James van Geelen never anticipated that his actions on Monday would trigger a sharp decline in the stock market. Yet, he was indeed the catalyst.
The 33-year-old founder of Citrini Research published a dystopian report on his firm's Substack on Sunday, outlining a bleak future for artificial intelligence. Titled "The Global Intelligence Crisis of 2028," the 7,000-word article depicted a hypothetical scenario where mass layoffs of white-collar workers spark a deflationary chain reaction, causing unemployment to surge past 10% and stock prices to collapse.
By Monday morning, the report had become a major topic of discussion among market participants. A sell-off commenced as trading began. The S&P 500 quickly turned negative, ultimately closing the day down over 1%. Financial stock indices experienced their worst day since April. A major software ETF plunged more than 4%. Specifically mentioned companies like ServiceNow Inc., DoorDash Inc., and American Express saw their shares tumble significantly.
Citrini Research did not hold short positions in any of these stocks.
van Geelen's phone was inundated throughout the day with calls from potential new clients seeking his firm's research or wishing to provide feedback.
"If I had thought the stock market would move because of it, I wouldn't have given it away for free," said van Geelen, who was meeting clients in Miami at the time.
Investors were already on edge, as sectors including software, insurance brokerage, wealth management, and cybersecurity had previously faced selling pressure due to AI-related anxieties. On Monday, a combination of news regarding tariffs and geopolitics, the release of the Citrini report, and fears about potential impacts from a new tool by AI startup Anthropic converged to create significant market volatility.
Stocks and sectors that were heavily sold off on Monday rebounded alongside the broader market on Tuesday.
However, the day's panic highlighted the precarious and peculiar situation on Wall Street in recent months, as the market's perspective on AI has shifted from enthusiasm about growth potential to fear of its disruptive consequences.
"The market clearly reacted strongly," van Geelen stated. "The report evidently became a focal point for investors who were already concerned about AI causing secondary impacts on existing businesses. When our article outlined the worst-case scenario, that anxiety reached a boiling point."
Citrini Research's model portfolio includes the following AI-related positions: NVIDIA, Alphabet Inc., Winbond Electronics Corporation, and MediaTek Inc. The firm has consistently published related stock portfolios based on its thematic investment philosophy since its inception. van Geelen noted that Citrini has historically been criticized for being overly bullish.
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