Quote · My First Million
Brutally honest guide to not losing money in the market
Where this was said
Why bubbles are good for the economy
At 50:51 · chapter starts 49:01
Sam Parr asks what the Buffett dot-com anecdote means for today's AI moment, and Ritholtz's answer is the episode's most counter-intuitive and intellectually satisfying argument. It's not just that new technologies always get overhyped — that's a cliché. The real insight is that the hype is productive. The dot-com bubble funded the laying of fiber optic cable at $1,000 per mile across the world. [1] — Barry Ritholtz "The dot-com bubble laid fiber at $1,000 per mile. When it all went bankrupt, cable and phone companies bought it for pennies. Without that …" 51:05 When Global Crossing, Metromedia Fiber, and hundreds of others went bankrupt, the legacy cable and phone companies scooped up that fiber for pennies per mile. Because bandwidth became cheap, everything that followed — YouTube, Facebook, Instagram — became economically viable. Without the bubble's infrastructure subsidy, those platforms couldn't have existed. The same pattern plays out in railroads, radio, television, mobile phones, semiconductors. Every cycle ends with a collapse, a fire sale of infrastructure, and a new generation of builders who inherit it at near-zero cost and build faster and cheaper than was previously possible. He won't predict who the AI winners are, but he's confident the infrastructure being built today — whether or not the current companies survive — will power the next generation of innovation. The historical parallel to Richard Wyckoff's 1920s trading book is the kicker: substitute 'AI' for 'internet' and 'dot-coms' for 'railroads,' and the book reads as if it was written last year.
The dot-com bubble laid fiber at $1,000 per mile. When it all went bankrupt, cable and phone companies bought it for pennies. Without that cheap fiber, YouTube, Facebook, and Instagram would never have been economically viable. The bubble wasn't a mistake — it was the infrastructure subsidy for the next wave.
