“Just Shut Up and Buy”: But Hype-Stocks & Cryptos Crashed

It works until it doesn’t. Now all eyes are on housing.

By Wolf Richter. This is the transcript of my podcast of last Sunday, May 23, THE WOLF STREET REPORT.

The market philosophy and the overpowering strategy on how to approach the markets since last summer – and I mean the stock market, the housing market, the crypto market, the junk-bond market, and a bunch of others – was summarized eloquently for all eternity: “Just shut up and buy,” the guy said.

For a long time, I mean for months, this strategy worked, everything was going completely crazy, and people kept changing metrics to explain that this was the new normal, that this is how it would be from now on. It became a “raging mania” – again one of those highly accurate technical terms – and it practically didn’t matter what you bought, and at what ludicrous insane price you bought, because as long as you bought, you made money.

But then, the logic of “just shut up and buy” broke somewhere near February 12. Many of the most hyped segments of the whole rigamarole started cratering. We’re talking IPO stocks such as Airbnb, which is down 39% from the peak, Zoom, which is down 46% from the peak, Palantir which is down 53%, Snowflake which is down 45%, and many others…

EV stocks started cratering too, including Tesla which is down 35% from the peak, and SPACs – the special purchase acquisition companies – and especially the EV SPACs that are down 50% and 60% and some over 70%, such as Quantumscape, and a few are down over 80%, such as super-hype-nova Nikola, which is down 87%…

Or media-darling Cathy Wood’s ARK Innovation Fund which is down, well, only 34%…

And real estate outfits such as Compass, which had its IPO seven weeks ago, is down 37% from the peak on the first trading day, and Redfin which is down 47%. And Zillow, which is now flipping houses, is down 45%.

And there’s another market philosophy and overpowering strategy on how to approach the markets: “Just buy the effing dip.”

In these segments, people did just that, and they bought the effing dip, or rather every plunge that the standouts such as Nikola performed, and every time they bought the effing dip, shortly thereafter they got run over by another and even bigger effing dip. At some point, this is starting to hurt.

In other words, there is a bloodbath going on in these segments. And this bloodbath has been deepening and widening, and their market capitalization is in the billions of dollars, or hundreds of billions, such as Tesla, and the damage has started to bubble to the surface ever so gently even in the overall stock market indices though they track many trillions of dollars in stocks.

The Nasdaq is down only about 5% from its high, and the S&P 500 has stalled since mid-April and on Friday was down just 2% from the high. So people who are invested in the overall stock market have not felt the pain. But others that chased after the biggest super-hype-novas of the moment are getting crushed one stock at a time.

That’s how broader problems in the stock market start out.

Then there is the entire crypto space. There are now well over 5,000 cryptos. There are more cryptos than stocks. Everyone is popping them out, and there are new ones every day. I might make my own crypto too pretty soon just to properly mock the whole thing.

Well, that whole thing was once worth over $2.5 trillion, $2.5 trillion being nothing to mock, even today when we’re throwing the trillions around like there’s no tomorrow.

And at the moment, meaning less than two weeks later, that whole thing is worth about $1.2 trillion less. In other words, in less than two weeks, in just the crypto space, $1.2 trillion in imagined wealth evaporated into ambient air.

For some of these folks who traffic in these digital entities, the hated fiat dollar is going to blow up and disappear, and these thousands of cryptos are going to be around, and take the dollar’s place.

Bitcoin is currently at $32,000. It’s down 50% from the high a few weeks ago. That by itself wiped out $600 billion in wealth that folks thought they had and suddenly don’t have, poof, just gone.

By now, everyone knows that these cryptos are essentially useless for transactions in every-day commerce because they’re too cumbersome and expensive to buy stuff with, or transfer fiat money with, even internationally. There are much quicker and simpler and cheaper ways of doing it. And then there are the cryptos’ hair-raising ups and downs that make transactions super risky. And folks have now given up hailing them as the next payment system.

Instead the meme is now that they’re a “store of value” and a “hedge against inflation.”

So one heck of a store of value, has now lost 40% or 50% or 60% of its value in a few weeks. And one heck of a way of hedging against 5% or 6% or even 10% inflation by right off the bat losing 50% in a few weeks. That’s a huge plunge in purchasing power in just a few weeks. Something close to “crypto hyperinflation.”

“Just shut up and buy” works wonderfully until suddenly it doesn’t.

So folks buy the effing dip with these stocks or cryptos or whatever, and they get run over by the next and even deeper effing dip, and they do it again – all along jabbering about “store of value” and “hedge against inflation” and “collapse of the fiat dollar” – and they get run over again and again by more effing dips, and at some point they’ve had enough.

“Just buy the effing dip” works wonderfully until it suddenly doesn’t.

There is no guarantee that these things will come back.

Some of the stocks might go to zero. Others might plunge by 95% and spend the next 20 years down by 95%, surviving and not doing much.

MicroStrategy, a dotcom-bust survivor, is one of those. It is now a cloud services and software company, that massively bought into bitcoin in recent years and was able to run up its share price on the coattails of the spike in bitcoin, and at one point – well, on February 9 – its shares exceeded $1,300 bucks, but today they’re down 65% from the spike.

The thing is, even at its share price of $450 bucks as of the close on Friday, it is still down 85% from its peak in early March 2000, meaning 21 years ago, the moment the dotcom bust kicked off.

And it massively leveraged up to buy that pile of bitcoin. Over the past year, its long-term debt ballooned by a factor of 17, from $100 million at the end of March 2020, to $1.7 billion at the end of March 2021. If bitcoin drops below a certain level, this leverage may blow up the company.

And that’s a survivor, one of the lucky ones. Lots of dotcom super-hype-novas just disappeared and their shares went to zero. The Nasdaq crashed 78% at the time. The strategy of buying the effing dip got people wiped out on the way down.

Only a small number of dotcom creations survived the bust intact and thrived afterwards, including Amazon. And buying the final dip of Amazon’s stock and holding till now has worked out phenomenally well. But Nikola isn’t going to be the next Amazon.

