For all the federal election related takes, remember that
1. Market price changes are changes from what was expected before compared to what is expected now. And not even only in regards to the asset itself, but with respect to comparative change in other assets as well.
2. conventional wisdom when the branches of government are divided, less change comes from the government, so you can expect that your expectations for the future will remain stable, and that confidence reduces risk aversion, resulting in higher pricing.
Therefore, the market going down cannot be attributed purely to a question of who is in charge, because the democrats can't pass anything unless they get a nice number of Republicans on their (possible I suppose, but I don't think anyone is expecting that right now). But it could be attributed to expectations of what Republicans would do vs now that they can't.
Besides, it's basically impossible (or at least for layman, who knows if you're a market maker?) to accurately attribute a day's market behavior to any event, with a compelling causal explanation (sometimes your attribution could also be explained to have the opposite effect than the one you're trying to explain) and not ignoring alternate possible explanations.
It's kinda annoying when even otherwise serious people invoke the market movement of a day as an meaningful event that can be explained (notwithstanding that by tomorrow the effect might have reversed). But unfortunately business news like CNBC promotes that kind of thinking.
It's still quite possible that all the non federal items on the ballot (lots of anti data center referendums, lots of democrat politicians in state office) matter quite a bit.
That's exactly why it's an AI correction! Because they've been betting on (increasing?) velocity, which was always going to come to halt sometime, but this election is abrubtlu interrupting. Changes in expectations, even if the business were to remain good, is bad in valuation.
Yes. I actually hadn't read the article before commenting because initially the link was to the Reddit thread. The data center buildout slowing, with Texas (among others) blocking otherwise expected to be built data centers is probably a significant justification for re-evaluating the business.
The "planned" capacity in Texas represented over 40% of the total power generation of the entire USA, how did the market think that was going to get built even without moratoriums?
I've wondered the same. But nevertheless that 75% probability becomes more of a certainty after the election, combined with all the smaller elections and ballot proposals that came in anti data center. Besides, there is always some uncertainty around the polls these days, and there's a bias towards not moving your money (for tax reasons if nothing else). But I'd love to hear from someone who works in the industry.
I can never tell if the market’s movement has anything to do with the actual news cycle or is that just analysts ascribing their finger in the air analysis to things they only vaguely understand.
I remember one time essentially reading from a market watch article that the market was up because it was a Tuesday and people feel real good about Tuesdays.
I always find these market cap numbers misleading. The US stock market isn't "worth" $2.5T less. If you multiply the marginal share price by the total number of shares, you get a number that's $2.5T lower. That is something different. E.g., if you tried to sell all Nvidia shares at once, you'd never get anywhere near ~$4.5T (just as buying them all would cost far more).
That is something different: liquidation value. Market cap tells you the sum total of the numbers next to this ticker symbol in everyone's brokerage account. It tells you the collective expectations about future returns and also the wealth effect that people feel based on their ability to individually obtain cash for shares.
It is true that neither of those things is liquidation value, but also liquidation value is neither of those things. If you expect a liquidation scenario, sure, use liquidation value. If you don't expect a liquidation scenario but want to measure collective expectations of and confidence in a stock, use market cap.
The point is still appropriate and relevant. I would have probably described it more like the same kind of con of American retailers that constantly run 80% off sales, which they come to by staking the fake sale percentage to a fake, fraudulent, made up number that the majority of the goods never sell for, i.e., MSRP.
Same clownish nonsense with this OP story, the S&P is still up 7.5% YTD, all that was lost is fabricated made up numbers on paper/screens. Now, if people sold stock and booked $2.5T in losses, then call me out please.
I can't stand the constantly lying, fraud, conning, and gaslighting. Maybe the market will drop more, maybe the counterfeit dollar market will go up. But reality is that noting is lost or made until you sell.
but it’s still so wrong. Like if I fund a company and I sell 1% to my mum who really believes in me for 100.000 USD I’m suddenly worth almost 10 million and the market cap of my company is 10 million, even though nobody might even pay a penny for my company. I don’t think most people are aware that this is how it works and crypto currencies have abused this a lot, by just selling a part of their shares, creating scarcity in the market and reaching high market caps. The traditional financial market is not that much different I feel like.
If Elon Musks sells all his shares the value of SpaceX and Tesla would drop dramatically I don’t know how much realistically he would be able to liquidate from his shares.
So the headline "is wiped" is misleading. I think it’s all ultimatively to get money in the markets and support growth
What something's worth is what somebody is willing to pay for it.
And conventionally, we use the marginal buyer's bid as the measuring stick for public companies. e.g. the share price
Of course, the intrinsic value based on currently known data/fundamentals is unchanged.
