu works.

However, Microsoft, Google, and Amazon are at risk of losing a large proportion of their cloud profit-centers, and the threat to Google's ad franchise is already biting deep. Each company's equity would drain if they had no compelling path to take part of the AI proceeds. So they are compelled by both market and capital competition.

As in politics, we used to be able to assume people in power were operating as expected to gain profits or maintain political power in the relatively near term. However, as the advantages of disinformation and dark money (for politics) and the prospects of economy-scale disruption (for AI) both give significant advantages to aggressive and strategic behaviors in the relatively near term, it basically creates moral hazards that are unavoidable, and leader cohorts respond by ousting anyone with doubts. So for voters or investors, the "representative" proxy of leadership character is less useful, and everyone has to fall back to watching the weather and assuming the worst about leadership.

Apple has long decided: (a) equity buy-backs, not peripheral ventures; (b) AI as consumer, local and otherwise, with privacy focus (whatever that can be). However, Apple's also in a tough position: outside of AI, nothing really drives new purchases because even old hardware is plenty for most customers, and memory prices are biting into margins. So Apple is an understandable bet, but not necessarily a great one.

Where's the money to go, in a world where everyone depends not on the red wheel barrow for food but on 8% annually to beat inflation?

Apple currently has a challenge: what are they going to do about memory? Are they going to sit back and accept the status quo, or are they going to leverage the Apple Silicon design group to engineer around the problem? That will determine whether or not their company/shares prosper in the future, or sink.

It's almost like they got in to fight the Republicans instead of actually helping the American people.