Enron was massive accounting fraud. Extraordinary claims require extraordinary evidence. Where is your evidence of accounting fraud? "Lots of companies investing lots of money into AI and it might not work out" isn't fraud.
The AI Economy (Part 2) - What Enron Can Teach Investors About the AI Boom - <a href="https://michiganfinancial.com/blog/the-ai-economy-part-2-what-enron-can-teach-investors-about-the-ai-boom" rel="nofollow">https://michiganfinancial.com/blog/the-ai-economy-part-2-wha... - August 4th, 2026
> Enron is often remembered simply as one of the largest corporate frauds in American history. While this is true, there are lessons to be learned from the way investors acted during this time. At its peak, Enron was viewed as one of America's most innovative companies. Investors believed it had fundamentally transformed the energy business through sophisticated trading platforms, financial engineering, and technology-driven markets. Its stock price reflected extraordinary confidence in the company's future rather than its demonstrated earning power.
> Part of that confidence was fueled by Enron's use of mark-to-market accounting, which allowed the company to recognize estimated profits from long-term contracts immediately instead of waiting for those profits to actually be earned. Future expectations effectively became present-day earnings. Those projections were wildly "optimistic". When investors realized the expected profits were unlikely to materialize, confidence disappeared almost overnight. Between August 2000 and November 2001, Enron's stock collapsed from roughly $90 per share to just pennies, erasing billions of dollars of wealth and devastating employees and retirement investors alike.
Draw your attention to:
> Despite the advancements created through use of AI and the increasing numbers of applications, investors still face an important question: How much of today's valuation reflects profits that have actually been earned, and how much reflects profits investors hope will eventually exist?
and
> Artificial intelligence represents one of the most significant technological developments of our generation. Its long-term impact may ultimately justify much of today's enthusiasm in the market. History, however, reminds us that markets frequently price revolutionary technologies well before their economic potential is fully realized and fluctuations occur in even the most stable sectors.
> The lesson from Enron is not that today's AI leaders are engaging in similar behavior. It is that investors should remain cautious whenever valuations become increasingly dependent on future expectations rather than demonstrated earning power.
Anthropic's IPO prospectus illustrates this fairly well.
Anthropic's IPO Prospectus Is a Fucking Doozy - <a href="https://news.ycombinator.com/item?id=49914149">https://news.ycombinator.com/item?id=49914149 - September 2026
Anthropic's IPO prospectus shows AI vision, surging costs - <a href="https://news.ycombinator.com/item?id=49886005">https://news.ycombinator.com/item?id=49886005 - September 2026
> Matt Levine's summary of Sam Altman's (and most of AI industry's) business plan remains accurate: "We will create God and then ask it for money."
> valuations become increasingly dependent on future expectations
Valuations are always dependent on future expectations. What else would they be based on? That's one of the main functions of a stock market: providing price discovery via competing buyers and sellers placing bets on the expected future economic prospects of companies. Of course fraud interferes with price discovery, but again, where is the evidence of fraud?
Enron functioned remarkably well regardless of fraud, in the same financial/stock market and accounting "standards" as everyone else.
The rules are still evolving but have been a cat-and-mouse effort for more than a century.
>Valuations are always dependent on future expectations.
This is the point. The market is a very responsive organism. It is not easy for a group to reach the point where it can evolve faster than the market can adapt. For some though, this has always been the holy grail. Rarely does it work. When it does some people do get much richer much faster than otherwise, but by comparison the market is so huge it's still usually not a significant impact on the overall market.
Future expectations can have a tendency to become bigger than the "whole" market though. Even if not that massive it still represents more paper wealth that could be more quickly extracted than the same companies will be able to contribute in earnings over the same period.
You could say extracting this was built into the system to allow this type of "bottled wealth" to flow, or alternatively, a much wilder version has been reigned in to arrive at what we have now, in which Enron itself has been taken into consideration as much as it could be at the time.
There really shouldn't be much problem unless a highly leveraged entity gets so big so fast that it is no longer insignificant relative to the market niche it operates in, or even the whole market. If it's also "evolving" faster or more creatively than the market that's something too.
In that equation fraud does not need to exist, and is not necessarily a prominent term.
Nobody at Enron tried to defraud me even though in the end they failed to pay thousands in invoices. A single company built from a house of cards shows the textbook example of how outgrowing the ability of future expectations to deliver can cause bigger companies to collapse further and more abruptly than otherwise.