Oh, and there was lots of leverage back then, and there is a lot more leverage now. Leverage is the great accelerator on the way up, and it’s the great accelerator on the way down. Most of the leverage is hidden, and it’s not reported, and even Wall Street firms don’t know where it is, and how much it is, and no one knows until something blows up.

We saw that when Archegos blew up. The biggest broker-dealers, such as Goldman Sachs, Credit Suisse, Deutsche Bank, Morgan Stanley, and others provided billions of dollars each in leverage for its highly concentrated trades, and none knew of the others. Each broker-dealer knew only about its own exposure to Archegos. And they didn’t find out just how much leverage was involved until Archegos was in full collapse mode.

The Fed warned about this leverage in its Financial Stability Report released earlier in May. It warned particularly about the vast parts of hidden leverage among hedge funds and insurance companies. And it specifically pointed at Archegos as an example of what happens when hidden leverage blows up.

Given the amount of hidden leverage in the system, particularly among hedge funds, family offices such as Archegos, and insurance companies, we don’t know how much total leverage there is.

But we know leverage is crazy high. We know because the only measurement we have that is reported monthly is margin debt that brokers report to FINRA. So this is just the classic margin debt in brokerage accounts. And this margin debt jumped from historic high to historic high in recent months, and at the end of April had reached about $850 billion. This has shot up by 55% from February 2020, before all heck broke loose.

Leverage, once prices go down, causes forced selling, and then prices plunge further, which triggers even more forced selling. That’s why leverage is the great accelerator on the way down.

When cryptos started selling off, it was made worse by leverage in that space. And it turned into a full-blown crash.

And there is contagion: When highly leveraged hedge funds get in trouble with their cryptos, and they’re forced to sell, they’re going to sell what is the most liquid, and that’s not the cryptos. It’s stocks. So when they come under pressure, they might sell a mix of cryptos and other things they have that they can sell, such as stocks. And that’s one of the ways by which a crypto crash can bleed into the stock market.

Now all eyes are on the housing market. The same insanity that had befallen the crypto space and the SPACs, the EV SPACs, the IPO space, etc. – meaning the “raging mania” – is visible in all its glory in the housing market, where it manifests itself in crazy bidding wars by buyers who have looked at the house only on photos and videos, and who waved all inspections and conditions, and have no clue what repair and maintenance expenses they’d face.

Often, they have no clue what they’re buying, but they’re engaging in bidding wars over it. “Just shut up and buy.” That’s the philosophy.

But the strategy of “just shut up and buy” has a shelf life. And when that shelf life expires, it doesn’t work anymore and it gets very costly as we are now seeing in these other segments.

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  121 comments for ““Just Shut Up and Buy”: But Hype-Stocks & Cryptos Crashed

  1. drifterprof says:

    Stonk market seems to be doing okay tho.

    • DAN says:

      Yes, at least for now. A common cause for higher prices is higher prices. That is the way bubbles work. Sometimes confidence withers for no reason, and then lower prices can bring even lower prices for the same mob psychology. People are sort of conditioned to buy on the dips however, so difficult to predict the course.

    • Wolf Richter says:


      Yes, that is EXACTLY what I said in the podcast and article. This isn’t about the overall market at this point but specific segments in the market. Go ahead and read it. It doesn’t bite :-]

      • Plumbing says:

        Wait…so buying AMC at a market cap of 8.74b when their pre-pandemic market cap was .65b is a bad idea? Silver Lake and Wanda, who were some of the largest equity and debt holders, all cashed out as well.

        • Wolf Richter says:


          Wanda finally got its lucky moment in its AMC affair. I would have loved to see the top people there sitting in their corporate big-screen war room, watching with their mouths open as AMC rocketed higher by the minute. At some point, someone yelled “sell,” and they were outa there :-]

      • TheWealthEffectIsAPonziScheme says:

        Youve been talking about an everything bubble for 8 months and you are going to claim victory cuz a bunch of Cathy wood companies who loose money every second they exist are losing market share….?

        Listening to u would make a fella go broke.

    • Phoneix_Ikki says:

      Yup, hopium have replaced gravity long time ago…to infinity and beyond!! No better time in recent history to be a wealthy elites fully invested in stock or housing market, when all you know is winning, market crash might as well be a Dodo bird…gone extinct in this new normal.

      • Yam says:

        Jerome Powell is the new Arthur Burnes of the 70´s, Denying inflation on low, hypothetical arguments, is he stupid or is he a desperate, boxed-in rat? or 2.
        Criminal white collar rat.

        • J-Pow!!! says:

          I am 2. You’re welcome.

        • Swamp Creature says:

          He’s a second coming of Dr Rudolf Havenstein the head of the German Central Bank during the 1922/1923 hyperinflation.

      • K says:

        Am I the only one that sees in cryptos the equivalent of Ponzi schemes like those sellers of vitamins, etc., that made more money if more and more people bought the items and then SOLD the items to others not through actually just selling lots of the items: each is a scheme wherein the initial “investors” (to be polite) make money and see a growth in their “investment” if they get more people to “invest” then those new people make money if they get more people to invest then those new people also make more money if they get more people to invest… and so on ad infinitum?

        This is why speaking realistically to a bitcoin “investor,” or other crypto “investor” is like making dirty jokes about some religious figures to their adherents — a life threatening experience. Have the rules of nature and axioms of logic been repealed suddenly and no one told me?

        I am scaaaareeeeed. Pinch me. LOL.

        My takeaway is that logic and common sense have abandoned investors or there must be something in our water supplies, like LSD.

    • A says:

      You know, new York and San Francisco real estate isn’t doing so hot but the stock market keeps going up.

      Don’t think that your local real estate market can’t correct and go down while stocks keep going higher.

      The share price of Google doesn’t care one bit about the property values in Phoenix.

    • Tom S. says:

      Smooth market functioning at its finest. Hard to say what will happen when the Fed reduces its MBS and CMBS holdings. Wages are not increasing at the rate these home prices are increasing, and regular people can’t afford these new prices. I guess that not a problem, until it is.

  2. cg says:

    Cryptos are analogous to the issues in Exchange Alley during the South Sea Bubble, cons, grifts, and ultimately worth NAV (zero).

