Weekly Market Pulse: Have We Reached Peak Speculation?

Last week I was contacted by two clients seeking information about cryptocurrencies. One was my godson, 12 years old and just getting started in investing. So far, he’s bought Nintendo and Roblox (the latter against my recommendation but what do I know about video games?). But last week he said he wants to buy a cryptocurrency. He first mentioned Dogecoin but I sent him a link to an explanation of its joke origins and he laughed and said well maybe not that one. Let that sink in for a second. Dogecoin was too much of a joke for my 12 year old godson to buy. What does that say about the adults buying it? Anyway, I told him he needed to do some research and tell me why he wanted to buy a crypto and why he thought it would be a good investment. He hasn’t gotten back to me yet but we’ve been through this with each of his previous two investments so I’m sure he’ll do the work. I’m just trying to establish good investing habits early and the most basic is knowing what you own and why.

The second person who called me was an 88 year old lady, a dear friend who has been a client for nearly 30 years. She said one of her girlfriends was trading cryptos and making a lot of money. This client is very conservative but even she couldn’t resist at least finding out what all the hoopla was about. And she may be conservative but she’s a savvy investor. Her response when I explained bitcoin to her was, that’s it? As I said, pretty savvy; you don’t get to be a successful 88 year old investor without a healthy sense of skepticism.

Call me crazy but I think if the cryptocurrency mania has penetrated the 12 year old and 88 year old psyches, it may have just about spread as far as it can. I could certainly be wrong. I’ll let you know if any 6 year olds call me.

Speculation is rampant right now across a variety of markets. Forget for a moment why there is a lot of speculation; it doesn’t really matter. I think a lot of investors get hung up on the whys and don’t pay enough attention to the whats. The what right now is speculation and it’s everywhere if you just look. Blank check companies (SPACs) are taking companies public that the traditional IPO market wouldn’t touch, a joke cryptocurrency is up 5 times in less than a month and commodity charts have almost all gone vertical. Copper is up 12% in the last month and it’s lagging the field. I saw an article recently that argued, apparently seriously, that since the last two bear markets were so short all future ones would be too. And I saw this headline on CNN last week:

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Disclosure: This material has been distributed for informational purposes only. It is the opinion of the author and should not be considered as investment advice or a recommendation of any ...

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William K. 1 week ago Member's comment

Housing sales have been booming because of the low interest rates on those huge mortgages, and how long will that last? Only until it ends. And then??? And many CEOs are very good motivational speakers, which helps keep investors happy no matter what. So just like that old song, "That's the Way it goes, Where it ends Nobody Knows, (but if it does), That's the way it goes." (A very old song, from the early 1960's.)

So there could be a "correction", because nobody will call it a recession or a crash. Oh Well.