On the 21st anniversary of the end of the Dot Com Bubble to the exact day, we find ourselves in yet another market bubble. Like 2000, the signs are all around us, and they go beyond just the stock market.

There are certain behaviors, trends and mindsets that take hold during a speculative mania, but the common denominator is simple: a widespread desire to get rich by buying speculative assets and selling them quickly. People are always trying to get rich quickly, but the difference in a speculative mania is that everybody is trying to do it and everybody thinks that not only can they themselves do it, but that they can do it easily and quickly. Because they see other people doing it easily and quickly.

The Dot Com bubble of 1999/2000 was not just in the stock market. The bubble mentality not only led people to quit their jobs to become day-traders, but also to a collectibles craze with things like Pokémon Cards and Beanie Babies. I’ll never forget this image that really summed up the speculative mania of the late 1990s; it’s a divorced couple splitting up the Beanie Baby collection in a courtroom:

We laugh now, but that’s how serious people were about Beanie Babies.

In hindsight, the tell that society was in the grips of a speculative bubble had to be that people were going gaga over stuffed animals, believing they’d one day be able to sell them for hundreds of thousands of dollars. But it’s hard to see it in the moment.

In honor of the 21st anniversary of the Dot Com bubble bursting, I thought I’d list off the most telltale signs that we are once again in the grips of another speculative mania.

11. Tesla: Tesla only at #11? How can anything be more bubbly than Tesla? It’s trading at over 1,000x earnings! Well, there’s a lot of things out there nowadays that are way more overvalued than Tesla. At least with Tesla you’re actually buying stock in a company that generates earnings and is legitimately revolutionizing the automobile.

You’re just paying way too much for it. When a stock that already has an $80 billion market cap goes up almost 1,200% in less than a year and people don’t bat an eye, you’re probably in a bubble.

Before the Covid crash, Tesla was trading at about $950 a share. During the crash, it dropped all the way down to $355 a share, and then rallied back up to $900 a share in less than a year. Wait–that $900 price is after a 5:1 split, so actually that would be $4,500 a share on a pre-split basis.

When TSLA hit $2,500 a share in late August, Elon announced the split. Investors must’ve thought they were getting a discount on the stock because it ran up another 80% after the split. And it was up 618% before the split.

When stocks rally after splitting, that means retail is pouring in to the market. They look at stocks that split and think they’re now “more affordable” due to the lower share price.

And retail has most definitely poured in to the market, like the caddies taking over the Bushwood pool in Caddyshack:

I just wrote a post the other day elaborating my thoughts on Tesla. I like the company, and I want to find a reason to own the stock, but it’s just so richly valued. It may not be the most overvalued stock on the market today, but it’s damn close. And it’s also the most significant stock that is massively overvalued. None of the other tech giants are trading at anywhere near the P/E ratio Tesla is trading at.

TSLA is the defining stock of the post-Covid stock rally. Other stocks have had bigger gains, but TSLA became a cultural phenomenon this past year due to its face-melting rally. It got so big it not only got added to the S&P 500, but is also now the 9th largest company in the world. And that’s after a sizable dump in the share price.

At its peak, Tesla had a market cap of $821bn, which put it behind only Apple, Saudi Aramco, Microsoft, Amazon, Google and Tencent in terms of the world’s most valuable companies.

It entered 2020 with an $81bn market cap, and left 2020 with an $821bn market cap.

And I almost forgot to mention: Elon Musk briefly became the world’s richest man with a net worth north of $200bn due to the insane rally in Tesla stock.

The good thing for Elon is that he got a ton of free publicity this year. Everybody (especially people under 40) now wants to buy a Tesla, so even if the bubble bursts and Tesla shares go all the way back down to $70 again, Tesla is still the coolest brand in automotive.

Earnings per share for Tesla are actually down over the past year, but investors didn’t care as they bid the shares up twelve-fold.

When all is said and done, we’ll look back at Tesla’s insane ascent as an example of what happens when extreme bullish sentiment takes hold and gives way to irrational exuberance.

10. Bitcoin: Be honest–do you really think Bitcoin would be going bonkers if not for the overall bullish sentiment in speculative asset classes?