  3. doug says:

    ‘And folks have now given up hailing them as the next payment system.’
    Well most all folks, except criminals.
    Paying ransom is perfect for cryptos..
    Money laundering is perfect for cryptos.
    Elites don’t like paying ransoms.
    Gov’ts don’t like money laundering(by other non govt entities).
    Draw your own conclusion…

    • p coyle says:

      smart companies ought to buy this dip in bitcoin, to hedge against future ransom requests. ?

  4. Rick says:

    Wolf, thank you for providing transcripts. My hearing is poor, so I don’t listen to podcasts or watch videos. So, I’m a silent lurker, but want you to know your efforts are appreciated.

  5. Lou Mannheim says:

    “ There is no guarantee that these things will come back.”

    No, but I am positive that our leaders will keep printing. Until that changes, enough people will BTFD. Same for cryptos – unless someone in DC finally gets concerned about flight risk.

  6. Harrold says:

    I’d buy the new WolfStreetCoin(™).

  7. Ted says:

    I think Wolf is warning us away from dodgey “investmeents” that have lousy balance sheets, a lot of leverage and little or no path to making a profit. A.T.& T. just made a pretty dramatic move to deleverage, maybe they read Wolf Street?

    • Shells says:

      I don’t have any insider info, but I’ve heard that The truth is stranger than fiction…

  8. greg says:

    Notice all the bitcoin pumpers lately: Summers, Dalio, Musk back on the pump-wagon, Cohen.
    Wonder what rabbi sent them the memo. Amazing how Summers gets all the finance media attention for being so wrong and still billed as a guru. Not to mention fired from Harvard for being an ashehole without the skills and brain power to succeed.
    I can understand why the media pumpers don’t want real experts like Wolf commentating.

    • YuShan says:

      To me this looks like another case of “when the music plays you have to dance”

      • jon says:

        Very true. All these guys simply want to take advantage of the momentum. I have some cryptos and made some money but have no faith or see utility of these coins. The underlying technology blockchain has many uses tho.

        I don’t see real estate crash coming soon. The market is as hot as it can be. Volumes are low because of low inventory.

        The rich people are loading up on real estate like crazy

        • RightNYer says:

          Your statement is contradictory. As people on this site have noted before, prices are set at the margins. So low volumes and low inventory just means that the “market” prices are set based on the few that are available for sale.

          If anything happens to increase that supply, prices plummet.

    • RightNYer says:

      Agreed for Cohen and Musk, but not for Summers. Summers went against the left’s grain in March and warned the Biden administration that the untargeted “stimulus” was unnecessary and would cause inflation.

      Regarding Harvard, he was fired for speaking the truth.

  9. MiTurn says:

    “Leverage, once prices go down, causes forced selling, and then prices plunge further, which triggers even more forced selling. That’s why leverage is the great accelerator on the way down.”

    Housing. The next to tank. Very sad the “raging mania” stoked by fear.

    Also, about your comments about buying real estate sight unseen (or is that unseen?) — people in my area that are buying rural lots as home sites, ones that have sat on the market for years. Now all gone. What these buyers are going to discover is that these lots, in beautiful settings, are sitting on solid rock. No way to get water. No wells. Nothing.

    Talk about regret…

    I wonder how forthcoming the realtors were.

    • Seneca's cliff says:

      I can pretty much guarantee how forthcoming the real estate agents were about the “flaws” in the property. My wife and I have been house hunting for a couple years now, and the current bubble combined with the flaws in all the property we see keeps us on the fence. Due to my wife’s job at a county-wide water and wastewater agency she can get the inside scoop on any property in the county. I can’t tell you how many properties we have looked at were she does the due diligence and finds out something like: the house is in a flood zone or the well is down to 1 gpm or the septic tank has collapsed and the property has been required to hook to the new sewer 200 yards away and must pay the connection fee plus the SDC fees or there is new road planned and the county right of way comes right up to the front door of the house. In none of these cases were these things listed, nor did the real estate agent admit to them even after the fact. I think that there have many “flawed” properties sold during the pandemic and the “sight unseen” buyers from the Tech utopias will find out they are not as smart as they think they are.

      • RightNYer says:

        In my experience, most of these “techies” wouldn’t know which end of a screwdriver is which.

      • Heinz says:

        In most parts of the country property disclosure statements require sellers (and presumable their RE agents) to disclose any known flaws or defects of their property that could negatively affect value or usability of said property.

        I’ve seen quite a few of these disclosures, and in most cases they are filled out more or less properly. But some are missing responses to certain categories on the statement form, or are too brief in detail, though.

        Prospective buyers looking at a particular property need to avail themselves of online research sources like FEMA digital flood mapping service, SCS soil maps, and local government planning & zoning map services, plus their own online city property maps for their jurisdiction.

        Also online maps from the likes of Google and Bing can give you a bird’s eye view of the neighborhood and further out environs with their aerial photographic maps (often called ‘satellite view’).

        Aerial imagery will help you determine at a glance if there are environmental factors near the property that could adversely affect property values or your enjoyable use of the property– things like cell towers, high tension electric transmission lines, strip mines or quarries, wastewater treatment plants, and so on. Beware though that some online mapping services do not update their aerial imagery very often and you may be looking at a picture quite a few years out of date.

      • Swamp Creature says:


        I have used RE agents over the years ( a dozen times) for routine transactions involving purchases, sales, and moves etc. In almost every case they were lazy, dishonest, and incompetent. Some were so bad that we almost wound up in lawsuits with the brokers they worked for. In other cases they almost sabotoged their own deal and their commission.

        We deal with them in our appraisal business. The ones in the poorer neighborhoods are mostly OK, but the ones in the rich areas are mostly lowlifes.

