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  • Writer's pictureMAC10

Late Stage Parabolic Tech Bubble

What we are watching in real-time is another generation of young investors (and many old, who should know better) about to get wiped out by the second massive Tech bubble in ~20 years.

As I write, Tech stocks, primarily the largest ones, are going late stage parabolic in an extreme manic mode that exceeds even the December 2021 prior all time high.

I have yet to understand why investors and observers consider vertical markets to be "bullish". It can only be bullish for those who exit their positions before they come crashing down. For the majority, this type of rampant speculation can be nothing but bearish.

I would point out that this second run to all time highs has yet to be confirmed by the largest exchange of growth stocks - the Nasdaq. It too is a market cap weighted index, however, the many thousands of stocks that are nowhere near their all time highs are offsetting the few mega caps that are sky-rocketing.

We saw the same thing back in Y2K. First the majority of stocks peaked and then a handful of the most popular mega caps made new highs. The broader market never made a new high. As a newly reformed blogger who is struggling to show all sides of markets, I have to say that this current belief that diversification is now "obsolete", was also the operating hypothesis back in Y2K. Yes, it WAS obsolete all the way up, but then it came back into fashion very quickly on the way down. The "Magnificent 7" are merely the latest incarnation of the "Four Horsemen of Tech" circa Y2K, which were Microsoft, Intel, Cisco and Dell. Those were the "must own" stocks of the day. And they were not spared the fallout once the second rally ended.

I highly doubt the broader Nasdaq will make a new high this time either. As we see the second leg down was BRUTAL.


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