“We will not have any more crashes in our time.” – John Maynard Keynes, leading British economist, in 1927
“Stock prices have reached what looks like a permanently high plateau. I do not feel there will be soon if ever a 50 or 60 point break from present levels, such as (bears) have predicted. I expect to see the stock market a good deal higher within a few months.” – Irving Fisher, Ph.D. in economics, Oct. 17, 1929
The lesson from history is this time is never different. Another lesson is never believe the “experts” who benefit from the existing bubble staying inflated and have financial incentives to help inflate it to greater proportions by lying. I wonder whether Keynes and Fisher were even slightly embarrassed when the market bottomed in 1932, 89% below its 1929 peak. Probably not. “Experts” just move onto their next grift.
The chart above shows multiple manias in the last sixty years where market bubbles formed over several years, only to collapse by 50% to 80% after the mania subsided and the hype machine ran out of the “expert” hot air. The current Magnificent 7 mania has put the all the other manias to shame. The stocks are up by a factor of 30. By comparison, the Nasdaq 100 went up by a factor of 12 before the dot.com collapse. The Magnificent 7 ten year share price increases are: Amazon +1,027%, Apple +1,294%, Google +586%, Meta +1,011%, Microsoft +1,254%, NVIDIA +38,130%, Tesla +3,993%.
I wonder if the stock pumpers who came up with the Magnificent Seven title know it is from a classic 1960 western, starring Yul Brynner, Steve McQueen, Charles Bronson, James Coburn, among others. I also wonder whether they know the majority of the Magnificent Seven were slaughtered in a shootout at the end of the movie. Let’s hope the same fate doesn’t await these “invincible” stock cowboys.