        • VintageVNvet says:

          Don’t want to rain on anyone’s parade here SC, but I have had wonderful experiences with several RE agents and brokers over the last 50 years or so making good capital gains in that mkt…
          Starting with a guy who helped me get my GC biz started after he decided to get out of that and become a broker,,, sold me his top quality equipment and ”lined me up” with his clients so I could estimate the work the clients wanted BEFORE the sale, and I got most of that work finished BEFORE the clients moved in.
          More recently, although it took a couple of re-listings, I ended up selling the ”farmstead” through a very competent guy,,, then, ditto, buying where we needed to move to, finding a retired AF vet lady who was not only competent, but hustled and found us what has been our home the last 6 years and continuing in a really great ‘hood, and put some of her commish into the deal to make it happen.
          Not to argue that a lot of the RE folks are so poor they can’t even pay attention, but good ones are out there too…
          Gotta keep in mind the old old saying, “If you meet one ahole in a day,,, they are the ahole: if you meet a bunch, you are the ahole.

        • Swamp Creature says:


          I’m sure there are some good ones out there, but I’ve been very unlucky and have been stuck with as$hole Real estate people all my life and it has resulted in much hardship for me and my family. I’ve never had a good experience with one. I stand by my statement.

      • Lawefa says:

        There is a reason they are real estate agents….they got no skill or ability to do anything but eagerly take your money for doing little to nothing. The market is riddled with flawed properties and those interested in “getting theirs” will sit silent on the real flaws with properties. The reality is that most dont proactively improve their properties and let the homes rot with problems.

    • nodecentrepublicansleft says:

      It’s called “Due Diligence” and realtors in my experience will lie their asses off (not in writing though, verbally) to get that sale.

      If you really want to CYA, get a Phase I environmental assessment. Make sure you’re not buying somebody else’s environmental disaster.

      There was a parcel on Ringling Blvd in downtown Sarasota, FL that sat vacant for nearly 3 decades. Prime location but site of a former dry cleaner. The cost of the clean up was greater than the value of the land until a few years ago.

      Basically, if you don’t ask…they won’t say anything.

      So let’s talk about the weather, sports, etc.! Anything so long as you don’t ask me about that thing I don’t want to talk about!

      • Robert says:

        “It’s called “Due Diligence” and realtors in my experience will lie their asses off (not in writing though, verbally) to get that sale.”

        I agree, but you also forgot the attorneys involved. Both attorneys for the buyer and seller will collude to get the sale done, regardless of how bad the property is.

        You really need to get an attorney that is not involved in the sale to critique what your real estate attorney is doing.

    • Johnbagodonuts says:

      Think back to 2006, everybody including most if not all of the “geniuses” at the top of the food chain creating fraudulent MBS’s and selling them to the other “geniuses” at the banks etc. had concluded that the real estate appreciation at that time was the new “normal” and would continue forever. People were panicking to buy a house then because “it will be 10% higher in a year”. The only difference now is they BELIEVE it will be 20% higher in a year. A crash will be engineered to benefit a very small group of the super elite, have NO doubt about that.

  10. ColtSeavers says:

    My usual sign for when to exit the stock market is high retail participation, extreme valuations, rampant speculation, and as this article mentions the canary in the coal mine of the most highly speculative corners starting to crack. This coupled with numerous warnings from the FED indicate this show is coming to an end.

  11. greg says:

    My schadenfreude will be off the charts when the bitcoin blockchain is cracked and hijacked!

    • 2banana says:

      Crazy – isn’t it?

      A teenager in mom’s basement could blow up the entire crypto market.

      I am always reminded on how the Germans and Japanese thought their code were uncrackable too…

    • LearnHowThingsWork says:

      But it probably wouldn’t be because it relies on the same kind of encryption that runs every secure internet payment system and even our secure gift comm channels. So jokes on you, if it is hacked your bank and brokerage are too ?

      • ram says:

        This won’t do online transactions any good. The RSA public key cryptosystem has been broken, and hence all public key cryptosystems isomorphic to it, which is just about all of them, including elliptic curve systems.

        Online banking, online purchasing, and pretty much online anything now has deep an fundamental problems. Trading platforms are totally screwed. It is “all over, red rover” for cryptocurrencies and their “wallets” as well.

        Internet privacy, totally gone. Everything is being laid naked. Here is the mathematics:

        More than a few military and police agencies are now also seriously exposed.

        This is probably the straw that has broken the back of Western financial markets.

        • Wolf Richter says:

          I took a look at the PDF you linked (and that I deleted). God lord almighty, what a load of crock.

        • ram says:

          No Wolf, the pdf was not a crock but a paper by a highly respected cryptographer in a referred mathematics journal. Yes, the math is heavy going. Of course, no one is going to publish the algorithm already written as convenient C or FORTRAN code. Plainly telling the truth is severely punished by the powers that be.

          There is no proof that the product of large primes is intrinsically difficult to factor, and that paper mathematically proves that shortcuts exist. The whole public key crypto “eco-system” was built on false assumptions.

          You can be sure that the spy agencies of the major and some secondary powers have already worked this out. I would not be surprised if some hedge funds with highly qualified “quants” also haven’t worked it out.

  12. YuShan says:

    “I might make my own crypto too pretty soon just to properly mock the whole thing.”

    This is exactly how Dogecoin started. It is now worth $44 billion.

    • Depth Charge says:

      Which proves the entire space is nothing but a PONZI.

      • p coyle says:

        you are failing to properly appreciate the value of wasted electricity. think of all the things you could do with all that wasted electricity! the sky itself is hardly a limit!

        surely a currency backed by wasted electricity is the way to power the world into the wonderful plan our betters have come up with, one that will without a doubt help raise all boats, like all previous plans.

        maybe there is even hope the legions of ZH commenters that have lost fortunes to the various pernicious aquatic environments they seem to be drawn to, will have their boats floated too.

        you never know. it might just be different this time.

  13. Mike says:

    Translated to BTFD!

  14. Should be new highs in the major indexes this summer. Money coming out of crypto, they sell their spec, in general, and buy general motors. Don’t figure on the money disappearing but it could. What is the negative real interest rate on an MM account? Investors are going to sit still for that? Not sure what crypto is worth but you must have it.

  15. polistra says:

    Housing equivalent: Buy the effing flip.

  16. David Hall says:

    The S&P 500 increased 11 times in the past 30 years, not including dividends. This index outperformed the price of California homes, excluding rent.

    John Bogle of Vanguard taught about buying the index.

