Citrini Founder Shocked His AI Prediction Spurred Stocks Selloff

The last thing James van Geelen expected to do on Monday was trigger a stock market meltdown. But that's what he did.

The 33-year-old founder of Citrini Research published his dystopian scenario for an artificial intelligence future on his firm's Substack on Sunday. Called “The 2028 Global Intelligence Crisis,” it described a hypothetical economic plunge in which mass white-collar layoffs create a deflationary cascade that pushes the unemployment rate above 10% while stock prices are wiped out. 

By Monday morning, the over 7,000-word post was the talk of the market. And when trading opened, the selling started. The S&P 500 Index quickly went from green to red and ended down more than 1% on the day. A gauge of financial shares had its worst session since April. A major software exchange-traded fund tumbled more than 4%. The report also named a number of specific companies, including ServiceNow Inc., DoorDash Inc. and American Express Co., and those shares sank. Citrini isn't short any of those names. 

By the end of the day, van Geelen's phone was blowing up, and a bunch of potential new customers were requesting his firm's research or offering feedback. 

“If I thought that stocks were gonna move on this, I wouldn't have made it free,” van Geelen said from Miami, where he's meeting clients.

Investors were already skittish after weeks of AI-related selloffs targeting a range of industries such as software, insurance brokerage, wealth management and cybersecurity, among others. On Monday, concerns over tariffs and geopolitics coupled with the Citrini report and worries about the potential disruption caused by another tool from AI startup Anthropic were enough to send the stock market careening. 

READ MORE: Citrini Report Author Calls For AI Tax After Scare-Trade Selloff

READ MORE: Ghost GDP, Mass Layoffs: The Future AI Nightmare Scenario, According To Citrini's 2028 Crisis Memo

The stocks and indexes that got punished Monday rebounded with the broader market on Tuesday. But the one-day panic revealed how dicey things have gotten on Wall Street in recent months as the sentiment around AI turns from enthusiasm about growth to worries about disruption.

“The market is clearly jumpy about this,” van Geelen said. “The article clearly served as a focus point for investors who were already concerned about the second-order disruption to incumbents by AI, and that anxiety hit a fever pitch when our article pointed to the worst case scenario.”

Stumbling Into Finance

The Citrini Research founder never intended to go into finance. His plan was to be a doctor when he was a student in college, but he gave that up before attending medical school. He then founded an alternative medicine company that he sold to a private equity firm in 2018. He used the proceeds to start investing and writing research.

Wall Street first noticed van Geelen's work after the demise of Silicon Valley Bank in March 2023. He posted about being short the stock in late 2022, and the lender collapsed just a few months later. Suddenly the finance community knew his name.

“It doesn't really matter who you are, you can very much be just judged on the meritocracy of your ideas,” he said. “If you have a good idea and then the other great thing in finance is your idea has kind of a scoreboard. Nobody can really say you're wrong if the number on the screen says you're right.” 

In 2023, van Geelen began monetizing his research behind Citrini's paywall. The firm, which focuses on thematic investing research, has about 10 employees and is based in New York. The platform has built a devoted following, with more than 119,000 subscribers. Its research spans topics from modern warfare and humanoid robots to GLP-1 drugs and broader macro trends. It is the top bestseller among Substack's paid newsletters. 

Among Citrini Research's model portfolio AI holdings are Nvidia Corp, Alphabet Inc., Macronix International Co. and Mediatek Inc. The firm has been publishing baskets of stocks related to its thematic ideas since its inception, and van Geelen said Citrini historically has been criticized for being too bullish. 

“We're definitely not allocated for a financial crisis,” he said. 

Citrini doesn't manage outside money. Citrinitas Capital Management Inc., which does business as Citrini Research, is listed as a selling shareholder on a prospectus filing for RoboStrategy Inc., a closed-end fund focused on “equity and equity-linked investments in robotics and embodied AI companies.” The 50,000 shares attributed to Citrinitas amount to 0.25% of the total shares being registered for a potential resale.

Starting a Conversation

Naturally, van Geelen has been inundated with feedback since the report hit. His favorite conversation was with an investor who disagreed with the thesis, and when he asked them to explain their thinking, their response was from Anthropic's Claude AI chatbot.

“If you're outsourcing your thinking about why the thesis that AI will replace us is wrong by going to AI, you kind of undermined your point,” he said. 

The case van Geelen presented in his post came from a conversation with his friend and now Citrini contributor Alap Shah, whose first contribution was the dystopian AI scenario. Shah is chief executive officer of AI firm Littlebird and managing partner at Lotus Technology Management, according to the company website. 

READ MORE: AI Shock Scenario In 2028 Paints Nightmare Risks For Infosys, TCS, Wipro: Citrini Research

The report was meant to be a conversation starter “to prevent anything like what's described in the article from coming to pass,” van Geelen said. “We saw a scenario that wasn't being discussed, and it was a scenario that we spent a lot of time in the beginning trying to disprove internally. We couldn't get to the point where we were comfortable saying there's a 0% chance that something like this happens.”

To van Geelen, these kinds of conversations and debates are crucial for society to navigate through the unprecedented thorny issues being raised by the emergence of AI.

“If you're the most bullish on AI disruption, what happens after that?” he asked rhetorically. “As a society, we really need to wrestle with the fact that over the course of history, the most productive kind of asset has always created jobs for humans.”

Essential Business Intelligence, Continuous LIVE TV, Sharp Market Insights, Practical Personal Finance Advice and Latest Stories — On NDTV Profit.