Even before the Covid crash, one bitcoin was worth about $9,000, a price that was pretty consistent with where Bitcoin had traded for the past 2-3 years. Since its massive rally in late 2017, Bitcoin traded sideways in a range between $3k-$12k. And even after the Covid crash, where Bitcoin plunged to about $3800, it got back up to $9000 in very short order and stayed around $9-10k for several months.

Until October:

Starting in October, Bitcoin began a meteoric rise that would take it to over $55,000, a gain of about 440%, and a total rise of 1,354% from the Covid bottom.

Now, I get the bull case for Bitcoin. It’s going to be the new global reserve currency, it’s not controlled by any government, it’s decentralized, it’s not subject to inflation, etc. But the euphoric sentiment on social media over bitcoin is getting unbearable. In a nutshell, it’s the smug overconfidence of the Bitcoin cultists. “Few understand this.” “Bitcoin fixes this.”

It’s borderline religious.

Got that? With bitcoin there is no more debt and there is no more environmental destruction. Bitcoin fixes everything. Inflation? Bitcoin fixes this. Erectile dysfunction? Male pattern baldness? Bitcoin fixes this.

It’s getting very New Agey.

They will call this year one. Every year after this will be denoted “A.B.”: After Bitcoin.

Look, they might well be right about the transformative potential of Bitcoin long-term. But it’s hard not to attribute most of Bitcoin’s massive rise this past year to the widespread bullish sentiment in the markets.

In other words, Bitcoin at $50,000+ feels like something you’d see in a bubble.

And we’re also seeing a spike in crypto MLM scams, too. When the dude from your high school that tried to sell you kitchen knives is now trying to sell you on forex and crypto trading programs, you gotta know something’s up.

9. DogeCoin: Piggybacking on the cryptocurrency craze was Dogecoin. The online Dogecoin community/movement is as blatant a pump-n-dump as you’ll ever find. I’ve spent some time in the online community and it’s literally just “hey if we all buy Dogecoin and hold it then the price can go up and we can all make money.” That and memes.

The funny part is that now due to its name-recognition, I actually believe Dogecoin has a great shot at becoming the most viable cryptocurrency in the world. I’ve written at length about Bitcoin and DogeCoin before, but the gist is that while Bitcoin is clearly the most valuable cryptocurrency in terms of market cap, Bitcoin is not well-suited to being a currency. It’s more like digital gold. Dogecoin, though, is uncapped (i.e. inflationary) and therefore far better suited to becoming a real currency that is exchanged all around the world.

Dogecoin is probably the most popular altcoin among “normal people,” i.e. the one that the average person on the street is most likely to have heard of. Even though Ethereum and Litecoin are bigger than Doge, most normal people don’t know what the hell Ethereum and Litecoin are. But they know what Dogecoin is. If somehow Dogecoin ever hit a dollar, or even just 50 cents, it’s basically a rival to the US dollar at that point. Mark Cuban just announced that the Dallas Mavericks are now accepting Dogecoin as payment. It’s being accepted more and more. Some dude in Florida recently paid for a car with Dogecoin. It may have started as a joke, but an awful lot of people are starting to take it seriously.

I actually think there’s a great case to be made for Dogecoin’s viability as a global currency. You go on a trip to Amsterdam, and instead of converting your dollars to euros, you instead just make your purchases with Dogecoin, which the seller can then either hold on to or trade for euros online. Of course, this would require Dogecoin to settle in at a stable price like a real currency. But it’s really not that far-fetched. Eventually some cryptocurrency is going to become globally accepted and ubiquitious, and right now Dogecoin is the most well-known. (Again, I’m not counting Bitcoin because I don’t consider Bitcoin a true currency).

Then again, a cryptocurrency based off a meme of a cute dog going up 3,500% in value to a $8 billion market cap in less than three months is exactly the kind of thing you’d expect to see when the world is in the grips of a speculative mania.