    • Old School says:

      I like Bogle and indexing, but today is not 30 years ago. Dividend yield was 3.5% then not 1.4%. When you buy the stock market, you are buying the future.

      Reviewing the historical charts you can see than normally dividend yield increases to a peak during a recession as stock prices fall. This is a strange recession that dividend yield coming out of recession has dropped as stock prices rose. Fed owns market now I think. They can not allow a panic.

      • RightNYer says:

        Not to mention that 30 years ago, you were buying ownership of companies that existed in an economy that was generally growing.

        I’ve said it before, but it bears repeating. We’ve had virtually NO economic growth since the financial crisis 12 years ago.

        All asset gains and “GDP growth” is premised on debt and printing. Period.

        The only way the next 30 years will bear any resemblance to the past 30 years is if 1) the economy begins growing again or 2) multiples keep expanding.

        I don’t think either is likely.

        • I think true economic growth stopped 100 years ago when those in power realized that productivity gains would result in economic contraction as people spend less and less time working to produce the things they need to live. At that point, the decision was made to get people used to buying things they don’t really need to keep alive the trend of rising corporate profits. The GDP growth over the last 100 years represents mostly make-work, and consumers being “sold” things that they could do without. My computer from 30 years ago had 4000 times less RAM, yet I was able to e-mail, watch videos, do Excel spreadsheets, and all the other things I normally do on a computer. Without the SSD hard drive and extra RAM, it would take 15 times longer to boot up now. The conveniences and luxuries that improved our quality of life, such as appliances, cars, the motion picture, etc, had already been invented in the 1920’s, so what we’ve been doing since is a game of growing GDP. Anything that makes money somehow “counts”. As long as real physical activity takes place and someone pays someone else, it’s considered bona fide GDP. But frankly, if we had stopped designing new models in the automotive industry or if we had never invented the smartphone, our quality of life wouldn’t be any worse, but GDP would be a lot less. So now that it’s harder to get people to work and consume even more, we are starting to paper over the difference. Just keep the money flowing. But if the Ponzi never collapsed while we were earning money while pretending to do useful things, why should it collapse now that we’re beginning to just earn money for doing nothing at all? At least when you pay people to sit at home, it has less impact on the environment.

          Average PE ratios could plummet to 5 and I could make the case that we’re still in a bubble because it’s all predicated on make-work and illusions of advertisement. If people wake up and decide that less is more, the entire stock market is suddenly worth 97% less.

          I don’t see any signs that we are close to the point where people are fed up and want the system to collapse. In 2000, tech stocks were expensive and houses were cheap, and in 2007 it was the other way around. The problem with saying that everything is in a bubble now is that if everything is expensive, it actually means it is reasonably priced. There is no other place for the money to flow into instead. I believe the ratio of home prices to the S&P 500 is at a historic low. That means houses are cheap.

          The work ethic is alive and well at least here in Nevada. Our governor has said he is not even considering ending the $300 unemployment bonus early, and all the businesses I look at have sufficient staff to operate efficiently. I’m sure many of them are looking to hire and having a hard time, but there is no visible difference between now and 5 years ago or 10 years ago. It’s going to take a much more generous welfare program to cause meaningful change. My base case is still rising home prices for another 30 or 50 years.

        • RightNYer says:

          I’ll address the productivity point later, but regarding Nevada, I’ve seen the exact opposite in Florida. Restaurants are stores are all woefully understaffed, because of the $300 “enhancement.”

          I’m not seeing this “work ethic” you speak of. Even “hard working” people tend to be lazy in terms of anything that requires getting their hands dirty.

      • p coyle says:

        “When you buy the stock market, you are buying the future.”

        this, more than the random shoeshine boy regaling me with tips on how to reap a fortune in the markets, makes me want to sell.

        well, soon-ish. surely they can keep the car on the road a little longer?

    • Javert Chip says:

      David Hall

      S&P increasing 11-fold in 30 years is compound growth of 8.5%/yr.

      Accepting your statement about CA real estate at face value, I’m actually surprised CA real estate didn’t come close to the S&P’s 8.5% compound rate.

      • sunny129 says:

        AS the balance sheet at Fed keeps growing, so does the S&P !
        Check the respective charts!

        If NOT for Fed with it’s Trilllions throw away every quarter, where would the S&P be?

  17. 2banana says:

    An excellent documentary on YouTube.

    “Bankrupt by Beanies” – only nine minutes long.

    So many parallels to today.

    My favorite quote (paraphrasing):

    “Each new release would go up in value. It was almost like a law or something. Until one day a new release didn’t. And then it none ever did again…”

  18. 2banana says:

    Doing a bunch of research of historical lessons of inflation.

    Just finished “When Money Dies.”

    Excellent book.

    Although about Weimar Germany and written in the 1970s, it is eerie how close the early stages mirror today.

    Maybe I should write a guest article.

    • Motorcycle Guy says:

      You are correct. “When Money Dies” is an excellent book. I was introduced to it decades ago.
      Over the years I have known people whose families survived Weimar Germany and the hyperinflation after WWII. Their survival mechanisms, warehouses full of sugar and/or adult beverages.

    • Swamp Creature says:

      Read the book twice. Excellent historical record. A must read.

  19. Brent says:

    Mr Richter,I beg to differ.

    Not all cryptos are created equal.Monero in 2021 is what BTC used to be in 2013: 2¢ transaction fee,it does not skyrocket to the Moon,and it does not plummet to the Center of the Earth either.

    What is more important is that $600K IRS bounty for cracking Monero remains unclaimed for 9 months ???

    About the rest of the 5000 numbers in Crypto Bingo Chart on Coindesk:

    Current narrative is Elon,Goldman Sachs and some poor schmuck who invested his last $200 in BTC are all pals,Bitcoin Bros,equal partners changing the World (and getting rich in the process).

    Total,utter,absolute BS…

    “For to every one who has will more be given, and he will have abundance; but from him who has not, even what he has will be taken away”— Matthew 25:29

    All 5000 cryptos move in tandem,today up 30%,tomorrow down 25%, steamrolling the crap out of the small fry.

    The institutions will continue this process and fleece all the poor bastards that didn’t start buying in until well after Bitcoin et al got close to the top.

