It’s starting to feel like 1999.
I’m talking about all the speculation I am seeing in the financial markets.
From Bitcoin to Tesla to Gamestop?
Several of us on social media commented that the price action in Gamestop (GME) is the most insane any of us have ever seen.
Yesterday, the trading range in GME was over $100. I’ve never seen that in a stock that closed below $80. Today, the range was about $70 and the stock closed up nearly 93%.
Social media is all abuzz about how the little guys are banding together to crush the hedge fund managers, who had a massive short position in the stock. Classic short squeeze.
Here’s the problem with that.
In 1999, the little guys were making money hand over fist, mainly day trading the big internet issues.
Everything was going to the stratosphere, particularly if had a name ending in .com.
I remember a conversation with a friend of mine back then. I was talking about the futures markets and he effectively said “why bother” when his 401K was going up 30% a year.
The market was up over 30% in 2019, and up another 16% in 2020.
I see the same signs of a major market top that I saw in 1999.
Everyone is trading. Bitcoin, Tesla, Gamestop, or whatever. People are becoming millionaires practically overnight as we see stocks explode in price.
Smart people are telling me I should be buying Bitcoin (after it was already up 1,000% from its 2020 lows).
So far this year, 18 stocks that show up on my stock market screen are up 200%! 33 are up 100% or more.
These are also not household names, and most are cheap stocks you’ve never heard about.
I guess during the Covid-19 lockdowns, everyone learned how to trade. Everybody is a genius now.
Those of us who’ve seen this movie before know that the tide is going to change in the foreseeable future. We don’t know when, but we know its coming.
We also know that this won’t be a run of the mill, 20% to 30% correction.
Nope, this will be a nasty bear that is accompanied by a nasty recession.
Think 2001-2003 and 2007-2009. Or worse.
I believe there is potential for this to be worse than those two because we now have a Fed with a $7 trillion balance sheet and a Federal government with $28 trillion in debt, with trillion dollar annual deficits.
This has the potential for a run on the dollar if confidence in the U.S. economy begins to wane.
And, some of the economic ideas coming out of the new administration don’t exactly give me confidence, i.e. killing Keystone Pipeline XL, $15/hour minimum wage, etc.
With all this in mind, NOW is the time to consider taking appropriate action to protect your assets and income.
The futures markets offer the potential for diversification and hedging opportunities. If interested in learning more about them, feel free to contact me.
Thanks for reading!
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