Letter: The globalisation of AI borrowing is a problem
- Investors are gorging on debt from Big Tech, chipmakers, and data centers, creating a false sense of security.
- Conventional diversification metrics are failing as every 'independent' asset is tied to the same AI infrastructure gamble.
- The entire market is betting on a single, massive outcome: that computing capacity will eventually pay the bills.
- When the AI investment cycle hits a wall, the lack of true economic independence will leave portfolios exposed to a single point of failure.
Brief Summary
The financial world is falling for the oldest trick in the book: the illusion of diversification. While your portfolio might look spread out across different currencies and tech giants, it is actually locked into a single, high-stakes bet on AI infrastructure. From chipmakers to utilities, every borrower is drinking from the same digital trough, making the entire market hypersensitive to the success of data centers.
Why This Matters
If you are invested in the market, your retirement or savings are likely more concentrated than your broker lets on. When everyone is betting on the same outcome, the 'diversification' you think is protecting you will vanish the moment the AI hype train slows down. You aren't just holding stocks; you are holding a singular, massive wager on a tech cycle that is currently burning through cash at an unprecedented rate. If the expected returns from this computing boom fail to materialize, your 'safe' portfolio could see correlated losses across the board.