Here Comes the Climax

“A bull market is like sex. It feels best just before it ends.”
– Barton Biggs

I knew this girl in college who really liked to be bitten right before she, you know… took a final. This past week’s $19 billion Facebook binge felt like the beginning of a climaxing of sorts – the type of deal that usually comes to punctuate the end of a great bull market (think AOL-Time Warner, the LBO of Equity Office Properties) or at least speeds up the gallop into the end. It’s either the sound of the curtain dropping or it’s the gun fired just as the dogs round the last lap on the racetrack.

Either way, it’s ominous as hell to those of us with a memory. Facebook at 70, Tesla at 200, Netflix at 450, Google at 1200, it’s all of a piece.

Jeff Mortimer of BNY Mellon Wealth Management tells Bloomberg News about some similar activity he’s seeing – namely the fact that stocks that lose money are the new leadership group on The Street:

Two things explain why the biggest gains in the U.S. stock market this year are coming from companies without profits, according to Jeff Mortimer of BNY Mellon Wealth Management: Greed, and fear of missing out…

Unprofitable companies such as Zynga Inc. and FireEye Inc. are leading gains in the Russell 1000 Index. The Nasdaq Biotechnology Index is up 25 percent in the past 10 weeks, the most since February 2012, data compiled by Bloomberg show. Less than a third of its 122 companies earned any money in the last 12 months. Marijuana shares, which trade on venues with less stringent reporting requirements, are among the most active.

“In this backdrop of human emotions, which begins to take over, it’s one of greed, it’s one of willing to pay for something that will happen in the future and being afraid that one might be left behind.”

I’ve seen this kind of thing before.

I was around in ’99 when they started taking companies public for billions of dollars just because they had the word “Linux” in their names. I saw 3Com take 5% of its Palm subsidiary public in 2000 and watched as that 5% little stub became worth more than all of 3Com – the parent company that owned the other 95%, plus its own business.

We’re not quite there yet, but we’re well on our way. Anyone who tells you otherwise or pretends that this is normative, rational behavior is a dangerous idiot with no sense of market history.

Source:

Greed Turning Losers to Leaders in Russell 1000 Index (Bloomberg)

This content, which contains security-related opinions and/or information, is provided for informational purposes only and should not be relied upon in any manner as professional advice, or an endorsement of any practices, products or services. There can be no guarantees or assurances that the views expressed here will be applicable for any particular facts or circumstances, and should not be relied upon in any manner. You should consult your own advisers as to legal, business, tax, and other related matters concerning any investment.

The commentary in this “post” (including any related blog, podcasts, videos, and social media) reflects the personal opinions, viewpoints, and analyses of the Ritholtz Wealth Management employees providing such comments, and should not be regarded the views of Ritholtz Wealth Management LLC. or its respective affiliates or as a description of advisory services provided by Ritholtz Wealth Management or performance returns of any Ritholtz Wealth Management Investments client.

References to any securities or digital assets, or performance data, are for illustrative purposes only and do not constitute an investment recommendation or offer to provide investment advisory services. Charts and graphs provided within are for informational purposes solely and should not be relied upon when making any investment decision. Past performance is not indicative of future results. The content speaks only as of the date indicated. Any projections, estimates, forecasts, targets, prospects, and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others.

Wealthcast Media, an affiliate of Ritholtz Wealth Management, receives payment from various entities for advertisements in affiliated podcasts, blogs and emails. Inclusion of such advertisements does not constitute or imply endorsement, sponsorship or recommendation thereof, or any affiliation therewith, by the Content Creator or by Ritholtz Wealth Management or any of its employees. Investments in securities involve the risk of loss. For additional advertisement disclaimers see here: https://www.ritholtzwealth.com/advertising-disclaimers

Please see disclosures here.

What's been said:

Discussions found on the web
  1. click here commented on Sep 14

    … [Trackback]

    […] Information on that Topic: thereformedbroker.com/2014/02/24/here-comes-the-climax/ […]

  2. Eat Verts commented on Sep 21

    … [Trackback]

    […] Find More on on that Topic: thereformedbroker.com/2014/02/24/here-comes-the-climax/ […]

  3. w88 commented on Sep 21

    … [Trackback]

    […] Read More on on that Topic: thereformedbroker.com/2014/02/24/here-comes-the-climax/ […]

  4. immediate edge commented on Sep 28

    … [Trackback]

    […] Read More Info here on that Topic: thereformedbroker.com/2014/02/24/here-comes-the-climax/ […]

  5. 배트맨토토 commented on Oct 06

    … [Trackback]

    […] Find More to that Topic: thereformedbroker.com/2014/02/24/here-comes-the-climax/ […]

  6. Facebook Marketing commented on Oct 10

    … [Trackback]

    […] Find More on that Topic: thereformedbroker.com/2014/02/24/here-comes-the-climax/ […]

  7. replica watches commented on Dec 15

    … [Trackback]

    […] There you will find 37494 more Info to that Topic: thereformedbroker.com/2014/02/24/here-comes-the-climax/ […]

  8. Regression testing commented on Jan 17

    … [Trackback]

    […] Info on that Topic: thereformedbroker.com/2014/02/24/here-comes-the-climax/ […]

  9. replica watches commented on Jan 23

    … [Trackback]

    […] Information to that Topic: thereformedbroker.com/2014/02/24/here-comes-the-climax/ […]