    If you can read a chart and know what short-covering is, then you can see that is what is happening now.  

    And the institutions will use the standard method of going short with each Dead Cat Bounce, to stair step it all the way down to $20,000 and then $5000.  

  20. Phoneix_Ikki says:

    Wonder if one day in the distant future if there’s a major and lasting bust in Crypto, we will ever look back at it with the same level of befuddlement as to how this bubble ever got so big and majority didn’t see it coming as we did with beanie babies…

    • Artem says:

      Certain cryptos will definitely see a bust. Not all crypto will die since the community consists in large part by BTC religious zealots. Never underestimate the religion of crypto.

      • Javert Chip says:

        not to mention a fair amount of money launders…

        • Anthony A. says:

          And criminals who extort pipeline companies…….(who’s next?)

        • p coyle says:

          @Anthony A.

          who’s next? that’s the big question. pretty much anybody. if i were a business owner, i would hate to have to worry about disgruntled employees, in this new world of labor shortages.

    • Heinz says:

      Long after the coming carnage in this historic ‘Everything Bubble’ chumps will still be crying in their beer and wondering how they could have been so naive and believe it could go on forever.

      I’m sure though that savvy elite, well-placed investors are waiting in the wings right now, salivating at prospect of cleaning up big time at expense of a nation of chumps.

  21. Xavier Caveat says:

    Say what you will about currencies emanating from the planet Crypton, but try buying arms from Martian war lords with Visa or Amex.

  22. John says:

    I think what u are lacking here is to have an open mind. Stop trying to picture it so blind sided and maybe you wouldn’t have lost so much money shorting. Can imagine u calling internet companies a scam in 2000 and look where the successful companies are at? Apple, google, Amazon.

    • Wolf Richter says:

      Apple was founded in the 1970s. It’s not a dotcom company. Google and Amazon are part of the few dotcom creations that thrived, as I SAID IN THE ARTICLE.

  23. SocalJim says:

    It is amazing to me how much garbage is getting listed. Homes that would be impossible to sell in most markets are now on the market … with a huge price tag to boot. And dummies are taking some of them.

    In the zip codes I watch, the majority of listings are garbage. Good listings are far and few between.

    People, be careful. Do not pull the trigger unless it is a decent listing. If you are buying a fixer in a decent location, that works. But, do not buy anything in a bad location, even if the home is in perfect condition.

    This time, I feel the rural homes are the big mistake. Bidding wars on remote homes? That only works if a very dangerous virus happens, or if society breaks down. I doubt we are there.

    • Trucker guy says:

      I saw one “house” built in 1907 in rural north Washington last 2 days on the market. It’s a whopping .5 acre and 600 sqft with no rooms and one bath. The washing machine and dryer are in the kitchen and the highway is about 50 foot from the front door. House is pretty run down. Went to pending at 450k.

      Just got to keep telling myself we’re at the top. The sky will be falling! The sky will be falling!

      • SocalJim says:

        I think the rural home prices are way too high. I would not touch those.

        As far as well located suburban homes, it all depends on the FED. If you buy a suburban home, you are betting that the FED will keep rates suppressed such that mtg rates stay lower than inflation. That is the bet you are making. My thought is this will be the case until the 2022 mid-terms … but I could be wrong. After the mid-terms, it will be a different ballgame.

    • Seneca's cliff says:

      How about that wild time in Huntington Beach over the weekend. I figure those sorts of antic will keep on growing. Between that and crazies like Bill Gross cranking Gilligan’s Island at all hours and before you know the So Cal beach towns will be the next Detroit.

    • Phoneix_Ikki says:

      I guess we will soon see houses declared as not safe to occupy, condemned, literally been through a fire listed as great deal with a huge price tag along soon enough, those type of listings always get a laugh out of me every time.

    • nodecentrepublicansleft says:

      And here’s a common sense way to find out information about a home:

      Ask the neighbors!

      You may have to take what they say w/a grain of salt, but I’ve learned a lot about properties, homes, neighborhoods by asking people in person.

      I know a guy who just bought a home recently. He found out after he bought it, there’s some flooding issues. Did he consult a topographic map? FEMA maps? etc. as part of his due diligence? Not sure.

      But if you ask the neighbors “How does this area do w/heavy rains?”, you might learn something important from a long-time resident.

      Where I live, FL, this is a major concern as over 30% of the entire state is wetlands.

  24. Prue Grubstreet says:

    This blog is the only thing keeping me sane these days. Thanks Wolf and commenters — you are voices of reason in the maelstrom.

    I spent the last ten years saving so that I might buy some property once I got a stable, salaried position — which, after 2008, is an event akin to winning the lottery for my generation. Spent the last five years riding it out in a dumpy but livable apartment in a dumpy but livable New England city. Decided to buy in February, got approved for a mortgage I thought was way too big (I make mid-to-high five figures, and a reputable lender wanted to give me $450,000, saying that I could devote upwards of 40 percent of my income to a house payment and still be a-okay), had a taste of the market and immediately felt I would be a fool to buy now. Landlord agreed to rent to me again for another year, but at the last minute fell victim to FOMO (realtor told him he could get top dollar for a condo that hasn’t been updated in 20 years — and he likely will) and now I’m desperately searching for a new rental along with all the other renters who are falling victim to this nonsense.

    I should have bought years ago, but was too busy writing books and doing all that dreamy stuff. Now I just dream of watching it all burn down.

    • Ronin says:

      Move to Portlandia and burn things down for real!

    • p coyle says:

      somebody will fix this for you. most likely, that somebody will have to be you. but once in a while people do get lucky.

      stay cynical, yet optimistic.

  25. Steel Phoenix says:

    “And at the moment, meaning less than two weeks later, that whole thing is worth about $1.2 trillion less. In other words, in less than two weeks, in just the crypto space, $1.2 trillion in imagined wealth evaporated into ambient air.”

    And like the rain, what has evaporated isn’t gone. It’s just waiting for the right combination of temperature and pressure to come raining back down again. People bought, people sold. Some are pining for imagined wealth lost, others celebrating imagined wealth gained. In the end it’s not wealth, it’s currency. A temporary store of value more convenient than trading goods directly. It’s doing what currency always does; getting conflated with wealth, speculated on, and manipulated.

