20 Years Later, We’ve Got “Irrational Exuberance” Again - It’s Called “To the Moon”
For all us grizzled old survivors of the Dotcom 1.0 implosion in the fall of 2000 - which led to the rush of capital to the real-estate market, that bubble and the crash of 2008 - the wild stock market swings of the last 18 months is looking WAY TOO FAMILIAR.
Over on Vice, an investor is calling out the disconnect, and giving it a name: religion. The current crazy investments in crypto and Tesla are not driven by reality, but by BELIEF.
We started this conversation by talking about the religion of Elon Musk. Do you get the sense that he’s sort of using these people or that he truly believes in this?
My instinct is—in the same way that a good Sunday morning preacher gives people a community and hope—he has, in the case of SpaceX, delivered real teams of people that have delivered technologically, competitively advantaged engineering marvels. There’s very little to criticize about SpaceX. (Notably, it’s a private company.) In the case of Tesla, you have millions of customers that are very happy. You have a minority of customers that feel like they were misled. And you have an entire tribe of investors that are true believers and a minority of people that are saying the emperor has no clothes. I don’t know what Elon truly believes. But I know that that number of true believers in Elon and the messages that he’s been putting out are not going anywhere. And I would say I massively underestimated the power of religious belief.
I had a front-row seat for this back in 1999 and 2000. It’s what made me freak out so much in 2006 & 2007, when I saw the real-estate market doing the SAME FUCKING THINGS that the stock market did.
Basically, the “Bigger Fool” theory is now in full swing. People are buying stocks and crypto and NFTs on the belief that someday, somehow, some bigger fool will come along and take them off their hands for profit!
We live in irrational times. But that doesn’t mean we have to be, long-term, as irrational as everyone else.
If you’ve got anything like an IRA or 401(k), now is the time to take a hard look at the companies that are in it.