In July 2007, just months before the global financial crisis broke, Citigroup CEO Chuck Prince gave one of the most revealing quotes in modern financial history. "As long as the music is playing," he told the Financial Times, "you've got to get up and dance. We're still dancing."

A story that should sound familiar

In March 2000, Julian Robertson, founder of Tiger Management and one of the most celebrated investors of his generation, wrote a letter to his limited partners and returned their capital. He had spent two years underperforming badly. His style of buying the best businesses and shorting the worst had stopped working in a market where earnings and fundamentals had been replaced by mouse clicks and momentum.

"In an irrational market," he wrote, "such logic does not count for much."

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The Nasdaq peaked ten days later and lost 80% of its value over the following two years. Robertson was right. The clients who redeemed at the bottom never saw the reversal they had waited years for.

This pattern has surfaced before. Every significant market dislocation in modern financial history has been anchored to a compelling story. Railroads genuinely transformed economies. Japanese industry was indeed dominant. The internet changed the world. None of that prevented those markets from becoming deeply overvalued. Euphoria does not attach itself to bad ideas. It attaches itself to very good ones, taken too far.

The AI story is real. The question is the pricing.

The AI story today is similarly compelling....