8. Zoom: It’s Skype. It’s FaceTime. It’s Google Hangouts. What am I missing here? Apple could squash Zoom in a nanosecond if it wanted to. It is a video conferencing app. That’s literally it. I get that it was a lockdown play and that the stock has come down some in recent months after peaking in October. But it still has an $89 billion market cap. At its peak price of $588 a share in October, its market cap was $159 billion. That is insanity. If it had that market cap today it would be the 70th largest corporation in the world. That’s a larger market cap than Wells Fargo, McDonald’s, Qualcomm, Costco and Boeing. Zoom is FaceTime. It’s not some revolutionary technology we’re talking about here. Video conferencing software has been around for decades. Yet somehow Zoom was trading at over 350x earnings.

I’ve always been kind of sketched out by Zoom, to be honest. It’s like all the sudden the pandemic starts and we go under lockdown and everyone is instantly on Zoom. I don’t know how it happened. I feel like I’m the only person in the world who didn’t know what Zoom was prior to March 2020. How did Zoom become the default program for video conferencing overnight? People are hitting you up like, “Let’s hop on Zoom,” and I’m just wondering why we can’t use FaceTime or Skype like we’ve always done. It’s like a memo went out to everyone in the country but me in March 2020 that Zoom must now be used for all video calls. The company has zero moat and does not deserve anywhere near an $89 billion valuation.

“But it has so much potential for tele-medicine!”

So does FaceTime. So does Skype. So do literally any of the hundreds of identical video calling platforms out there. And ZM is still trading at 237x earnings.

7. SPACs: IPO volume normally spikes around market peaks, as companies want to go public when the market is doing well. IPO volume in 2020 reached Dot Com bubble levels with over 400 IPOs in a single year:

Many of those companies went public via SPAC, aka a special purpose acquisition company, or a “blank check company.” Basically the whole point of a SPAC is to raise money through a market IPO, and then the proceeds of the IPO are used to finance either a merger or a full-scale acquisition of a private company with the end goal of taking the private company public.

SPACs are considered highly risky speculative investments, and most of them have insane volatility. Most of the time, when a SPAC goes public, the market has a good which company the SPAC was created to acquire. For instance, with Churchill Capital IV (CCIV), the long-running rumor was that they were going to merge with Lucid Motors, the high-end EV company, but it took a while for that to ever be confirmed.

CCIV went public on September 18, traded flat for several months, and then starting in January, spiked 556% in about 5 weeks, before dropping 67% in under two weeks. The merger with Lucid was eventually confirmed, but the stock ran up way too far based on the value of the underlying deal.

The risk with a SPAC is that they don’t ever get a deal done. SPACs are based largely on the star power of the founder of the SPAC. You need someone with big name recognition to be the face of the SPAC in order to attract investors and raise capital. This is why the New York Times recently wrote an article entitled, “Anyone Who’s Anyone Has a SPAC Right Now.” Shaq, A-Rod & J-Lo, Steph Curry, Paul Ryan, Jay-Z, Serena Williams–SPACs are the latests celebrity craze. Billionaire investor and early Facebook exec Chamath Palihapitiya has become a household name due to his association with numerous SPACs in 2020.

Here’s how it works:

Hypothetically, let’s say a SPAC prices at $10 a share, and raises $500 million in the public markets. If a celebrity adviser had negotiated 1 percent of that deal, they are rewarded with a stake in the company that is worth $5 million. But now let’s say the same SPAC also finds a successful merger candidate, brings in other investors and a deal is done at $10 billion. The celebrity’s 1 percent stake has netted them (on paper) a $100 million payday.

So you can see why SPACs are so attractive to celebrities. “I can make $100 million and all I have to do is attach my name to a SPAC? Deal.”

Barry Ritholtz weighs in on SPACs:

“What always happens with investors, no matter the asset class or the decade, somebody hits the lottery and everyone else piles in,” he said. “The SPAC enthusiasm is just investor behavior. People look at these as lottery tickets, and very often they’re not.”

According to NYT, SPACs raised $42 billion in just the first six weeks of 2021, which is nearly half the amount they raised in all of 2020. In 2019, SPAC deal volume was just $13 billion. The SPAC IPO count has skyrocketed to bubble levels:

This is how the SEC characterizes SPACs:

Per the U.S. Securities and Exchange Commission, a blank check or Special Purchase Acquisition Company (SPAC) is a “development stage company that has no specific business plan or purpose or has indicated its business plan is to engage in a merger or acquisition with an unidentified company or companies, other entity, or person. These companies typically involve speculative investments and often fall within the SEC’s definition of penny stocks or are considered microcap stocks.”