But many market valuations are disconnected from that to begin with. Loans, options, warrants, many things are tied to the market cap/share price of a company. E.g. what is the LTV ratio when lending? What are my RSUs worth?
> What something's worth is what somebody is willing to pay for it.
This is completely and definitionally true in the context of trading, but keep this definition on a leash because if you apply it outside a purely financial context it tends to smuggle wealth-weighted objectives into your thinking, and regardless of whether or not you think that's moral you probably want to be aware of it. Example: feeding orphans is zero "value" because they can't pay you but merging the banks into a mega-bank to raise fees and collect bailouts has extreme "value" because it can make a bunch of obscenely rich shareholders even more obscenely rich and they can carve you off a mighty slice.
Due to this mismatch I keep both definitions in my pocket: Wealth Weighted Value for finance, People Weighted Value for more colloquial settings or moral analysis. "Exchange Value" is a good quasi-synonym for WWV if you want something less confrontational.
The point is that market cap doesn’t tell you what people are willing to pay for a company. When a stock price is $100, that means people are willing to pay $100 for one share. And then because big companies have a big market for their stocks, this can be extrapolated out to a few thousand or millions of shares without much loss of accuracy. But it falls apart when you go beyond a small fraction of outstanding shares. A $100 price may mean people are willing to pay $100 million for a million shares. But it probably doesn’t mean people are willing to pay $1 trillion for ten billion shares. At some point the marginal willingness to pay will shift.
This becomes visible in buyouts where the cost of acquiring a company is significantly higher than the share price multiplied by number of outstanding shares.
On the flip side - if you wanted to buy all of NVIDIA shares - you would have to pay more than $4.5T - likely 20-25% premium. So this cuts both ways.
The peer-comments about the market cap being representative of the expected value, or present-value of cash-flows with some discount / risk adjustment are on point. (which implies that the change in market cap might be a change in cash-flows, change in discount (typically FedRate) or risk)
People in finance have largely (and correctly) agreed that the marginal buyer and seller represent the best guess for the value of the business with very few exceptions. There are various flaws with this, but you won't come up with a better method, I can guarantee it.
People in finance all profit from the same scheme.
I can come up with one right now. Instead of calculating it from the last price calculate it from some deepness in the order books. Realistically you cant drop just shares without moving the market so no company can just get 10% of shares dropped without losing a lot more in price impact. We only look at a small part of the market and the last price is practically the highest somebody on the world would pay for one more share. Nobody is buying for more. So its a upper bound not a good estimation.
That same flaw applies to the category of "billionaires".
You can't just take the marginal share price and multiply by the total number of shares to magically get a number that is conceptually equivalent to your normie's brokerage or 401K account: A normie can liquidate their portfolios tomorrow at the market price, but no billionaire can.
I agree, its such a pet peeve of mine these sensationalist headlines. The price gets bid up, majority of shares were mostly bought at cheaper prices, but when there's a drop it's still 'new price x existing quantity' which means we lost X trillions.. Yet it never existed in the first place!
That's basically the same as anything that could be bought and sold though. Your house is worth what you could sell it for tomorrow, not an impossibly unlikely tomorrow in which all house owners decided to also sell. I don't even know how or why you would try to value according to some crazy scenario like that, but it would be much more misleading IMO.
Everything is valued in prevailing conditions. Conditions change, and value changes.
This is definitely scary, but not the end of the world (yet).
The S&P500 is still up ~7% YTD, and 5y CAGR of 9.4% before dividends, in line with historical norms.
This is primarily a decline in tech: week over week, the S&P is -4.5% (SPX), but the S&P excluding tech is +0.1% (SPXT).
Right now, this looks like speculation that tech will reduce capex after Q4 earnings (Nvidia, Micron, Sandisk, AMD all down >2x vs the S&P). But it'll take time to tell; most just announced Q3 a week ago.
All this to say: expect volatility, but no need to panic.*
The context is different. We learned about the circular financing deals in Oct 2025: https://news.ycombinator.com/item?id=45473033 and since then most people have been speculating a bubble which has inflated a lot in the year since.
The AI bubble is the background context, but on top of that there is the immediate context Anthropic S1 where we learned what journalists had been speculating for a while that the AI industry is in fact not nearly as large to justify the valuations of AI companies. And finally we have the election where local governments in the USA were elected on the grounds to stop the AI datacenter buildout.
Now with that context in mind the current dip does not look like some random and normal fluctuations in the market.
What is also different, for me at least, is that many of us (including my self) are rooting for the AI bubble to burst. And seeing these signs makes us existed that it is finally (maybe) starting to happen.
