From Cathie Wood to Elon Musk, a new generation of ‘influencers’ has emerged in the markets … but investment veterans know what to expect (and especially that there isn’t much’ something new under the sun).
The lessons of the past have turned into a curse,. Some 40% of shares in Russell 2000 (which unites small US stocks) have lost money; no need to add zeros. However, these companies are often the ones which register the greatest capital gains.
What should we think ? What to think about non-fungible tokens (NFTs) and cryptocurrencies? What to think of Beeple?
What about MicroStrategy, then? The company’s revenue had been dropping since 2014. Then, last year, it bought more than $ 1 billion worth of bitcoin … and its share price rose + 400%.
What is the meaning of that? Has the business become a convenient way to own bitcoin without having to remember your password?
But how can investors be sure MicroStrategy won’t forget theirs?
During the dot-com bubble, the CEO of MicroStrategy, Michael Saylor, had uttered a phrase that has remained famous: “Information wants to be free. Then, in 2000, he was fined $ 8 million to the SEC for overestimating the company’s profits.
How do investors know he’s not lying about bitcoin today?
Experience vs. Youth
But that’s the kind of question a veteran would ask.
Young investors trust. Older investors are looking to verify. They heard too many claims that turned out to be false… they saw too many bubbles burst… and trusted too many unworthy people.
Today’s novice investors have their own methods of market valuation… and their own gurus – now called “FinTwit influencers” – to help them.
Elon Musk, for example, was born in 1971. He was only nine years old when the great bull market in stocks and bonds began. And he was born in South Africa. But his influence is such that he only has to mention a company whose name resembles that of another company … and the two will see their price double in a few minutes.
Chamath Palihapitiya – the so-called “King of SPACs” – was born in 1976 in Sri Lanka. He started amassing fame and fortune only in 2007, when he joined Facebook. He now has both to not know what to do with … as well as 1.4 million followers on Twitter.
Cathie Wood,, is not that young… but she must be the Henry Blodget of the 21st century tech bubble.
Can’t remember Blodget? Do you think “influencers” were invented yesterday?
No, dear reader, influence is one of those recurring things… one of those things that age may be better able to recognize than youth.
Blodget was a young financial analyst in the 1990s. In 1998, he said that Amazon – which at the time was worth $ 240 a share – would soon climb to $ 400. This has indeed been the case. Blodget then became a peerless influencer, making appearances on TV, touting his assortment of dot-com values.
Then the dot-com bubble burst in 2000, and former New York Attorney General Eliot Spitzer (who would later fall out of favor himself) sued Blodget for stock market fraud.
Blodget had to pay four million dollars and was banned from trading for life. From now on, it is Elon, Cathie and Chamath who are in charge of the influence.
And the veterans know how it will end …
For more information and advice like this, it’s here and it’s free