DeepSeek Shocks and Surprises

Every year we make plans and set goals, but one element we often forget to factor in - even if it's a subtle reminder to keep in the back of our heads - is that all plans, people, neighborhoods, cities, markets, countries, etc are subject to unexpected shocks and surprises. Yes, often the writing is on the wall, in clear sight, but we are fallible humans, often fueled by agenda driven messaging from those seeking power and fortune, so we are prone to this. Often we simply choose not to see what is quite clear.

Yesterday's market turbulence was triggered by the revelation of DeepSeek, an A.I.-Chat-GPT-style system from China that's (allegedly) much, much cheaper to build, that uses far less power/energy and may upend the valuations some have placed elsewhere on building a massive AI infrastructure. Is this akin to Toyota's efficient car impact on the US gas-guzzler car market in the 70's? We have yet to determine what sort of quality this AI is, but the shock rippled throughout global markets.

In recent years we've seen irrational exuberance displayed in multiple segments of our world. Why did anyone believe 2% mortgage rates would continue forever? Why did anyone believe double-digit inflation would last forever after a global supply chain disruption? Why did anyone think the price of any one stock or currency would continue to rise unchecked forever? Why does anyone think they will win the lottery? Why? Maybe we WANT to believe this stuff? The human desire for quick-'n-easy money will never go away. Recently a trader who invested over $1 million in memecoins saw nearly 90% of their funds vanish in just two days as the hype-driven tokens plummeted: someone profited from his loss. Fear not, there are always rational, fact-based skeptics who base their concern on real data and facts. Many knew of DeepSeek some time ago.....

The bottom line: in all plans, always allow for shocks and surprises. Often they are tied into speculative thinking. They are inevitable. Whether a storm, fire, flood, injury, correction, etc, something is bound to happen at some point. Have savings and (complete)insurance. Betting against this is akin to gambling. Yes, you can win big, but you can also lose big. Keep an eye out always for irrational, mass, herd-mentality thinking...that's usually the first, most potent indicator of a bigger problem brewing. Ponzi Schemes are always most profitable for the early adopters.....those who 'buy in' later hoping to cash in on the 'hysteria' are usually the biggest victims. Sometimes these 'problems' subside and rebalance over time, more calmly and gradually, but sometimes they require a shock to trigger real awareness and an accelerated reaction/response.