There's a lot of conjecture about how the midterms have caused the drop today but I can't help but think it may just be a convenient coincidence. Yesterday was one of the largest bumps of the year and by yesterday it was already known that Democrats were taking control.
Is this just the start of the fall that many people have been predicting for months? Did something materially change in the Democrats' stances or policies since yesterday? Or is something else unwinding entirely?
In fact the Wednesday bump could have precipitated today's correction as traders looking for a nice sale price window found one.
I would put this as part of the larger crunch in the AI trade that started just before earnings season as people digest what margin compression in traditional revenues for the big tech companies means going forward. Just with bigger swings because of the election.
That's not market manipulation. That's thinking "There's going to be a crash in the next couple of months, if it goes up to $x then I'll take the profits and cash out"
Sounds scary until you realize that this happens about once per year on average. If this happens again tomorrow and a few more times in the few couple weeks that would be bad, but as of now it's notable but not a huge deal.
Not really - today was a rare and large sell off - last time that was close was 2020 - for the pandemic.
The question one should ask is how far down does it go and if history is any indicator it's not gonna be up from here before the new year (and likely down a bunch more). There is a LOT of over valued stocks still to be cleared out - I suspect the cut is gonna be a lot deeper. The history on this is 2018 for Trumps last midterm and a pending rate hike. Sticky oil prices are gonna drive inflation and the fed raise's the market suffers.
Inflation. When inflation is high, people want change. The democrats won because voters rejected inflation. (Which is the same reason Trump won in 2024, BTW, inflation was high, so voters wanted change). Anyway, if the democrats want to keep power in 2028, they have to deal with inflation, and deal with it hard and fast. That means (much) higher interest rates, lower government spending, and, possibly, tax increases. All of these make stocks go down.
There is no chance we will see lower government spending. Neither party is anywhere close in policy to what needs to be done to correct our spending problem.
Josh Johnson has a joke about how little this matters for the average person. How trillions can be lost overnight and your everyday Joe sees no changes.
Probably not. Most bubble prophets are tech journalists and are therefor unlikely to participate in the market (they make enough money reporting on it).
Additionally I suspect a lot of day traders are them selves AI boosters and are unlikely to believe the AI bubble is real.
Interesting how the coverage of midterm elections was flagged with many users talking about how politics are not a hacker worthy topic but this somehow seems to be
America desperately needs January to come around fast. We need some level headed sensible people running the country. We need to elect more socialists to knock these tech companies down hard. Power to the people and fuck all this AI shit.
As usual, I was right about the market but way too early. I sold all of my AI-exposed stocks last year, as I knew the investment going into it couldn't be recouped in a reasonable time. If I'd held longer, I'd be up about 2x on those shares even if I'd only sold in a panic yesterday.
But, it also means I can probably reinvest in some of those stocks now that a correction is in progress. There are some excellent tech companies with strong leadership and strong growth (e.g. ARM) that have been too expensive for a long time; still too expensive, but getting closer to reasonable.
It's about timing and direction. Timing doesn't matter if it's not a well-run business.
Most of my holdings with AI exposure were and are well-run businesses; they were when I bought them, when I sold them, and throughout the AI-inspired rise. The problem was I didn't believe there was sufficient market opportunity to justify the stratospheric rise, and I think the market has now begun to catch up to that thinking. The market has begun to agree with the premise I based my decision to sell on.
I suspect the decline will continue and I will be able to buy back into at least some of the stocks I sold at a price better than what I sold them for.
So, yes, my post was to say I am frequently wrong on timing, even if the premise I based a decision on turns out to be true. I don't understand people, but I understand tech.
Yes, well, remember the dot-com boom/bust cycle? Lots of people lost a lot of money then but not all of those stocks ended up becoming worthless. Some held on to what they had and made a fortune once the internet-hype was over and the internet-era began. The same could happen with some - but certainly not all - of these 'AI-exposed' stocks. Once the 'AI' hype is over the 'AI era' will probably begin, especially if the dearth of RAM and matrix processing capacity is solved somehow.
That was the first time I was right but early. I sold out well before the peak to start a business with the money. I made money, roughly tripling my investment, but lots of folks made more money (and lots of folks lost a lot of money). In this case, I sold at a profit, but I could have made a bigger profit by being more slow to respond to my understanding of the market.
With all respect, you were not right. Your stocks are still above where they were when you sold them. To say that the stocks you held would at some point experience a large one day drop is a certainty.
Selling AI stocks before year-end makes sense, right? New Congress, new House take over in January. Cost of living so tax hikes next year. Better to lock in gains now than pay more later? Besides cash is now bringing more than 4% pa
I expect Democrats to be as pro big business as they always have been - as long as they are "regulated" to be in sync with Democrats desires.
