Kevin Duffy on the 2000 and 2022 tech busts

The great tech bust of 2000-02 could not take place if not for the boom that preceded it. And quite a boom it was.  As Grant’s Interest Rate Observer reports, U.S. venture capital investment doubled in 1999 and then again in 2000 to a record of roughly $125 billion (1.2% of GDP).  By comparison, the 2021 vintage doubled from 2020 to $342 billion (1.4% of GDP); worldwide figures were twice as large: $643 billion. 

The initial casualties, in both cases, were money-losing tech companies (ARKK is our present-day proxy). Both busts were sharp and unequivocal.  Both times investors early on failed to connect the dots to the suppliers of uneconomic ventures.

~ Kevin Duffy, "Summer of 2000: Déjà vu all over again," The Coffee Can Portfolio, September 18, 2022

Chris Pavese on the disconnect between stock prices and economic fundamentals

While the many oddities within the market are puzzling enough, the most striking aberration is the gap between asset prices and economic fundamentals. To paraphrase Jeremy Grantham, today’s market is valued at levels only seen maybe 10% of the time, while the economy is bouncing around at recessionary levels only seen maybe 10% of the time.

~ Christopher Pavese, CIO of Broyhill Asset Management, The Broyhill Letter, August 2020

Jeff Ross on the disconnect between the stock market and economy

It feels like a patient with terminal cancer who goes and spends a million dollars at a plastic surgeon's office to look as pretty as possible with only a month or two to live.  And that's what I feel like the stock market is doing right now.  It think it's being completely puffed up and inflated superficially by all the things that the Treasury and the Federal Reserve are doing, but the fundamentals are horrendous.

~ Jeff Ross, Vailshire Capital Management, "Robinhood Traders Gamble on Bankrupt Companies," Stansberry Investor Hour, 49:00 mark, June 11, 2020