If you think SPY will go up because it’s gone up historically, there’s more direct ways to get leverage on SPY than buying a 2030 call. If all you thought was that AI will change everything, SPY doesn’t seem like the right thing to buy—wouldn’t you want something with more exposure to AI?
Edit: I also am not sure the returns of SPY in like 1974 have any predictive power on the returns of SPY next year.
Exactly that—they profit under different circumstances, and that affects the number of investors willing to bet on right-tail possibilities for them:
NVDA has a right-tail outcome as long as AI companies are still doing well in 2030, which is a very broad space of worlds. Maybe AGI happens, maybe it doesn’t but they make a good pitch for more runway, maybe the U.S. government decides they’re too big to fail and props them up.
SPY has a right-tail outcome iff AI becomes sufficiently general to have wide-ranging positive impacts on the broader economy AND the economy is sufficiently dynamic to adopt it successfully within four years AND these positive impacts are not offset by the instability of the transition.
The former might attract pragmatists, but the latter is only a good bet if you’re a true believer in AGI soon. If you are, it’s a much more profitable bet.
there’s more direct ways to get leverage on SPY than buying a 2030 call
I’m curious what you have in mind.
If all you thought was that AI will change everything, SPY doesn’t seem like the right thing to buy—wouldn’t you want something with more exposure to AI?
To get more exposure to SPY I think you could purchase a levered ETF, purchase more SPY on margin, or at the very least buy a call that has a real amount of delta and gamma. I think that AI related stocks like NVDA probably have more exposure to AI than something that just reflects the broader market.
In the short term, yes. In the medium term, the entire economy would be transformed by AGI or quasi-AGI, likely increasing broad stock indices (I also expect there will be various other effects I can’t predict, maybe including factors that mute stock prices, whether dystopian disaster or non-obvious human herd behavior).
If you think SPY will go up because it’s gone up historically, there’s more direct ways to get leverage on SPY than buying a 2030 call. If all you thought was that AI will change everything, SPY doesn’t seem like the right thing to buy—wouldn’t you want something with more exposure to AI?
Edit: I also am not sure the returns of SPY in like 1974 have any predictive power on the returns of SPY next year.
I think the claim is that things with more exposure to AI are more expensive.
Exactly that—they profit under different circumstances, and that affects the number of investors willing to bet on right-tail possibilities for them:
NVDA has a right-tail outcome as long as AI companies are still doing well in 2030, which is a very broad space of worlds. Maybe AGI happens, maybe it doesn’t but they make a good pitch for more runway, maybe the U.S. government decides they’re too big to fail and props them up.
SPY has a right-tail outcome iff AI becomes sufficiently general to have wide-ranging positive impacts on the broader economy AND the economy is sufficiently dynamic to adopt it successfully within four years AND these positive impacts are not offset by the instability of the transition.
The former might attract pragmatists, but the latter is only a good bet if you’re a true believer in AGI soon. If you are, it’s a much more profitable bet.
I’m curious what you have in mind.
Also curious what you have in mind here.
To get more exposure to SPY I think you could purchase a levered ETF, purchase more SPY on margin, or at the very least buy a call that has a real amount of delta and gamma. I think that AI related stocks like NVDA probably have more exposure to AI than something that just reflects the broader market.
In the short term, yes. In the medium term, the entire economy would be transformed by AGI or quasi-AGI, likely increasing broad stock indices (I also expect there will be various other effects I can’t predict, maybe including factors that mute stock prices, whether dystopian disaster or non-obvious human herd behavior).