Bitcoin, Tilray, Tesla and the rest: Bill Bonner continues his exploration of the follies and illusions that reign in the investment world right now.
We continue our exploration of the reasons why the authorities cannot guarantee a bright future (first episode here… and second episode there)…
… And today we are dealing with a particularly difficult subject: people are more and more suspicious. Mostly.
A few low-fronted idiots force Capitol Hill entry into Washington and it’s called an attempted coup.
Russia and China are up to something… for sure… we just don’t know what.
As for counterfeit money… people depend on it now.
Does it really make sense to give people aid checks? Previous generations would have found this absurd… but the current generation takes it for granted.
People are waiting for bailouts… allowances… and they get upset if all that doesn’t come.
Worse yet, they plan their existence around the bubble. They depend on the price of bitcoin to build their dream home. They need low interest rates – zero, in other words – to refinance their mortgage and other debts. They expect to retire early thanks to their cannabis values.
They think that if they all close their eyes and wish hard enough, all of their absurd dreams will come true.
Dot-com and skepticism
Moreover, they do not appreciate that we dare to contradict them.
We remember that in 1999 we suspected that the dot-com revolution was more akin to the invasion of the Capitol by a group of madmen than a real revolution. Readers have written to us to bitch and laugh. They were counting on their dot-com profits.
Again, in 2007-2008… nobody wanted to hear that “house prices don’t always go up”. Back then, the average American home was selling for more than the average person could afford.
Yet, many believed they had the right to “an ATM in their room”. They would buy houses, take out mortgages, then “pull out”… and live with them.
Here again, we have the advantage of being behind the scenes of a news company teeming with analysts and advisers… to which are added the comments of thousands of readers.
Many of them – even those in their head – are convinced that these stock prices, especially for techs, represent a “New Era”, or that “$ 1,000 billion” companies will make True Believers rich.
Maybe we are too old. Or maybe the True Believers are too young! Most of them are under 40, which means they were born after the end of the last big bear cycle (in 1980).
Tesla – worth $ 10? Inconceivable. Blockchain – nonsense? Impossible. The stimulus policy – wrong… silly… and futile? So come on… you’re kidding, aren’t you?
No, we’re not kidding. Now we see that a sort of delusion has spread to the whole structure of capital.
Take individual actions – GameStop, Tesla and Tilray come to mind. No sane investor would think that their stock market valuations represent a fair calculation of future income deducted from present value. All of these companies are losing money… and will probably always lose money.
Tilray – seriously? What is a business that produces nearly half a billion in losses on just $ 200 million in sales value? Nothing. Zero. What a slab.
However, stoned “investors” have attributed to it in recent days a market value of more than $ 10 billion. What can we say? It’s flat …
Or look at bitcoin. At the start of its existence, people saw it as a bet on a new monetary system, in which cryptocurrency – despite having no physical existence, but limited by mathematical magic – would prove to be superior. so.
This could still prove to be true …
Or it could turn out that the evolution of bitcoin’s price is just one more cloud of smoke coming out of the Fed’s Vesuvius. When the latter explodes… Bitcoin could disappear at the same time.
For more information and advice like this, it’s here and it’s free