    I like it. It’s not getting spent out of my pocket by Congress. It’s not tied to the success of a single nation. It’s near instantaneous, it crosses borders, it never sleeps. Sure, it’s a gamble, and not a safe one, but understanding that is enough for me. If I want stability over 30 years, there’s another place I can park my imagined wealth. What better way than a mortgage, where I get to trade the promise of future imagined wealth, for the deed to actual current wealth? I for one, am doing both.

    Leverage is certainly an issue, and a very current one. Do the dealers really not know what the others are doing? I’ve a strong suspicion that China has connections high in such organizations. What’s their game? With the well timed crypto ban reminder causing an avalanche of margin calls, and their quickly switching direction on things like steel prices and their currency valuation? I suspect they engineered this latest crash, and their game may not be over. All this reverse repo may be a response to give some flexibility in case they swing the pendulum back hard the other way and cause another wave of havoc.

    • Javert Chip says:

      Steel Phoenix

      “…If I want stability over 30 years, there’s another place I can park my imagined wealth…”

      And what might that other place be?

    • Fat Chewer. says:

      That was some excellent satire there. Well done.

  26. Micheal Engel says:

    1) AMZN used to sell old books, but now they are selling old movies. The cancel culture will get them.
    2) Next year investors will have an answer if there is high inflation, or SPX is
    a Bitcoin.
    3) Bitcoin might be a warning sign. Fundamental investors are blind.
    4) The economy is strong, corp profit is strong, there is no reason in the world for a 10%-15% correction.
    5) The experts might be wrong. QQQ Apr highs can be ==> UT after distribution.

    • RightNYer says:

      How exactly is the economy “strong?” Without permanent “stimulus,” it all collapses. Without ZIRP and $120 billion of printed money every month, it all collapses.

      If this is your idea of a “strong” economy, I’d love to see what you think is a weak one!

      • Fat Chewer. says:

        One would have to wonder why these people don’t understand that ultra low interest rates are a sign of weakness, not strength. They must be idiots.

      • Nathan Dumbrowski says:

        Have you been a a retail store lately. On the East coast they are absolutely packed. Today was the first day I saw a ton of people in stores without masks. Spend Spend Spend is all I am seeing. Plus there are a bunch of new dining locations, outdoor facilities and general stores opened up in the last three months. You mileage may vary

        Right now there seems to be no end to the money supply. Roaring 20’s y’all

        • RightNYer says:

          My post appeared at the bottom for some reason. A glitch:

          Right, but they’re spending money that the government gave them. 35% or whatever of income comes from government.

          That’s my point. This illusion of prosperity requires continual “stimulus.”

  27. Fromks says:

    BTFD. Have you been reading Reddit’s WallStreetBets?

  28. John says:

    Thanks I have not been listening, I’d rather read. I like effing instead of f ing. The volitility was good when it lasted for trading, big swings, did not hold some I should have like Amat. Otherwise in the weeds for established stocks for yield. Owning outright no leverage. I’ve learned a thing or two reading your work, thank you.

  29. Michael Gorback says:

    “It is a great art in life to know how to sell wind. Most things are paid for in words, and by them you can remove impossibilities. Thus we deal in air, and a royal breath can produce courage and power.” — Baltasar Gracian, The Art of Worldly Wisdom, 1647

    And a crazy billionaire’s breath can move an asset up or down thousands of dollars in a day. An ECB president’s breath (“Whatever it takes”) can pull a global market from the brink only to give it time to worsen to untold multiples a decade later.

    Mark Cuban was a huge fan of crypto, right until recently when he wasn’t. But he hedged that by saying that the best platforms will do well in the long term. Which platforms and why were not discussed. No way to tell which will be pets.com or Amazon. Musk’s opinion on crypto changes so fast it could induce seizures.

    How many people have been slaughtered in the market listening to Fed jawboning?

    Criticize crypto all you want, but the dollars you have are debt. Debt is not money. Dollars are not redeemable for anything by the debtor. There is no limit to how many dollars can be produced. The only reason we use it is because we have to.

    And it’s totally out of our control. It’s made, destroyed, deployed and withdrawn at the whims a small handful of people who wouldn’t piss on you if you were on fire.

    They want a great reset? They want globalization? Fine, but on our terms with a decentralized system independent of Lloyd Blankfein “Doing God’s work”.

    Pursue decentralized finance, figure out how to use blockchain to make it work, and have a stable currency in the system. Or continue to be sheared like the sheep you’ve always been.

    I think DeFi a is step in the right direction as it uses blockchain and stablecoin but it’s not ready for prime time.

    Bankers and their government puppets are terrified of us controlling our own money in an open market.

    In medieval times serfs worked the land and the nobles took a piece of their production. The Black Death was the nobles’ worst nightmare. With labor in short supply serfs just walked off the land and worked for the highest bidder.

    We don’t need a huge disruption like that, and certainly not a plague, but maybe we do need to kick people in the pants and wake them up to their serfdom.

    If you want to object based on software hacks please speak with the executives at Colonial Pipelines. If you want to bitch about money laundering check out the banks listed in the FinCen files. Big names. Very big. Even when they’re caught nobody goes to jail.

  30. cd says:

    Well, I joined the short bus finally with Wolf and today had to take a loss, the short I thought was pretty straight forward was the RUT 2000, yesterday it was in a very bad position…..today the miracle workers rode it up 2% on a day when nothing else was moving at all….I have been long since last April until cutting wins last month…

    The PTB is not letting u short….Period! I waited until optimum time to short going into summer with RUT only 100 pts off all time high and a huge blow off top……today the MM’s said were not ready and I had to bow out with loss….a pretty good one too as I was expecting RUT to find 1930 area with this down move…

    When they let it go, the window will be so short, the train will be leaving station fast and your asks will not get hit….

    • Old school says:

      Yep. The Fed has killed off shorts. Working on us that don’t believe in shorting, but hold cash. Probably will break us as well.

      I am a little concerned about the Fed taking over the money market funds. What if they gate us when we want to buy the bottom.

