First, a couple housekeeping items — My fingers and hands are literally cramping from all the typing and working I’ve been doing lately and I can’t make it through a one-hour live chat today. I’m also headed up to NYC to meet my nine month old god-daughter who I haven’t met yet, leaving from Roswell tonight and getting back into Alto, NM next week.
I hope you’ll forgive me but this might be my last post until next Monday, as I’ve worked myself into a dizzy lately. Now, onto today’s column.
$CREE‘s down $12 this morning and I probably won’t buy any more yet. My cost basis from just a couple months ago is still down in the $50s and if the momo’s hadn’t plowed this thing up to $75 before the call, it wouldn’t be down $12. It’s a long-term investment for me anyway. Still would rather it be up tho. 😉
Not doing any new trading today, as I’ve done my selling, trimming, hedging (and a little bit of buying the TQNT for example) that I’ve wanted to do at this time and these prices.
I’m rather shocked at all the confident dismissal of my recent commentary about just how big a stock market bubble we are already in and I haven’t even started again calling it my old “Biggest Stock Market Bubble of All-TimeTM“. In the comments on my Marketwatch blog lately and especially over on Scutify.com’s Scuttle page, there is non-stop debate about the current state of the stock market bubble or lack thereof. Former idiot Fedhead Alan Greenspan and the latest Rasputin Chairman Bernanke both don’t think it’s possible to tell when you’re in an asset bubble til after it pops. I totally disagree. I think you can see them coming and see them get ready to pop too. The cycles are repetitive and often predictable.
I say this with the confidence of someone who’s now correctly bought at the bottom of a bubble pop twice in my professional career and got out of the markets and went to become a TV anchor at the top of the most recent stock market bubble that popped. More recently, back in 2010, I wrote every day pleading with my readers to get in front of what I really did repeatedly write was about to be the coming of “Biggest Stock Market Bubble of All-TimeTM.”
It’s always incredible insightful to take a look back at some of your analysis from past years. I think we’ve got some good insights here from my Marketwatch writings from back 2010 and we can apply it to our recent analysis about how far along in this current stock market bubble. So please excuse the long quotes from two columns below that I’d published here on Marketwatch back in 2010, but they are instructive for our analysis today.
In one column about the “How to invest today for the app bubble arriving tomorrow” published in early 2010, I wrote these very words –
“Hopefully you were one of those people who got in that second phase, after the early adopters had worked through much of the bugs and the mainstream masses were just starting to get their first Internet accounts back in 1996/1997, right? And hopefully you’re one of those people figuring out ways to invest in the app bubble now that the early adopters have worked through much of the bugs and the mainstream masses are just starting to get their first apps…right now in 2010, baby!“
And later in that same column, I highlighted two of the very biggest winners in the stock market since 2010, Netflix NFLX and Priceline PCLN — “you can chase a Netflix or PriceLine that will both benefit from their app-strategies and will continue to take marketshare from the huge marketplaces that they continue to disrupt. You can even go start your own app company like I did.”
A month before that right after I left my TV show on Fox to get back into the markets, I really laid out my vision for why were were headed into a new tech stock market bubble focused around smartphones/tablets and apps. The column was literally titled, “History lesson: How to invest for the app revolution bubble” and in it, I wrote –
“Don’t you think you want to get in front of the app revolution because it’s very, very likely to turn into an app bubble, just like the Internet Revolution went through its own bubble phase? And don’t you think and believe that if you can work hard enough, study enough trends and companies, get your arms around enough technology business strategies and start to conceptualize our App Future, that you’re going to make a ton of money just like many people have done in the Internet Revolution?
Do you remember the PC Revolution… the Automobile Revolution… the Railroad Revolution and how they bubbled and how hundreds of companies were created, built into mini-juggernauts and then flamed out?
Do you see how all those revolutions played out similarly? Human nature doesn’t change. People start to see a new technology that catched traction, hits critical mass, and brings in more customers, which brings in more traction, which brings in more people who want to invest in the techology, and things start to get bubbly and fortunes are made and then the bubble pops as people recognize that you had to actually know which companies were making the right moves and developing the right technologies to stay in front of each respective revolution.
Do you really question that mobile apps are revolutionary? Do you really question that we’re heading into an App Future? Do you really question that there will be hundreds of companies created, built into mini-juggernauts, and then flamed out? Do you really question that there will be vast fortunes created in this App Revolution and that the biggest and best app companies will reap huge profits?”
So let’s get back to 2013 here and what does all this say to you now? Well, if 2010 was 1996/1997 then wouldn’t that make today the equivalent of say late 1999 or early 2000? Does that mean we are about to crash right now? I have for the last three years and still do argue that this bubble will actually be much bigger and probably last longer than any of the past bubbles my generation has already lived through. I read Paul Ferrel’s strange article today where he’s now calling for a huge rally in the stock markets for 2014 and while I do like to read his stuff, the fact that someone who’s that bearish is now that bullish makes me wonder how much longer this bubble can go.
But really, bubbles don’t stop blowing just because the permabears give up and turn bullish. Especially when the primary driver of this stock market bubbles in particular is the radical free money policies like QE and 0% interest rates for TBTF banks and lax enforcement of bank fraud. Think about how many trillions of dollars worth of mortgage-backed and other securities that the banks have traded to the FED for cash and which they then go buy and trade stocks with and lend to people who then go buy stocks with it. With these radical monetary policies of the 21st century, it’s not like grandma’s got any place to safely put her money and get some interest income, huh?
Indeed, the analysis of my own recent musings on this current stock market bubble are similar to that in Ferrel’s column today. I think the Biggest Stock Market Bubble of All-TimeTM will keep going at least into next year and perhaps start to pop in 2015. I remain invested in many of the same stocks I was highlighting for my readers back in 2010, including Google, Sandisk, and Ciena. But I’m sure not as aggressive since the bubble’s gotten bigger and the valuations gotten somewhat ridiculous already.
I plan on being as vocal and aggressive about calling the coming top of this ongoing Biggest Stock Market Bubble of All-Time as I was about calling for its coming back in 2010 and 2011. I’d really like to hear even more debate from all of you about this topic, so please go read Ferrel’s stimulating column and then come join the discussion on Scutify.com’s Scuttles page where it’s heating up, or leave a comment below. And no matter your take on the current state of the stock market bubble or lack thereof, please do take a cue from Carl Icahn who trimmed the aforementioned $NFLX for a 500% plus gain and go trim some stock now while so many of them are up so big.