These DAT companies, led by MicroStrategy, are essentially buying crypto with leverage. But when it comes to investing, I think you should respect common sense. You don’t need a high IQ; common sense is enough to make a judgment. In the centuries-old financial markets, has any company ever used leverage and ultimately come through unscathed? Not one, right? Sooner or later, they’ll face their own black swan moment.
MicroStrategy has at least weathered the 2022 plunge in Bitcoin from $69,000 back to $15,000, but it has yet to face the dot-com bubble of 2000 or the financial crisis of 2008. The Fed’s consecutive rate hikes in 2022 caused some losses in US stocks, but that was, at most, just an appetizer. I have serious doubts about whether MicroStrategy could hold up if US stocks were cut in half—or fell even further.
If using leverage could guarantee a big win, and MicroStrategy’s leveraged model is hardly complicated, why don’t the US stock market’s megacap companies do it? Are they stupid? MicroStrategy’s removal from the MSCI index may just be the beginning. When the AI bubble really bursts, no matter how much cash it has in reserve, it will panic.
MicroStrategy has at least weathered the 2022 plunge in Bitcoin from $69,000 back to $15,000, but it has yet to face the dot-com bubble of 2000 or the financial crisis of 2008. The Fed’s consecutive rate hikes in 2022 caused some losses in US stocks, but that was, at most, just an appetizer. I have serious doubts about whether MicroStrategy could hold up if US stocks were cut in half—or fell even further.
If using leverage could guarantee a big win, and MicroStrategy’s leveraged model is hardly complicated, why don’t the US stock market’s megacap companies do it? Are they stupid? MicroStrategy’s removal from the MSCI index may just be the beginning. When the AI bubble really bursts, no matter how much cash it has in reserve, it will panic.