“Too Much Exploiting and Not Enough Exploring Leads to Fragility.”
Ant colonies rely on a diverse mix of explore and exploit activities to sustain their ecosystem and to promote resilience and robustness to outside shocks. The market is also healthiest when it has a mix of exploited leadership backed by strong breadth (explorations).
The market failed in 2000 due to excessive exploitation of leadership (internet bubble) while neglecting the duty to explore other alternatives (old economy). Today’s condition shows a similar degree of exploitation of leadership (AI Bubble), but at the margin, there appears to be more exploration today than in 2000. This leaves the market a bit more capable of avoiding a future tipping point due to failure of leadership.
