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Did I Steer You Wrong? Did I Miss It?By
Thursday, December 21, 2017
I've been predicting a massive speculative boom...
The thing is, I expected it would happen in the stock market.
Instead, it has happened somewhere else – in the cryptocurrency market.
This brings up a bunch of questions:
It has all been fascinating so far... I remember watching the dot-coms soar in 1999 and early 2000. I said to myself, "The next time this situation repeats itself, I am not going to miss it." So that's what I've been trying to do with the Melt Up.
The thing is (as they say), history doesn't repeat – it rhymes.
The Internet was a new thing during the last Melt Up, like cryptocurrencies are a new thing today. And you hear many of the same kooky ideas today that you heard back then – ideas that have nothing to do with making money.
"Bitcoin is about freedom from government and democratization for all." Maybe. But does that make you money? You heard the same things about the Internet in 1999... but freedom or not, people still lost nearly all their money in 2000.
The big question to me is if the "animal spirits" ignited by the bitcoin boom will spill over into the stock market. Will the excitement spread? Will people go into a speculative frenzy in stocks?
My honest answer is, I think they will – but that outcome is not as certain as you might think.
The final speculative frenzy at the end of a great boom is often fairly "narrow." It tends to focus on one corner of the market. For example, during the final year of the dot-com boom, the non-tech Dow Jones Industrial Average stock index did practically nothing. Meanwhile, the Nasdaq Composite Index – full of tech and biotech names – soared more than 100%.
You'd think the final boom would happen in stocks today. But I haven't lived through another time where we had an entirely separate exchange for an alternative speculative asset, like bitcoin has today. So this time around, it is entirely possible that ALL of the animal spirits will be directed into cryptocurrencies.
I don't expect that to be the case. But we can't rule it out.
So what do I expect?
I expect that these animal spirits in bitcoin today will ultimately carry over into other speculations – including stocks and properties – before this great boom is all over. But I can't guarantee it.
I believe that the Melt Up will still happen... I believe this great bull market in stocks will end with a frenzy in tech stocks and biotech stocks, and that some of that frenzy will come from bitcoin traders who love the rush of a good boom.
I believe the stock frenzy is still coming. But the speculative mania in stocks that I thought was guaranteed a few months ago could be a bit less guaranteed today.
You look to me to call it as I see it. And I try to call it as black and white as possible – even though we're making guesses about the future.
This one is a bit tougher to call... But I think it's the right script to go on today.
Good investing,
Steve
Further Reading:
"The big, fast gains are in front of us, not behind us," Steve writes. He says a Melt Up in stocks is still likely – and it could be years before we see the peak. Learn more here.
If you're a bitcoin investor today, you need to decide on one thing right now – a plan to help you protect your gains. "This applies to all your trades... especially on speculative assets like bitcoin," Steve says. Read more here.
Market NotesTHIS CREDIT-CARD PROVIDER IS A FINANCIAL POWERHOUSE Today's chart highlights another big winner in the financial sector...
We often like to check in on America's major financial firms. Companies like JPMorgan Chase (JPM), Wells Fargo (WFC), and Bank of America (BAC) act as America's "financial backbone." They rise and fall with our country's ability to make money, save money, service debts, and generally "just get along." Today, we look at another big financial player...
American Express (AXP) is best known for credit cards. However, it also offers a variety of financial services, including loans, marketing research, and expense management. This $86 billion financial powerhouse helps people buy goods and run businesses. In short, it drives economic activity... And its business model is succeeding today. American Express saw $8.4 billion in revenue last quarter, up from $7.8 billion the same quarter last year.
As you can see in the chart below, AXP is taking off right now. Shares are up around 33% over the past year, and they recently hit new 52-week highs. It's likely we'll see more strength ahead as business keeps booming in America...
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