patrick.net

"Circular finance deals" are part of the current boom in AI, and Mish Talk website has an excellent article about this titled "S&P 500 Bounce Off Support, What About Bitcoin?".

Mister Mish brought up a great example about Lucent doing the same with financing upstart telecom and internet companies and then its stock collapsing +90% as part of the internet stock bubble.

Lucent's stock collapsed starting in early 2000, and by 2002, it had dropped from a high of over $63 per share to under $1. The collapse was due to a series of factors, including the bursting of the dot-com bubble, accounting issues, failed mergers, and a sudden downturn in demand for telecommunications equipment.

Many of the smaller, riskier start-ups that Lucent lent money to, such as Winstar Communications and Global Crossing, did not survive and eventually went bankrupt, leading to significant financial losses and write-offs for Lucent. However Sprint (later acquired by T Mobile) and Verizon were Lucent equipment customers who survived.

AD says

Lucent's stock collapsed starting in early 2000, and by 2002, it had dropped from a high of over $63 per share to under $1. The collapse was due to a series of factors, including the bursting of the dot-com bubble, accounting issues, failed mergers, and a sudden downturn in demand for telecommunications equipment.

I was on the front lines for this as an employee for a small process measurement and control company that sold to the big OEM's that sold turnkey production lines to fiber producers such as Lucent, Corning, General Cable, Sumitomo, and others - all of whom had a huge manufacturing presence in my state of North Carolina (Lucent was in Georgia just north of Atlanta on 85).

Fiber was the sexy "AI" of the early 2000's and they overbuilt production capacity in anticipation of FTTH (fiber to the home) for every house in the U.S. When the demand didn't materialize and improvements in switches increased capacity of existing fiber all of these companies had active production capacity or capacity in the pipe line that became worthless in the space of 6 months.

Suddenly 70% of the process engineers and engineering managers I was working with disappeared. IIRC this was at least a year after the dot com bust but it got almost no national news coverage. It was a big deal in NC and the state even passed a law allowing these companies to depreciate 100% of their production equipment in one year - the only caveat was that all of this equipment had to go to the land fill immediately to get the tax benefit.

It was surreal hearing about brand new never turned on multi-million dollar fiber drawing towers at Siecor (a joint venture between siemens and corning) and general cable being de-installed and trashed before they ever got into production. My employers' revenue (we were small) for the Southeast went from 300k in 1997 to over 3 million in 2000 down to about 200k by 2002. It was brutal.

stfu says

My employers' revenue (we were small) for the Southeast went from 300k in 1997 to over 3 million in 2000 down to about 200k by 2002. It was brutal.

Yes, seems like in most industries especially technology that it is never steady, straight line growth which in your case is with the fiber optic sector. It seems more like a speculative boom-bust, feast or famine environment.

At least your small company survived, as so will the big players like Google and Nvidia will survive albeit with some proverbial bruises and at least some small AI firms will also after the AI bubble pops or slowly collapses.

So what is the status of your small company now ? How long did it take to return to 1997-level sales ?

AD says

So what is the status of your small company now ? How long did it take to return to 1997-level sales ?

They're still in business but I have no idea of numbers or if they ever got back to the sales figures we achieved back then. They have a diversified business selling into Plastic, medical, and rubber extrusion and hot and cold steel. Wire and Cable used to be 80% of revenue when I first started with the company but it was below 50% when I left.

Trump admin is pumping stock market and private equity bailouts. So next 3 years stocks will do very well.

They won’t let AI bubble explode.

Full S&P 500 (with Magnificent 7): Up about +15% YTD as of November 2025, driven largely by mega‑cap tech.

Excluding Magnificent 7: The remaining 493 companies are up only about +7–8% YTD, showing much weaker performance.

Nvidia’s explosive growth—62% YoY revenue increase in Q3 2025—is partly driven by circular investing, where its own capital fuels demand for its GPUs. Analysts estimate 10–20% of recent growth may be circular, but the exact share is uncertain. The practice raises questions about sustainability, though it also entrenches Nvidia’s dominance in AI infrastructure.

Just look at Lucent's stock price around 2000 as it made a lot of circular financing deals with smaller telecom companies to buy Lucent hardware. MishTalk has a recent article about this.

FortWayneHatesRealtors says

Trump admin is pumping stock market and private equity bailouts. So next 3 years stocks will do very well.

They won’t let AI bubble explode.

True as he has made the AI race or competition with China, etc. as a major agenda of his administration. And the White House recently hosted a dinner with the AI industry leaders like Tim Cook, Sergey Brin, Sam Altman, Bill Gates, and Mark Zuckerberg which highlighted this.

Mplx 8% dividend energy stock

This Energy Stock Pays an 8% Dividend (And It's Safe) | The Motley Fool https://share.google/x92iM191ARTuxIuwF

Worth investing? Given that snp is very high n market may go down

JPMorgan sees S&P 500 reaching 7,500 in 2026 — or surging past 8,000 if the Fed keeps cutting rates

https://finance.yahoo.com/news/jpmorgan-sees-sp-500-reaching-7500-in-2026--or-surging-past-8000-if-the-fed-keeps-cutting-rates-142602366.html

https://rudy.substack.com/p/the-increasing-economic-fragility



Why is the rest of the world rushing into the US stock market?

KgK one says

Mplx 8% dividend energy stock

Similar to AMLP. Note of caution to anyone that starts investigating this. These are ETF's that own Energy MLP (Master LImited Partnerships). You may look at the MLP's these two ETF's own and think "why buy the ETF - the dividends of the underlying MLP's are much higher". You would be right in that but a word to the wise :

These MLP's get special tax treatment in order to pay these dividends. That means if you hold the individual MLP's you will get a K1 from each one that you will have to include on your taxes. If you buy these inside your tax deferred account (IRA, ROTH) you still have to pay these taxes - and it's an accounting hardship (people do it, but it's not straightforward).

Again, this isn't for the ETF's - AMLP and XMLP - they take care of the tax paperwork but they are charging you to do it - the dividends of what they hold are higher than what they pay you. I've owned AMLP in the past and it did a reverse split 1:5 so I dumped it as soon as I broke even on the principal - but I did receive the dividends the entire time.