But when you’re a bubble, nobody cares about risk. They don’t think about risk, they only think about how much money they can make if all goes according to plan.

6. NBA Top Shot: Okay, get this: it’s like a trading card, except it’s not actually a card, it’s just a video file on your computer. People are buying videos of Ja Morant dunking, or Zion Williamson swatting a shot into the stands, and they’re selling them for not insignificant sums of money. Go check it out for yourself.

The most expensive Top Shot is a Ja Morant dunk with a $240,000 asking price. There’s at least 11 listings right now over $100,000.

I guess the value comes from the fact that there’s a finite amount of each Top Shot out there. See in the image above on the Ja Morant dunk how it says “only 2 listings”? That means there’s only two for sale on the open market. I don’t know (or really care) how many of that particular Top Shot were actually “made,” but I’d assume it’s a small number. So I guess that means it’s “rare” or “scarce.”

This is the kind of shit that happens in bubbles. It’s not just the stock market that goes insane.

Beanie Babies and Pokemon cards would not have become such massive crazes back in the late 1990s without the backdrop of the Dot Com bubble. The bubble mentality is contagious, and it often spreads to the collectibles market.

Now people are considering videos of NBA plays as collectible items, and they’re paying real money for Top Shots. I don’t know if there are actually any bidders on those six-figure Top Shots, but it wouldn’t surprise me if there were. I do know that some dude bought a LeBron dunk Top Shot for over $71,000 in January.

It’s not as if people actually think a video of Ja Morant dunking is genuinely worth $240,000. It’s that they think they’ll be able to turn around and flip it for more at a later date. It’s the greater fool mentality that takes hold during bubbles. People know it’s a bubble, they just think they’re going to be able to find someone dumber than them to sell to at a profit before the whole thing collapses.

But in the end, someone will be holding the bag. And one day, perhaps soon, he’ll be like “Damn, I really paid $200,000 for a video clip that anyone can just look up on YouTube.”

5. NFTs/Selling tweets: NFTs (non-fungible tokens) are another aspect of the collectibles craze taking hold. NBA Top Shots are NFTs in the sense that they’re “unique,” or limited in supply. The reason Top Shots are perceived to have value is because there’s only a certain number of each Top Shot out there. I guess certain Top Shots are valuable for the same reason a 1909 Honus Wagner baseball card is worth millions: scarcity. NFTs are essentially the means by which to certify you as the owner of a given digital asset, like a Top Shot, or artwork. There’s digital artwork already being sold for millions.

Or a tweet. Because apparently people are now selling their tweets. Jack Dorsey, the founder of Twitter, is selling his first tweet from 2006, which I’d assume is the first tweet ever, and it has a high bid of $2.5 million.

$2.5 million dollars for a tweet.

The tweet is in the form of an NFT, apparently guaranteeing its scarcity (“one of one”) and authenticity, as well as essentially serving as a bill of sale/title deed (NFTs use blockchain technology to do this).

I guess the allure here is so the buyer can say, “I own the first-ever tweet.” Even though he wasn’t the one who sent it. And anyone can just take a screenshot of it. I really don’t understand the concept of digital collectibles, to be quite honest. People are buying and selling tweets on this site, Valuables, and you can see that some tweets are selling in the thousands:

But with NFTs, you don’t actually own anything physical. At least with baseball cards, you have the actual physical card that you can hold in your hand and look at. But NFTs are just files on your computer or phone. You open them up and you look at them on your laptop or smartphone, and you go, “Yeah, that’s mine.”

I guess I just don’t understand the idea of digital scarcity. It’s all arbitrary. Like, if I see some digital artwork online and I like it, I can buy the NFT for it and be THE sole owner of it, but then other people can just right-click and save image. And they’ll have the file saved to their phone or laptop, just like I do. Only, I paid money for it.

“But the NFT makes you the real owner of the original!”

But, like, who the fuck cares?

