Posted on 03/09/2024 8:47:26 PM PST by nickcarraway
The stock markets have been on the rise recently, with major indexes like the S&P 500 and Nasdaq hitting record highs. At the same time, speculative assets like bitcoin and gold have also surged to new peaks.
While many investors are cheering the gains, some analysts are sounding the alarm that we may be right in the middle of another financial bubble, similar to the dot-com boom and bust of the late 1990s.
Gold and Bitcoin Peaks: Are We Heading to Another Dot-Com Bubble? Much of the recent market’s rise has been driven by a small group of mega-cap tech stocks. These are dubbed the “Magnificent 7” – Apple, Microsoft, Alphabet (Google), Amazon, Nvidia, Meta and Tesla.
These companies now make up an astounding one-third of the S&P 500’s total market capitalization.
Valuations for many of these tech firms, especially those involved in artificial intelligence, have reached dizzying heights reminiscent of the dot-com era.
Nvidia, for example, is at the center of this AI frenzy. It has seen its stock price surge over 250 percent in the past year, far outpacing its earnings growth.
Price-to-earnings ratios for the tech sector overall are approaching levels not seen since the late 1990s bubble, sparking concerns among experts.
Parallels to the Dot-Com bubble The dot-com bubble was characterized by a rapid rise and consequent crash in tech stock valuations between 1995-2000.
This had been fueled by speculation in internet startups of the time. Investors threw money at any company with a “.com” in its name, ignoring even the fundamentals. Media hype, easy money policies and pure greed inflated the bubble of the late 20th century.
When it finally burst, the tech-heavy Nasdaq index plunged over 75% from peak to trough.
Many dot-coms went bankrupt, although some like Amazon survived.
This incident showed the dangers of irrationality and investing based on fear of missing out (FOMO) rather than real value.
Worryingly, there are clear parallels between then and now. A small group of tech highfliers are dominating the market and seeing their valuations stretched to extremes.
The IPO market for young, unprofitable startups is heating up again. Retail investors are piling in, while insiders quietly cash out to make a quick buck. This mania has even spread to non-tech assets like crypto and even meme stocks.
Unique risks of the everything bubble What makes today’s situation even riskier is that it’s not confined to just tech stocks, but rather an “everything bubble” spanning equities, bonds, real estate, commodities and more.
Stimulus from central banks has flooded markets with liquidity, encouraging speculation thus making the situation even more complex.
If this grand bubble pops, the damage could be more extensive than previous crashes. Some analysts warn of a repeat of Japan’s experience in the early 1990s, where simultaneous busts in stocks and real estate led to decades of stagnation.
Staying grounded amid the euphoria It has to be noted, obviously, that none of this means a crash is inevitable or imminent. There are differences between today’s tech leaders and the flimsy dot-coms of 2000. Companies like Apple and Google are highly profitable and their innovations are transforming the global economy. Higher interest rates could also let some air out of the bubble gradually.
Still, investors would be wise to proceed with caution. Chasing the hot stocks of the moment doesn’t always end well. Sticking to a diversified, long-term strategy, rather than trying to time the market, remains the best way to manage risk and protect wealth. By keeping some healthy skepticism, we can enjoy the ride without losing our shirts when the music eventually stops.
Is Bismarck a Herring?
Just kidding
Who knows how high it will go before......
Gold is around $2170 and has just been going up for the last 14 years. I expected during Trump for it to drop like after Jimmy Carter messed it up, but it didn’t. So not sure gold will drop, but I would not be surprised at all to see bitcoin massively tank.
Federal Reserve bank funding program ends on Monday.
Keep an eye on NY Community Bank.
CRE will eventually cause a cascading banking issue…
>> speculative assets like bitcoin
Bitcoin is a speculative asset? You mean I could lose my a$$ets betting on Bitcoin? No! Say it ain’t so.
Oh.....🤔🤔🤔
I looked
Federal Reserve Board Announced Ending of the Bank Term Funding Program. On January 24, 2024, the Federal Reserve Board announced (Off-site) the Bank Term Funding Program (BTFP) will cease making new loans as scheduled on March 11, 2024.
Feb 20, 2024
Could be an interesting week.
“Gold and Bitcoin Peaks: Are We Heading to Another Dot-Com Bubble?”
yep ... such bubbles are always created by massive amounts of excess synthetic liquidity conjured out of thin air by corrupt “leaders” trying to fake economic growth ...
said excess synthetic liquidity has no legitimate economic opportunity, so invariably fuels speculative bubbles built from greed and exuberant ignorance ...
said bubbles then inevitable crash, thereby performing the useful service of draining said excess liquidity ...
unfortunately, it’s usually those fools who can least afford it who are parted from their money during said bubble draining ...
oh, rinse and repeat every couple of decades ...
your assessment is accurate, but i take minor umbrage at the description of bitcoin as an “asset” ...
Gold doesn’t go up, the dollar goes down. Between the massive money printing and BRICS moving off the petrodollar, it’s no mystery.
hhmmm...too bad congress mortgaged our sovereignty
BTC is about to breakout. Look at the technicals.
—> but i take minor umbrage at the description of bitcoin as an “asset” ...
You may. I see the problem.
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Could indeed be interesting
Its the massive money printing and debt which has people going to BTC and gold. No faith in the US dollar under Biden and dims.
NVDA FY 2023 EPS $3.34
NVDA FY 2024 EPS $12.96
$12.96/ $3.34= 3.88 , aka 288% gain.
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