In the last two years of the 1982-2000 bull market, the NASD soared from 3,000 to 5,000, a mere 24 months. Maximum mood occurs at the end of moves up and down. The excitement focused on a new creation, the dot.com stocks. Companies were capitalized overnight with the then universal belief that commerce would shift from so-called brick and mortar stores to on line shopping. The mania peaked in March, 2000. Two years late the NASD had lost 75% of its value sinking to about 1,500. A new term was coined, the burn rate. That measured the amount of time an Initial Public Offering would last a dot.com. Divide the money raised by the monthly expense and the result was a good approximation of just how long the firm would last. By NASD 1,250 most of the dot.com were kaput, gone, no more garden.com. Appliance.com sold its remaining inventory to long time retailer Oscar Snowden in Austin.
I sense the same thing is happening now. The at home shut-in created by COVID launched another mania for get rich quick stock investing. Netflix lead the way with on-line streaming on the internet. Sign up for a monthly fee ($9.99-19.99) and watch on your computer, phone, or tablet. NFLX shares soared from $100 in 2017 to peak last fall at $700. Whoops, the dot.com sell-off strikes back. Since then one can buy back at early 2018 levels for just $213.That is a loss of 70% over six months. Yes we have inflation at the grocery store but deflation on Wall Street. That wiped out billions of market value. Facebook has a one day drop from $330 to $240 in early February. Google is down from $3,000 to $2,450. Peloton seems to have set the record, down from $170 to $20 since January. The NASD is down from its November high of 16,000 to 13,000 today. The recent rally ended at 14,500, the downtrend resumes. Remember social mood governs stock prices. It is unremembered and internally generated. All these examples are Exhibit One that social mood rules Wall Street.
It works the other way as well. Two years ago people were paying to store oil priced at near zero. Today oil trades over $100. Halliburton soared form $5 to $40, but down 7% Thursday. Schlumberger had a similar run from $12 to $45, down 4% Thursday.
Team Biden has been quick to call for Putin’s ouster with no pathway available to do that. Such off the cuff remarks only embolden an autocrat. Will President Biden ever declare he is in this to see Ukraine win, or just lob nerdy comments at the new Stalin of our era?
