...its double whammy potential for Europeans to stay long in US equities
> lose value as US equities continue to tank
> lose value as the dollar drops
..and potentially triple whammy if EU stocks disconnects/diverge from US stock underperformance
When the space bubble deflated in the early 1970s, the dollar plunged. When the dot-com bubble burst in the early 2000s, the dollar plunged.
In the chart, I’ve shown the S&P 500 returns for a Eurozone investor. Between 2000 and 2008, the S&P 500 delivered a 0% return in dollars, but due to the falling dollar, the return for Europeans was -42%.
Every major innovation eventually leads to a bubble. Don’t believe me? Name one that didn’t.
The only real question is: are we near the top of the AI bubble, or do we have a few more quarters to go?
It makes sense when you think about it, during the 60s, 90s, and 2010s, the dollar rose alongside emerging U.S. tech because global capital rushed into American innovation. When the bubbles popped, that capital rushed back out.
