'Black Swan' author Nassim Taleb warned about the stock market's brewing AI bubble in a new interview. Here are the 8 best quotes.
- "Black Swan" author Nassim Taleb is once again warning investors about potential risks in the stock market.
- Taleb warned about a bubble brewing in AI stocks and the lingering impact of high interest rates.
"Black Swan" author Nassim Taleb has never shied away from warning investors about the looming risks in the stock market, and a new interview with CNBC included just that.
Taleb is an advisor to Universa Investments and specializes in constructing tail risk portfolios, which tend to surge during periods of elevated market volatility and risks.
From calling crypto a "tumor" to warnings about a brewing bubble in artificial intelligence stocks, Taleb had a lot to say about markets.
These are eight top quotes from his interview on Thursday.
1. Higher rates for longer
"We're going to have to learn to live in an environment with higher interest rates, and 15 years [of 0% interest rates], that's a generation of traders, a generation of finance practitioners who don't know what interest rates mean. So welcome to a new era."
2. Potential for another 2008-like crisis
"The whole structure needs to tumble. [It needs to tumble like 2008] probably because systems don't correct themselves without some kind of a little bit of pain. The risk is right there. We know we have real estate valuations that don't make sense with interest rates... we have startups that basically were using the funding market as cash machine, and it's not sustainable."
3. Recent Fed decisions
"The Federal Reserve's primary job is price stability [that's long term]. And monetary policy is something that is short term. They used that [monetary policy] tool in place of a structural reform. It's not made for that. So that's a big mistake, we're going to pay the price."
4. Areas investors should avoid
"If you're an individual, you have to stay away from two businesses. You got to stay away from new technologies, particularly the ones that connected to AI, because it's going to be very unstable. And the other one is real estate."
5. Bitcoin
"It's a tumor. It makes no sense at $70,000 and it would make no sense even at a million. It will still be a tumor. And the property of a tumor is that it grows without control until it stops growing, kills a host, or self destruction."
6. 'Cult' of crypto
"Let's look at crypto. Is it being used for real transactions? No. It is a cult of business. It did exactly the opposite of its mission as an inflation hedge because it collapsed... it's not an inflation hedge... it's not good for real money laundering because it's very traceable. It's pretty much the first time in the history of the world we have had a cult coupled with a financial instrument."
7. AI bubble
"Because you don't know which one is the one that's going to win. It's too early on... It's very hard to figure out the next environment. You can be right on the technology and wrong on the vehicles. Like if you predicted the personal computer, you'd be invested in Osborne. The first laptop was made by Osborne. Osborne went bankrupt... It's very risky to invest when you have a coupling of new technology and a crowded space."
8. Retail investors
"If you're a dentist, try to make money drilling teeth, not making money with your portfolio. That's the problem is we have a generation of people who are now, because of this bubble, who think that they can make more money in the market than in their profession. They should focus on what they know and where their skills are."