“This is the beginning. The beginning of an adjustment of people to reality.” – Nassim Taleb
‘The Black Swan’ author warns future selloffs could be 2-3 times worse than the DeepSeek shock as it reveals how fragile the economy is
Nassim Taleb, author of “The Black Swan,” has warned of potential market instability following the significant stock downturn experienced by Nvidia. This came amidst concerns over DeepSeek’s new AI offering, which operates at significantly reduced costs compared to rivals. Nvidia’s stock declined by 17%, eradicating $589 billion in market capitalization, marking the largest drop for a U.S. company and affecting the Nasdaq index by more than 3%. Taleb suggests this event indicates the beginning of market adjustments to reality, exacerbated by the AI boom spurred by OpenAI’s ChatGPT. He highlighted the risks of economic fragility due to over-reliance on a few tech giants, recalling how technological history shows first movers like Google can overcome initial leaders like Alta Vista. Taleb predicts potential future market downturns could be even more severe, emphasizing that the fragility of current wealth structures is significant. He previously indicated that market conditions mirror those preceding past collapses, citing widespread complacency and reliance on low interest rates that have discouraged conservative investments.
