with Anthony Newcombe
Topic: That ‘silly, crazy stock market’ this month
Category: Economics, Financials, and Social Psychology
So, unless you’re somewhere between a rock and a hard place, you probably spent some of the past few weeks rummaging through the onslaught of news concerning the stock market. In just a few days, there were swings from single digits to over thousands of percentage gains. And the most amazing part is these public companies did absolutely NOTHING different to cause this phenomenon. In fact, some of the biggest debt funds pounced on this situation to dump old, crappy positions they had – and even profited in some cases!
For those of you who don’t own any stocks, I hear you, who cares, right?! But, for the rest of you (us), it caught our attention because many of us of a certain age have probably been caught up in something very similar to this in “our investing past.” If your stomach didn’t roil a bit, and your brow didn’t raise, you must be a first-time trader with no scar tissue built up from the past.
If you recall in spring, 2001, there was a ton of hoopla regarding “surging dotcom stocks.” It seemed like you didn’t even need a drop of ability to make good picks during that time. Just buy, buy, buy (Thanks, Jim Cramer!) Then, all of sudden, BOOM! The markets tanked, and everyone ran for the hills – sphinctered-up, shirtless, and stuck!
Now, I’m not naïve enough to think that the ‘dotcom bubble of 2001’ is anywhere near the same as the last two weeks have been, but I tell you, when you see some of the publicly traded stocks like GameStop (GME) and AMC Theaters (AMC), it forces a reflection moment. These stocks went from (practically) zero to amazing heights – and then returned back to earth again – in mere days. Unfortunately, it rhymes with some of our tortured past (like: 1987’s Black Monday, spring 2001, and September 2008). I agree, all had different characteristics that we won’t get into, but each also created sheer terror in the marketplace at the time!
Thankfully, for today at least, it seems like the storm has mostly passed (did it?), and we’re back to the “old, regular froth” that we’ve become accustomed to from the past several fiscal years. We’ll just keep our chinstraps fastened, our eye on the ball, and continue onward, right? I mean, what else can we do? Happy investing, folks!