🦔Five ECB economists warned that an AI market correction is likely whether current valuations are justified or not. They studied every major tech revolution and found the same boom-then-correction pattern each time, even when the technology was transformative. European households hold about €440 billion in Mag 7 stocks through index funds and pensions. The ECB said policymakers have less room to cushion a correction now than during dot-com. Their line: a US AI correction would not remain a US problem. My Take The ECB isn't saying AI is fake. They're saying the technology can work and the stocks can still crash, because that's what happened with railroads, electricity, and the internet. The tech survived every time. The investors who bought at the top didn't. Lucent made the equipment that built the internet, dominated the market, and lost 98% of its value when the financing behind the buildout collapsed. Nvidia sells the chips that build AI and is now guaranteeing the leases and financing the purchases of its own customers. The technology was legitimate both times. The financial structure around it was not. €440 billion in European retirement savings is exposed to Mag 7 stocks through index funds, and the same concentration exists in US 401k target-date funds. If you hold an S&P 500 index fund, roughly 30% of it is in a handful of AI companies. The ECB flagged that the tools to respond to a correction are weaker now than in 2000. Rates are high, deficits are blown out, and the fiscal room to cushion anything has shrunk. That means if the correction comes, the people holding these stocks through their retirement accounts absorb more of the loss than they did last time, with less help on the other side. Hedgie🤗