It’s artificial scarcity. And it’s not like you were the one who even made it in the first place. “I own the first tweet ever!” No, Jack Dorsey does because he made the tweet. “I own this LeBron James dunk!” No, you’re a random dude from LA. You own a video of something LeBron James did in real life. Congratulations.

“I own this original artwork!” Cool, so does anybody else who takes a screenshot of it.

The reason physical art is so valuable is because it has genuine scarcity. There’s only one Mona Lisa because Da Vinci only painted one Mona Lisa. That’s it. There’s only one, there will only ever be one. His hands painted actual brushstrokes on a real canvas centuries ago, and it took him a long-ass time, and the end result of his work was the Mona Lisa. He only made one Mona Lisa, and he’s been dead for 500 years, so there will never–can never–be another. Real art has real scarcity.

And you can show-off real art in your house to your guests. You can’t show off digital art. If you just walk around showing everybody your digital art on your phone that you paid thousands of dollars for, people will just think you’re a douchebag.

I just don’t get it. I read several articles to try to “educate myself,” but I still don’t get it. I understand the concept, but I fail to see how any of this stuff has any value. That hasn’t stopped people for paying millions for digital art, and Top Shots, and all kinds of other fake-scarce digital collectibles. Go see all the NFTs at Open Sea for yourself. Apparently their transaction volume is spiking:


(Also: how long until e-thots are selling their nudes as NFTs to their OnlyFans simps? Porn is the inevitable endgame for NFTs, right?)

4. Meme Stock Frenzy: Blockbuster stock, which apparently still exists, went up 6,000% in five days despite the company having filed for bankruptcy in 2010. There’s only one BlockBuster remaining in the world, and it’s in Bend, Oregon. The company is dead and buried, and yet the stock went bananas in late January 2021 because that’s the kind of shit that happens during bubbles. When GME started going vertical, a bunch of other failing companies did, too: BlackBerry (BB), AMC (AMC) Nokia (NOK), and of course BlockBuster.

Blackberry stock went up 535% from November to February. AMC went up 986% in three weeks despite being on the verge of bankruptcy. Nokia went up 152% in a two week span, and then fell 60% over the next three weeks, giving up all of its gains.

Now, in fairness, it’s not like these stocks were going up because people thought they were all about to make massive comebacks. They went up because people noticed that they, like GameStop, were heavily shorted. It was all part of the short squeeze frenzy. People just figured they’d be able to buy in to these skyrocketing stocks and make a quick buck. And I’m sure a lot of people did profit.

But there’s a lot of people still bag-holding NOK at $9 a share. I promise your fellow apes are coming back for you. Some day.

3. Penny Stock Madness: In December, trading volume spiked in penny stocks (OTCs) with over 1 trillion shares changing hands in total. That may not sound like a lot for stocks that often trade at less than a penny, but average monthly volume in 2020 for the penny stock markets was under 250 billion consistently:

By February trading volume got up to nearly 2 trillion. I have no idea if that volume surge has continued into March, but the penny stock craze is a tell-tale sign of a market bubble. Normally people avoid penny stocks due to the ridiculous volatility and risk, but nowadays people have a voracious appetite for risk. They don’t give a shit about the downside potential, they only think about the potential GAINZ they could make if the penny stock moons.

It should be considered as a warning sign that newbies and people who generally don’t fully understand the concept of asymmetrical risk/reward potential are gravitating to the penny stock market.

2. “🚀 Stocks only go up 🚀”: You couldn’t find a single phrase that better encapsulates the general public sentiment during stock bubbles if you tried. That is literally the entire mentality of a stock bubble: “It’s just gonna keep going up.” I know the phrase started as kind of a joke on Reddit, but if you’ve been over to Wall Street Bets and Finance Twitter, believe me, people do not think it’s a joke. There are tons of people out there who truly believe that stocks only go up. And now anyone who dares to suggest that the market might do anything other than moon is dog-piled and called a “gay bear,” or, to avoid censors, they just use the emojis: 🌈🐻. The phrase “stocks only go up” started spiking on Google Trends last spring and reached its peak in early December 2020. This is classic bubble behavior: widespread and overwhelming bullish sentiment, while bears occupy a rung on the social hierarchy below lepers and criminals.

