u/ilnik2003 ·
Reddit — r/ValueInvesting
· May 30, 2026 at 00:34
· ⬆ 15 pts
· 💬 41 comments
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AI Summary
Summary
The post warns that the semiconductor and memory (RAM) market is in a euphoric “HOT” phase, driven by FOMO and the dangerous narrative “this time is different,” which historically precedes a bust.
Author compares current dynamics to past commodity boom-bust cycles: excessive demand → price/earnings spike → new capacity → oversupply → crash.
Upcoming IPOs (SpaceX, OpenAI, Anthropic) are flagged as potential exit liquidity for insiders, signaling frothy sentiment and low expected returns for latecomers.
Quality assessment: This is a well-reasoned cyclical analysis based on Howard Marks’ framework and historical patterns, not rigorous data but a strong macro contrarian take – speculative but credible as a top-of-cycle warning.
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Howard Marks says that we shouldn’t forecast the market but prepare ourselves accordingly to current situation. We should check the temperature of the market and adjust our portfolio and investment decisions accordingly.
The current boom in the semis and RAM is built around 4 riskiest words “this time js different”. RAM which is a commodity always went through boom and bust cycles. Excessive demand, rise of prices, rise of earnings, building new factories, oversupply, drop in earnings and stock crash. People start to extrapolate current situation and act as it were to last forever. We are in HOT territory. People who didn’t earn enough in semis feel FOMO that’s why they decreased their required return and willing to buy stocks with lower MoS or overpaying. Good indicator of the market temperature are the upcoming IPOs: SPACEX, OPENAI and Anthropic. Which may be just the exit liquidity for early investors and VCs. Stock will be sold to FOMOed people willing to take huge risks for low expected returns.
What do you think about this take?
Semiconductor and memory (RAM) have historically followed boom-bust cycles; current demand extrapolation and capacity builds mirror past peaks. Frothy IPOs (SpaceX, OpenAI, Anthropic) and FOMO-driven buying indicate the market is overextended, creating a short opportunity on a broad semiconductor ETF. Short SMH to bet on a mean-reversion cycle as oversupply and slowing demand reverse the current euphoria. AI demand may be structurally persistent, delaying the bust; new capacity could take years to materialize; central bank liquidity could extend the boom.