The Blogs: The Artificial Intelligence Trap in the Markets | Yosef B. Moran

https://blogs.timesofisrael.com/the-artificial-intelligence-trap-in-the-markets/

Publish Date: 2026-06-09 13:01:00

Source Domain: blogs.timesofisrael.com

Financial Rules Enabling Overvaluation: New rules by Nasdaq enable a fast entry for companies into major indices, allowing companies to become part of these indices with minimal market supply, leading to passive funds automatically buying into their stocks based on index mandates rather than independent analysis.
Valuations vs. Profits: The article argues that valuations of major tech companies like SpaceX, despite their massive estimated value, may not correlate with actual profits. This discrepancy could lead to inflated accounting gains that are not sustainable in the long term.
Potential Transfer of Risk: Through the mechanism of passive funds and index inclusion, large investors transferring exposure to automated index funds could shift real risks to ordinary savers and pension holders who have not consented to these high-risk investments.
Systemic Implications: Rising interest rates, particularly in the US, may exacerbate fiscal pressures, impacting public spending on pensions, healthcare, and welfare, possibly diverting burdens initially intended for specific high-value investors to broader populations.
Lack of Transparency and Consent: The financial automation mechanism routes people into high-risk investments without their informed consent, effectively transferring risk to ordinary citizens, thereby compromising the integrity and the ethical standards of financial systems.
Macroeconomic Context: High interest rates and refinancing costs for governments and large corporations mean that while technology may develop, the economic conditions could result in the bearing of risk shifting from initial investors to broader populations.
Ethical Considerations: The ultimate ethical dilemma lies in whether ordinary people, who are led to believe the system holds them, should end up bearing the risks constructed by others, thus questioning the true nature and impact of financial automation in present and future economic scenarios.