"Some commentators say market and GDP concentration are poor measures of the size of a stock bubble, or its potential to burst. The market was far less concentrated during the dotcom boom, even though it led to a painful three-year bear market.
But it was far more concentrated during Britain’s 19th-century railway mania — a period that some commentators say has parallels with the AI boom — when stock markets were much less developed than today.
Gareth Campbell, an economic historian at Queens University Belfast, said that unlike other asset bubbles, the railway mania was based on “a very tangible technology which would eventually change the entire system of how people travel”.
At its peak in 1845, hundreds of new lines were proposed and railway investment reached 6 per cent of UK GDP. But the sector was hit by an economic downturn and the realisation that new railways connecting smaller towns would fail to ever find enough passengers. By 1850, railway stocks had tumbled to one-third of their peak and projects were abandoned in droves.
Despite the crash, “the railways would go on to dominate the stock market”, Campbell said. Given the technology’s transformational potential, “I think AI is probably similar,” he added."
https://www.ft.com/content/41e9d03a-e5c1-4862-9836-b3c80b3f9be4
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