They'll be anti data centers until they are no longer the opposition party. Then suddenly both Republicans and Democrats will change while MAGA/America First and woke 2.0/socialists sides won't have changed at all.
What an inane comment. AI came out of 1950s university labs, not a political party, and tech workers still donate overwhelmingly to Democrats. Republicans and Democrats worry about AI at nearly identical rates. Copyright, energy and jobs are real issues, but a boycott fixes none of them. And "give back all tech gains" means nothing.
1. Market price changes are changes from what was expected before compared to what is expected now. And not even only in regards to the asset itself, but with respect to comparative change in other assets as well. 2. conventional wisdom when the branches of government are divided, less change comes from the government, so you can expect that your expectations for the future will remain stable, and that confidence reduces risk aversion, resulting in higher pricing.
Therefore, the market going down cannot be attributed purely to a question of who is in charge, because the democrats can't pass anything unless they get a nice number of Republicans on their (possible I suppose, but I don't think anyone is expecting that right now). But it could be attributed to expectations of what Republicans would do vs now that they can't.
Besides, it's basically impossible (or at least for layman, who knows if you're a market maker?) to accurately attribute a day's market behavior to any event, with a compelling causal explanation (sometimes your attribution could also be explained to have the opposite effect than the one you're trying to explain) and not ignoring alternate possible explanations.
It's kinda annoying when even otherwise serious people invoke the market movement of a day as an meaningful event that can be explained (notwithstanding that by tomorrow the effect might have reversed). But unfortunately business news like CNBC promotes that kind of thinking.
Wait, what? When does the market think at all?
Nvidia can be down to 3-3.5T market cap from 5-5.7T heights
The market should have already priced in an almost-certain Democrat takeover of the House, and a 75% chance of takeover of the Senate.
And yet the markets rallied hard the day after the election. Why?
* Maybe it was responding positively to the scale of the Democrats' win, for whatever reason.
* Maybe it was the removal of uncertainty.
* Maybe it was reacting positively to the fact that there weren't massive irregularities, lawsuits, chaos, extended vote delays, etc.
But then flipping even harder negative the day after is even harder to explain purely in electoral terms. Maybe it was just time.
Maybe if you were looking at the most optimistic forecasts. Most forecasts and betting markets had it at 50-50
I remember one time essentially reading from a market watch article that the market was up because it was a Tuesday and people feel real good about Tuesdays.
"The market went down because the Fed increased the rate"
That is something different: liquidation value. Market cap tells you the sum total of the numbers next to this ticker symbol in everyone's brokerage account. It tells you the collective expectations about future returns and also the wealth effect that people feel based on their ability to individually obtain cash for shares.
It is true that neither of those things is liquidation value, but also liquidation value is neither of those things. If you expect a liquidation scenario, sure, use liquidation value. If you don't expect a liquidation scenario but want to measure collective expectations of and confidence in a stock, use market cap.
Same clownish nonsense with this OP story, the S&P is still up 7.5% YTD, all that was lost is fabricated made up numbers on paper/screens. Now, if people sold stock and booked $2.5T in losses, then call me out please.
I can't stand the constantly lying, fraud, conning, and gaslighting. Maybe the market will drop more, maybe the counterfeit dollar market will go up. But reality is that noting is lost or made until you sell.
If Elon Musks sells all his shares the value of SpaceX and Tesla would drop dramatically I don’t know how much realistically he would be able to liquidate from his shares.
So the headline "is wiped" is misleading. I think it’s all ultimatively to get money in the markets and support growth
And conventionally, we use the marginal buyer's bid as the measuring stick for public companies. e.g. the share price
Of course, the intrinsic value based on currently known data/fundamentals is unchanged.
But many market valuations are disconnected from that to begin with. Loans, options, warrants, many things are tied to the market cap/share price of a company. E.g. what is the LTV ratio when lending? What are my RSUs worth?
This is completely and definitionally true in the context of trading, but keep this definition on a leash because if you apply it outside a purely financial context it tends to smuggle wealth-weighted objectives into your thinking, and regardless of whether or not you think that's moral you probably want to be aware of it. Example: feeding orphans is zero "value" because they can't pay you but merging the banks into a mega-bank to raise fees and collect bailouts has extreme "value" because it can make a bunch of obscenely rich shareholders even more obscenely rich and they can carve you off a mighty slice.
Due to this mismatch I keep both definitions in my pocket: Wealth Weighted Value for finance, People Weighted Value for more colloquial settings or moral analysis. "Exchange Value" is a good quasi-synonym for WWV if you want something less confrontational.