It would have been much worse if I had been a shareholder. But I was a valued contractor and everyone I had contact with was exceptional, sometimes the smartest person in the room.
jqpabc123 · · focus · HN ↗
ralph84 · · focus · HN ↗
toomuchtodo · · focus · HN ↗
> Enron is often remembered simply as one of the largest corporate frauds in American history. While this is true, there are lessons to be learned from the way investors acted during this time. At its peak, Enron was viewed as one of America's most innovative companies. Investors believed it had fundamentally transformed the energy business through sophisticated trading platforms, financial engineering, and technology-driven markets. Its stock price reflected extraordinary confidence in the company's future rather than its demonstrated earning power.
> Part of that confidence was fueled by Enron's use of mark-to-market accounting, which allowed the company to recognize estimated profits from long-term contracts immediately instead of waiting for those profits to actually be earned. Future expectations effectively became present-day earnings. Those projections were wildly "optimistic". When investors realized the expected profits were unlikely to materialize, confidence disappeared almost overnight. Between August 2000 and November 2001, Enron's stock collapsed from roughly $90 per share to just pennies, erasing billions of dollars of wealth and devastating employees and retirement investors alike.
Draw your attention to:
> Despite the advancements created through use of AI and the increasing numbers of applications, investors still face an important question: How much of today's valuation reflects profits that have actually been earned, and how much reflects profits investors hope will eventually exist?
and
> Artificial intelligence represents one of the most significant technological developments of our generation. Its long-term impact may ultimately justify much of today's enthusiasm in the market. History, however, reminds us that markets frequently price revolutionary technologies well before their economic potential is fully realized and fluctuations occur in even the most stable sectors.
> The lesson from Enron is not that today's AI leaders are engaging in similar behavior. It is that investors should remain cautious whenever valuations become increasingly dependent on future expectations rather than demonstrated earning power.
TLDR <a href="https://en.wikipedia.org/wiki/Reflexivity_(social_theory)" rel="nofollow">https://en.wikipedia.org/wiki/Reflexivity_(social_theory)
Anthropic's IPO prospectus illustrates this fairly well.
Anthropic's IPO Prospectus Is a Fucking Doozy - <a href="https://news.ycombinator.com/item?id=49914149">https://news.ycombinator.com/item?id=49914149 - September 2026
Anthropic's IPO prospectus shows AI vision, surging costs - <a href="https://news.ycombinator.com/item?id=49886005">https://news.ycombinator.com/item?id=49886005 - September 2026
> Matt Levine's summary of Sam Altman's (and most of AI industry's) business plan remains accurate: "We will create God and then ask it for money."
ralph84 · · focus · HN ↗
Valuations are always dependent on future expectations. What else would they be based on? That's one of the main functions of a stock market: providing price discovery via competing buyers and sellers placing bets on the expected future economic prospects of companies. Of course fraud interferes with price discovery, but again, where is the evidence of fraud?
fuzzfactor · · focus · HN ↗
The rules are still evolving but have been a cat-and-mouse effort for more than a century.
>Valuations are always dependent on future expectations.
This is the point. The market is a very responsive organism. It is not easy for a group to reach the point where it can evolve faster than the market can adapt. For some though, this has always been the holy grail. Rarely does it work. When it does some people do get much richer much faster than otherwise, but by comparison the market is so huge it's still usually not a significant impact on the overall market.
Future expectations can have a tendency to become bigger than the "whole" market though. Even if not that massive it still represents more paper wealth that could be more quickly extracted than the same companies will be able to contribute in earnings over the same period.
You could say extracting this was built into the system to allow this type of "bottled wealth" to flow, or alternatively, a much wilder version has been reigned in to arrive at what we have now, in which Enron itself has been taken into consideration as much as it could be at the time.
There really shouldn't be much problem unless a highly leveraged entity gets so big so fast that it is no longer insignificant relative to the market niche it operates in, or even the whole market. If it's also "evolving" faster or more creatively than the market that's something too.
In that equation fraud does not need to exist, and is not necessarily a prominent term.
Nobody at Enron tried to defraud me even though in the end they failed to pay thousands in invoices. A single company built from a house of cards shows the textbook example of how outgrowing the ability of future expectations to deliver can cause bigger companies to collapse further and more abruptly than otherwise.
It would have been much worse if I had been a shareholder. But I was a valued contractor and everyone I had contact with was exceptional, sometimes the smartest person in the room.