Two years ago, a friend who farms pigs said something to me that sent chills down my spine. He said, "Back when pork prices skyrocketed, everyone in the industry knew it would end in disaster. Everyone knew that the result of frantic expansion was a price collapse and total loss."
I asked him, "Since everyone knew that, why did you guys still go crazy, borrowing money to expand production capacity?" He took a drag of his cigarette and laughed. He said, "Because the capital market approves!"
"I'd set up a new pig farm, tell a story, and the stock price would soar, adding billions to the market capitalization like child's play. I could easily sell some shares and have enough to live on for the rest of my life.
Tell me, am I more concerned about how much pork will sell for per pound in the future, or how much the stock price has risen now?
But what if I don't expand? Old Wang next door expanded, his stock price doubled, and he became a hero. My stock price plummeted, and shareholders called me every day cursing my ancestors, saying I lacked courage and was out of touch with the times.
Not expanding means instant death." Expanding production could mean future failure.
Which would you choose?
Once you understand this, you'll understand why AI is everywhere. Do you really think those tech giants are betting on the future of technology? Don't be naive. They're betting on investors' imagination, on analysts' reports, on whose story is more compelling and can drive the stock price up. As for whether they'll recoup their investment? After they die, who cares about the deluge?
First, they'll drive up the current stock price, turn their shares into real money, and then others will clean up the mess. Frankly, the business world we often see isn't based on business logic at all.
It's just a giant storytelling event.
Whoever tells the best story gets to make it big first.