This becomes visible in buyouts where the cost of acquiring a company is significantly higher than the share price multiplied by number of outstanding shares.
The peer-comments about the market cap being representative of the expected value, or present-value of cash-flows with some discount / risk adjustment are on point. (which implies that the change in market cap might be a change in cash-flows, change in discount (typically FedRate) or risk)
I can come up with one right now. Instead of calculating it from the last price calculate it from some deepness in the order books. Realistically you cant drop just shares without moving the market so no company can just get 10% of shares dropped without losing a lot more in price impact. We only look at a small part of the market and the last price is practically the highest somebody on the world would pay for one more share. Nobody is buying for more. So its a upper bound not a good estimation.
You can't just take the marginal share price and multiply by the total number of shares to magically get a number that is conceptually equivalent to your normie's brokerage or 401K account: A normie can liquidate their portfolios tomorrow at the market price, but no billionaire can.
Everything is valued in prevailing conditions. Conditions change, and value changes.
The S&P500 is still up ~7% YTD, and 5y CAGR of 9.4% before dividends, in line with historical norms.
This is primarily a decline in tech: week over week, the S&P is -4.5% (SPX), but the S&P excluding tech is +0.1% (SPXT).
Right now, this looks like speculation that tech will reduce capex after Q4 earnings (Nvidia, Micron, Sandisk, AMD all down >2x vs the S&P). But it'll take time to tell; most just announced Q3 a week ago.
All this to say: expect volatility, but no need to panic.*
*(Unless you're in TQQQ. Then panic.)
TQQQ is the only ETF (Exchange-traded Fund) that targets 3x the daily returns of the Nasdaq-100 Index.
Ouch!
It's interesting reading the panic then in the comments, and yet now the nasdaq is up 65% from those lows, even with today's drop.
The AI bubble is the background context, but on top of that there is the immediate context Anthropic S1 where we learned what journalists had been speculating for a while that the AI industry is in fact not nearly as large to justify the valuations of AI companies. And finally we have the election where local governments in the USA were elected on the grounds to stop the AI datacenter buildout.
Now with that context in mind the current dip does not look like some random and normal fluctuations in the market.
What is also different, for me at least, is that many of us (including my self) are rooting for the AI bubble to burst. And seeing these signs makes us existed that it is finally (maybe) starting to happen.
Is this just the start of the fall that many people have been predicting for months? Did something materially change in the Democrats' stances or policies since yesterday? Or is something else unwinding entirely?
I would put this as part of the larger crunch in the AI trade that started just before earnings season as people digest what margin compression in traditional revenues for the big tech companies means going forward. Just with bigger swings because of the election.
How do you manipulate the market like that and not get caught?
The question one should ask is how far down does it go and if history is any indicator it's not gonna be up from here before the new year (and likely down a bunch more). There is a LOT of over valued stocks still to be cleared out - I suspect the cut is gonna be a lot deeper. The history on this is 2018 for Trumps last midterm and a pending rate hike. Sticky oil prices are gonna drive inflation and the fed raise's the market suffers.
Nasdaq plummets 4% into correction territory
https://news.ycombinator.com/item?id=50381623
It will be a long time required here, investigating all corruption that has been happening.
Inflation increase should be viewed as a mafia in charge of a country.
Additionally I suspect a lot of day traders are them selves AI boosters and are unlikely to believe the AI bubble is real.
But, it also means I can probably reinvest in some of those stocks now that a correction is in progress. There are some excellent tech companies with strong leadership and strong growth (e.g. ARM) that have been too expensive for a long time; still too expensive, but getting closer to reasonable.
Most of my holdings with AI exposure were and are well-run businesses; they were when I bought them, when I sold them, and throughout the AI-inspired rise. The problem was I didn't believe there was sufficient market opportunity to justify the stratospheric rise, and I think the market has now begun to catch up to that thinking. The market has begun to agree with the premise I based my decision to sell on.
I suspect the decline will continue and I will be able to buy back into at least some of the stocks I sold at a price better than what I sold them for.
So, yes, my post was to say I am frequently wrong on timing, even if the premise I based a decision on turns out to be true. I don't understand people, but I understand tech.
But, also, right but early isn't worth much. I've sold too soon many times...most often making money, but selling early in the rise.
Anthropic and OpenAI will disintegrate and vanish in the mist.
That's all folks!!!
Deliberately pay capital gains tax now on the off-chance taxes go up next year? You do you my friend.
They'll be anti data centers until they are no longer the opposition party. Then suddenly both Republicans and Democrats will change while MAGA/America First and woke 2.0/socialists sides won't have changed at all.
Isn't the political party system great!