Lessons from Investing Through Bubble Regimes with Andy Constan

First Principles with Andy Constan launches with a deep dive into market bubbles, AI, semiconductor stocks, and the financial conditions that can turn powerful technological change into a dangerous investment regime. Andy explains how bubbles form, why they are almost impossible to time, how today’s AI boom compares to past episodes like 1987, the dot-com bubble, housing, and the bond bubble, and what investors should watch as expectations, financing, and FOMO build.
Andy Constan on X
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Damped Spring Advisors
dampedspring.com
Topics covered:
• Why bubbles are easy to identify in hindsight but nearly impossible to define in real time

• The difference between an expensive market and a true bubble regime

• How new technologies, easy money, regulation, and exogenous shocks can create bubble conditions

• Why AI may rhyme with the internet boom without being an exact repeat

• The role of ChatGPT, Microsoft’s OpenAI investment, and semiconductor earnings expectations

• What the 1987 crash, Japan, housing, bonds, and dot-com bubble can teach investors today

• Why human nature, FOMO, and “keeping up with the Joneses” make bubbles so powerful

• How the late-1990s Fed response to Long-Term Capital Management helped fuel the final phase of the tech bubble

• Why tech’s current size in the economy and market may limit how far the AI boom can grow

• How AI capex, hyperscaler spending, buybacks, debt issuance, and IPO supply could determine what happens next

Timestamps:
00:00 Intro and the challenge of identifying bubbles
04:32 Expensive markets vs true bubble regimes
09:57 The five bubble episodes Andy compares to today
14:35 Root conditions, escalation events, and the peaking phase
19:20 Why the 1987 crash may also have been a bubble
24:25 The late-1990s setup and the Netscape Navigator moment
28:00 Crisis analogs, easy financial conditions, and today’s AI parallels
32:20 Long-Term Capital Management and rocket fuel for the tech bubble
36:11 Why tech’s market share matters more today than in the 1990s
43:18 Policy mistakes, subsidies, and how governments feed bubbles
47:42 Semiconductor earnings expectations and valuation risk
53:45 The AI capex chain and where the money has to come from
58:42 IPOs, corporate debt, and the financing risk behind the AI boom
01:02:27 What investors should do differently in a bubble regime