Speculation is Back to Dotcom Bubble Euphoria

The price being paid for many high growth, stocks with no profit is back to the Dotcom Bubble extremes. The Fed (US Federal Reserve Bank) has spiked the punch bowl repeatedly with massive bond purchases that have driven rates down making bonds uncompetitive for capital investors. This thus causes liquidity to flow into stocks and cryptocurrencies.

If, and when, the Fed reverses course and rates rise and liquidity is withdrawn, highflying, high price-to-sales, stocks are likely to collapse. See the Dotcom Bubble burst for a lesson on how this might end.

Bubbles last longer than expected by rational investors and burst faster than speculative traders can fathom. So while we don’t know when this bubble will pop, we are being cautious and avoiding the more speculative high-growth stocks in the market.