Bull markets turn into bubbles when retail starts pouring into the market, and there’s no better example of this than the fact that “stocks only go up” is something that people these days are saying and believing. TikTok market gurus are a dime-a-dozen now (follow TikTok Investors on Twitter to see them all) telling you how to turn $1,000 into $1,000,000. A lot of these people predictably blow up their accounts:

Then again some of them are killing it. And good for them, I have nothing but respect for people who make tons of money in the stock market and escape the rat race. It’s literally the dream. But lots of people are now convinced it’s easy to do it. I mean, dude, all you have to do is gain 3% a day for a year and boom, you’re rich. It’s that simple.

When you hear people talking like that, you know things are getting bubbly.

1. GameStop: Could the #1 spot really be anything else? Of all the things this bubble period will be remembered for, GameStop stands the tallest.

Shares of GME went up over 12,000% in six months, from August to February. Between January 8-28 alone the stock shot up 2,586% in a coordinated attempt by the Wall Street Bets subreddit to force a short squeeze. It’s one thing to buy GME to get in on the short squeeze, but the initial craze over GME began with people genuinely talking up the company’s prospects for a turnaround after Chewy founder Ryan Cohen bought 10% of the company, joined the board and released a public letter claiming he was going to turn GameStop into the “Amazon of gaming.” This was and is never going to happen. GameStop, despite the strong nostalgia value for basically every guy under the age of 40 (myself included), is a failing brick-and-mortar retailer in a digital world. It’s a relic of the mid-2000s.

Once WSB got fully on-board the GME hype train and the stock started spiking in December, things just got entirely out of hand. GameStop mania went mainstream and suddenly everyone was talking about GameStop and stonks and diamond hands. The stock got so crazy that eventually all the online brokers basically just banned people from buying meme stocks because Wall Street Bets was on the verge of taking down at least one hedge fund, probably more, and possibly starting a domino effect that could’ve brought Wall Street itself down.

Don’t get me wrong, I’m totally on WSB’s side; fuck the hedge funds. They bitch and cry to the SEC the one time retail starts manipulating a stock, yet literally these guys’ bread and butter is manipulating stock prices. They go on CNBC to pump up stocks they’re long on, and tank stocks they’re short on. They set price targets low when they want to buy a stock on the dip, and then once they’re all-in, they jack up the price targets to send the stock to the moon. They naked short sell stocks and completely destroy the underlying company. Wall Street is institutionalized corruption.

But still, there’s no greater sign of the times than GameStop. The chart says it all:

And as you can see, it’s still going! They haven’t given up on it, even though it appears all the hedge funds have wisely closed out their short positions.

If there’s anything good that can come of the GME mania (other than the overnight millennial millionaires who YOLO’d their life savings in at $14), it’s that retail now knows how to coordinate and hammer Wall Street short sellers. You can easily find data on what percent of a given stock’s float is sold short, and now the internet has the blueprint on How to Blow-Up a Hedge Fund.

It really couldn’t have been any other company than GameStop. You’ve got millions of young guys stuck at home, trying to find some way to pass the time, so they take up stonk trading. And then they find out some asshole hedge funders are trying to destroy GameStop, a store inextricably linked to their childhoods. It’s where they spent all their birthday money, it’s where they hung out, it’s where they got fleeced selling their used games, it’s where they tried to convince the clerk to sell them a copy of Grand Theft Auto IV despite not being old enough to buy M-rated games. For millions of guys, GameStop was a big part of their childhoods, and the company holds sentimental value to them. Wall Street picked the wrong retailer to short.

They pissed off a whole generation of gamers and wound up sparking possibly the first-ever populist uprising carried out via the stock market. The hedgies may have quashed the rebellion for now, but now millions of people know that if they operate in coordinated fashion, they can turn Robinhood into a financial weapon of mass destruction to unleash upon the elites.

Fitting that GameStop’s motto is “Power to the players.”

I don’t know when it’s going to end. But it’s going to end at some point, probably soon. It may have already ended.

And it’s going to end badly.

Hopefully you managed to make some money during this speculative craze. If not, hey, you can’t put a price on memories. Right?

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