"Markets go up and down. What's important is that they are continuous and functioning. In my 35-year career, when people panic is when you're not able to have price discovery—when markets close, when there is the threat of gating, things like that."
"Volatility, he implied, is fine. Volatility is information. The true crisis arrives when the mechanism that produces prices breaks down entirely—when buyers and sellers can no longer reliably find each other and agree on what something is worth."
"The problem isn't that AI stocks are dropping. The problem is that nobody credibly knows what they should be worth—which means price discovery, in any meaningful sense, has been severely compromised for years."
Treasury Secretary Scott Bessent, with 35 years of market experience, defines systemic risk not as volatility but as the breakdown of price discovery mechanisms. Volatility conveys information and is manageable; the real crisis occurs when markets cannot function continuously and participants cannot reliably establish prices. Applied to AI stocks, the sector faces a deeper problem than typical corrections: fundamental uncertainty about valuations has compromised price discovery for years. Despite strong fundamentals like Nvidia's 73% revenue growth, stock declines reflect structural dysfunction rather than normal market adjustments. The issue intensifies because major AI players operate outside public markets, further obscuring true valuations and preventing effective price discovery across the sector.
Read at Fortune
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