Hollywood has long been fascinated by artificial intelligence (AI), portraying it as a miraculously powerful force — for good and evil. I have a special affinity for Arnold Schwarzenegger’s Terminator, who explained how Cyberdyne Systems’ Skynet assumed control of U.S. strategic defenses, became sentient (self-aware) and responded to shutdown attempts by its human masters by launching a nuclear attack.
Was this just sci-fi fright, or is AI — as OpenAI co-founder Elon Musk has warned — “far more dangerous” than nuclear weapons and an existential risk to humanity?
For Wall Street, the promise of AI became real when OpenAI’s ChatGPT burst onto the scene in November 2022. Since then, AI has gone from shiny toy to market menace in record time. In just a few days, a fictional memo from the future knocked billions off blue‑chip stocks, a former karaoke company tanked trucking shares by uttering the magic letters “AI,” and Jack Dorsey calmly announced he would cut 40% of Block’s (parent of payment processors Square and Cash App) workforce because, in his words, everyone else is “late” to right‑sizing for the age of machine intelligence.
Citrini Research lit the fuse with a Substack titled “The 2028 Global Intelligence Crisis,” describing a dystopian near-future America where unemployment has soared to 10.2% and the S&P 500 has crashed 38% from its October 2026 high. The scenario is straightforward simple and alarming: highly capable AI agents rapidly replace well-paid white‑collar workers and turn today’s stable, fee‑rich intermediaries—payment networks, insurers, wealth managers, real‑estate brokers—into thin-margined middlemen.
In this AI “doom loop,” companies cut workers to protect margins, redirect the savings into more AI, enabling even deeper cuts. Those job losses then depress household spending—the very spending that drives roughly three‑quarters of discretionary spending.
It’s a disaster movie and frightened investors did not wait for the closing credits to sell. The next day, IBM and Datadog dropped double‑digits, DoorDash, Visa, Mastercard, ServiceNow and Blackstone—called out by name—sold off and a major software ETF fell nearly 5%.
Bloomberg’s Matt Levine calls this the “AI scare trade.” Tongue‑in‑cheek, he sketches an AI lab “business plan:” 1) build a disruptive AI tool; 2) bet on a price decline for the target sector; 3) announce the tool and 4) profit from the selloff. In today’s jittery market, he argues, step one—actually building the technology—might be the least important. A press release or CNBC appearance where you solemnly say “DoorDash. AI.” with a grim nod might be enough to wipe billions from a sector’s market capitalization.
That kind of “shadow trading” would almost certainly be illegal, but that anxiety has already hit software, cybersecurity, payment processors, wealth managers and commercial real‑estate brokers after announcements of new AI “tools.”
Should investors take Citrini’s memo as a roadmap—or a Rorschach test?
History suggests we consistently underestimated the economy’s ability to create new categories of jobs when automation displaces old ones. Commenting on the fallout from the Citrini memo, The Wall Street Journal’s James Freeman notes in “Robots Have Been About to Take All the Jobs for 100 Years” that we have been here before—over and over. In 1928, The New York Times worried the “march of the machine” would make farm hands idle; in 1940, it fretted about “technological unemployment”; in 1980, a headline warned, “A Robot Is After Your Job.”
In each case, the economy adapted—even if the adjustment was painful in specific industries and communities.
In his memo “AI Hurtles Ahead,” Oaktree Capital Management Co-Chair Howard Marks stakes out a more uncomfortable middle ground. No tech Luddite, Marks finds the speed at which AI is growing in capability and usage—far outpacing past technological innovations—genuinely unnerving. Marks quotes AI leaders who casually suggest AI could wipe out half of all white‑collar tasks in a handful of years. What troubles him is not just the claim—but the absence of a clear answer about where comparable replacement jobs will emerge.
For Marks, the risk is less about the future state and more about the transition: how communities, households and capital structures handle a shock in which AI can throw people out of work faster than they can be retrained, relocated or reabsorbed. He likens it to offshoring and automation in manufacturing—great for global productivity, brutal for many towns that never fully recovered.
So, where does that leave the long‑term investor trying to navigate between AI utopia and AI doom?
First, be wary of both narratives that say “AI changes nothing” and ones that say “AI changes everything, immediately.” Investor anxiety over AI is now pervasive: entire sectors have seen sharp, sometimes indiscriminate selloffs on thin catalysts. That creates opportunities on both sides. Some businesses really do sell expensive, standardized information work that AI can replicate. Others have durable protective “moats” in brand, regulation, physical assets or deeply human service.
Second, companies powering the AI infrastructure build-out—semiconductors, data centers and energy—what Marks might call the “picks and shovels” of AI—may have a clearer line of sight into sustainable demand and “adequate” profitability than so-called hyperscalers. For companies like Microsoft, Amazon and Google, AI is only one part of an already vast profit engine. Investments in pure-play AI labs such as OpenAi and Anthropic are highly speculative, as the long-term economics are very much unknown.
Citrini’s scenario is intentionally extreme, but dismiss it at your own peril. The market’s hair‑trigger reaction—and the willingness of CEOs like Dorsey to wield AI as a reason to reset their cost structures—show us the stakes are real. As investors and citizens, we should neither smash the knitting machines nor worship them. We should resist embracing AI utopia or surrendering to an AI doom loop. In short, we must not let either AI hype or hysteria do our thinking for us.
Mickey Kim is the chief operating officer and chief compliance officer for Columbus-based investment adviser Kirr Marbach & Co. Kim also writes for the Indianapolis Business Journal. He can be reached at 812-376-9444 or mickey@kirrmar.com.


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