George Soros Says It's Not the Bubble You Fear That Will Get You

Investors might feel like they have nowhere to hide when even Sundar Pichai, CEO of Alphabet (GOOGL.O), believes no company would be unscathed if the artificial intelligence boom collapses.

But markets can not only predict an AI bubble, but by acting defensively, they can prevent it. Legendary investor George Soros believes the very fact that so many people today worry about an AI bubble is good reason to believe there won't be one.

Financial markets can precipitate or abort future events. It is possible that we have indeed been teetering on the verge of all sorts of financial calamities. We have been saved from them only because financial markets constantly anticipate events, which fail to materialize exactly because they have been anticipated.
— George Soros

Soros points to the old joke that the stock market has predicted seven of the last two recessions. And he says his theory explains why.

When markets expect something bad to happen, like a recession or a bubble, investors, companies, regulators, and government all take actions to prevent it.

As a result, wrote Soros, the disasters we expect seldom occur. Instead, we're caught by surprise from an unexpected direction.

According to Soros, the AI bubble that everyone is worried about may not materialize, but that doesn't mean markets will continue their unprecedented rise forever.

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