  31. Keepcalmeverythingisfine says:

    I have not shut up, and keep buying. The current administration has me worried (Jimmy Carter 2.0), but as long as the fed is printing I am buying the S&P 500 dips, which by the way are pretty shallow. I am holding firm on small caps and real estate too. The fed can keep this up for a long time, and the dollar will buy far less, so I avoid cash like the plague. If you are buying real estate then be really careful and buy a quality location. IF you are sitting on cash put a little in the S&P 500 index each week or each month. Otherwise, you are going to be really sorry. Crypto and SPACs are just noise, and I personally avoid them.

    • Yes, and money comes out of spec and goes into dows of the dog. Monetary alchemy creates money and money cannot be destroyed. Eventually crypto replaces money but nothing happens to value. Value is value. If you are sitting on cash hold the reins of that horse real tight.

  32. Cobalt Programmer says:

    So, when do we buy SQQQ and short term ultra vix futures? asking for my friend who opened a Rhood account last month.

    • MonkeyBusiness says:

      Your friend won’t be able to collect. If markets were to crash super hard again, they’ll just close the stock market. It will be reopened once morale has improved.

  33. Here it comes says:

    Great article, Wolf. I’ve said a few times on here that the overall SPX is still headed to 6000 within a year or two, which I still believe (not in a straight line), but I strongly believe we are headed into a Great Depression level era afterward that could last decades. These leverage elements are just building themselves up to support that crash when it comes down.

    I believe we’ll read a lot more of these articles from you for the next year or two, and you’ll have some “Triple WTF” labels on your charts.

    • Nathan Dumbrowski says:

      The USA will be the first to pull of the 3x GDP in spending successfully. How? Don’t ask stupid questions . But seriously what is going to stop the US from minting another $8T in the next three years? Remember a while ago a certain president said it would be like Rocket Fuel for the Stock Market. Well behold what real Rocket Fuel looks like. Brrrrr

  34. Micheal Engel says:

    Warning : the economy is strong, corp profit is strong, there is no reason in the world for a 10% – 15% correction, but QQQ might plunge to : 250 – 260, thereafter a bounce to LPSY, before the big collapse.

  35. Tom Stone says:

    Compass Realty was started with $ from Sofbank and grew very quickly by poaching high producing agents from other brokerages by offering them once in a lifetime deals.
    There is NFW those brokerages made a dollar on any of the deals the hotshots made, but the agents made out very well indeed and Compass had a lot of transactions.
    Top producers come in two major types, agents that are flat out better than most of the competition and agents who sail very close to the wind.
    And ALL of them can pick up the phone and move to another brokerage the same day if they decide to move.
    As to buying a home now, if there are urgent reasons for you to do so, go ahead.
    DO NOT waive inspections or contingencies unless you are a pro and know what you are doing.
    And by a pro I mean a licensed contractor or equivalent.
    It’s shelter at a reasonably predictable cost, counting on significant appreciation in real terms over the next decade would be unwise.

    • Heinz says:

      “DO NOT waive inspections or contingencies unless you are a pro and know what you are doing.”

      I second that good advice. If seller or real estate agents involved flatly state that in order to successfully bid on a property you must waive home inspection move on. They take you for a fool.

      Home inspectors, as in all other trades, come with various levels of skill and competence. Make sure at least that the inspector is certified with interNATCHI, ask how many homes/years of experience they have, and check references.

      If you know enough about residential buildings (outside and inside) and can detect defects or safety issues commonly encountered then you can do a preliminary inspection yourself during the showing.

      But I would leave the termite and other wood-destroying organisms inspection to the experts in that field.

  36. Auldyin says:

    One of the few good things about being old is that you don’t have to care about ‘cryptos’, so I don’t.
    Investment, in my book, is trying to predict future earnings, then discounting at the ‘going’ rate to arrive at a fair buying price for a share in the long-term ownership of a business you like. Anything else is ‘noise’
    Trying to predict what some humans will be foolish enough to pay on a whim for a hyped dream, is akin to betting on a chicken race. It’s all emotion, usually in the following sequence:-
    FIFO = first in first out.
    FOMO = fear of losing out.
    FOGO = fear of getting out.
    FOLA = fear of losing all.

    Looks like we might be tipping from FOMO to FOGO, what do you think? Earnings are always valuable come what may.

    • sunny129 says:

      Even EARNINGS report is unreliable in the of creative accounting, good will value, one time charge, release of reserve (JPM!)to bump up earnings!

      • Auldyin says:

        Spot on
        I didn’t say it was easy when the PR Dept writes the annual report to please the media!

  37. RightNYer says:

    Right, but they’re spending money that the government gave them. 35% or whatever of income comes from government.

    That’s my point. This illusion of prosperity requires continual “stimulus.”

  38. LeClerc says:

    1) If cryptos threaten fiat, government will;
    4) Houses in Sunnyvale, expensive termites not worry;
    3) S&P 500, what about wheelbarrows?
    6) Nikola, QuantumScape, Lordstown, merger of equals.

  39. Winston says:

    “I might make my own crypto too pretty soon just to properly mock the whole thing.”

    Actually, the reason there are so many cryptos is because the person who starts a new crypto can mine many coins very easily and then get rich if there are enough fools to buy them. Early adopters help because they too can mine them easily… for a while. Then, if that particular crypto catches on… You’ll note the stories like the guy who accidentally threw away an old laptop with a bazillion dollars “worth” of bitcoins from the early days of that particular tulip bulb when they were very easy to mine.

  40. Mark says:

    Although I agree with the general take on current crypto development, I would recommend looking into strike. It was the best demonstration of potential to me. A friend downloaded the app and set it up. He then sent 5 bucks internationally at zero cost in a matter of seconds. Zero friction and no fees. This in stark contrast to the service offered by our archaic banking system. Time will tell but the technology is certainly showing great potential.

  41. sunny129 says:


    Need an update on’ reverse REPO’ regurgitation with increased liquidity all over, with Banks over run with treasuries. Fed does QE to buy MBSs and puts back into banking system, which deposit back at the reserve!? Where does this crazy loop end? What effect on the mkts?

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