The Nifty 50, the so called “one decision” stocks ( “Buy!” ) of the 1970s was the first contemporary bubble I read a lot about. Oh, we had a cup of coffee’s worth of time in history class about the South Sea bubble and even Tulipmania, but I never really understood it until I looked at the Nifty 50, probably because so many of the names were familiar to me and to everyone in the US: Coca Cola, Johnson & Johnson, American Express, Procter & Gamble, Sears, Sears, Gillette, McDonald’s and more.
And then it all came tumbling down. Peaked in 1972 and stumbled along as stagflation brought it low, then came the OPEC oil embargo to put a knife through the heart. Some of the most well respected names in the market lost 90% of their value. It was a macroeconomic event writ large thanks to the turmoil of the early 70’s, but it would have happened anyway, perhaps in slower or less dramatic fashion, but it was one of those ‘out of control’ moments.
Flash forward to the dot-com bubble of the latter 1990’s, and lots of people knew it, they were just afraid to get off the train while it was still rolling. The AOL-Time Warner merger was announced in January, 2000, and the bubble began to burst in March or April, just a few months later. It was another of those ‘out of control’ moments that was bound to fail, but I can’t help but think it was the merger that made people sit up and say “This is nuts, there’s no way that stock is worth that much! And if that one is not, what about all these others?”
The Super Bowl of 2000 had 14 different dot-com advertisers buying a total of 21 commercial spots. A year later that number was: 3.
It is not beyond the imagination that this SpaceX IPO will cause the same sort of general head scratching (as this and other articles are doing), and possibly a rush for the exits once the initial allotments to “smart money” are allowed to be traded, probably to gullible retail investors. At which time, “pop”.
Nobody can say for sure, of course, but every party has a pooper and this market has been above the historic line for quite a while now, has weathered the latest oil shock, even the aftermath of a world wide pandemic in pretty decent shape. Unless we have reached “a permanent new plateau”, as seems unlikely, and given the economic strain of the bottom half of the country, the next several months should be, to quote the logical Mr. Spock, “interesting.”