While the Nasdaq gained 100%, the economy grew by 15% not adjusted for inflation. Who needs cryptos when stocks are so much fun.
By Wolf Richter for WOLF STREET.
The Nasdaq Composite Index jumped 1.5% on Friday, wrapping up its 13th consecutive day of gains, the longest such streak since 1992, according to Dow Jones Market Data. It jumped by 17.7% in those 13 trading days and set a new high earlier this week.
But the bigger thing: Since the bottom of the Liberation Day selloff on April 8, 2025, so in a little over a year, the Nasdaq has gained 60%. This may also have been a record going back to the neolithic period. Or maybe it was just kind of normal or whatever. At any rate, a lot of fun was had by all. To the moon!
Since May 1, 2023, in less than three years, the Nasdaq Composite has doubled, it gained 100%, despite the Liberation Day trough in between. Probably just normal or whatever. The S&P 500 gained 71% during that period.
Over the same period of less than three years, when the Nasdaq soared by 100% and the S&P 500 by 71%, the US economy grew by 15% not adjusted for inflation (nominal GDP growth). Not any kind of disconnect whatsoever. Nothing to see here, folks.
The S&P 500 Index jumped 1.2% on Friday, and by 13% in those 13 trading days. Since the bottom of the Liberation Day selloff on April 8, 2025, in a little over a year, it gained 43%, possibly also a record for the S&P 500 since the neolithic period, or maybe just normal or whatever.
The WSJ ran an article this morning that was years too late, but it did nail it: “It’s Getting Harder to Tell Investing from Gambling, and it’s Not Your Fault.”
No one cares anymore about anything, as long as this stuff just keeps going up, driven by others that are buying it with the same attitude.
There have always been overlaps between gambling and investing, in some periods more than in other periods. It comes and goes in waves. And the distinction has never been clear. It doesn’t have to do with risk taking, but with the reasons behind that risk-taking, maybe.
During the Dotcom Bubble, the distinction for those stocks involved faded entirely. Then the Nasdaq Composite collapsed by 78% from March 2000 to October 2002, and thousands of companies vanished.
But that was then and this is now. Crypto trading is gambling by definition. There is nothing else there. And now people equate cryptos and stocks, and Wall Street wants to put cryptos into retirement accounts. For people who bought into crypto, gambling and investing have fused completely. And big brokerage houses piled into it to make money off that gambling.
But who needs cryptos when stocks are even more fun? Bitcoin has plunged by 38% since its high in October last year. That’s not fun. Where’s the moon?
Much more fun to pile into stocks, such as the stock of former sneaker retailer Allbirds [BIRD], that had gone public in November 2021 and the shares exploded and gave the company a value of $4 billion, and then collapsed by 99.5%. In March, the company sold its intellectual property, including the brand, for $39 million, and by April 15, the shares were down to about $2.50, and the market cap to about $21 million, when the company announced that it would pivot to AI infrastructure. And it said it lined up $50 million of potential investment that is actually a death-spiral convertible stock offering, upon which the stock spiked by 890% to $24.31. To the moon. It has since then given up over half of that. Not even cryptos can do that routinely. And the stock market is full of this stuff. People are just having fun.
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This will end well.
Its dIffERenT ThiS TiMe-
Totally different this time. We shall see whether people have as much fun on the way down. The greatest wealth transfer in history is teed up to start in June.
I would love to take a ride down, I’ve been waiting a loooong time but down never comes, number keeps going up
It was supposed to crash. It had a promising start. So, “by the book,” many people went very, very short (justifiably so). Then it backfired, and voilà—prolonging the inevitable.
It’s only fun when you’re making money…
The problem is that most people DON’T believe they’re gambling, and they don’t believe there is any real risk.
It’s all “Just DCA into index funds and let the money work for you.”
I have enough cash to last a while, as I refuse to put 100% into equities, but many, if not most, people seem to do so these days.
The reason all of us should care is that the economy is now based on this “wealth effect.” Because of this, a prolonged stock downturn would have more catastrophic impacts on the markets than it did when the NASDAQ dropped 78%. That’s why so many people believe the Fed and Congress will bail markets out, that the entire S&P is too big to fail.
But one thing is sure, no one cares about valuations or earnings anymore. I’m not even sure why companies still even do earnings reports.
Where else are you going to put your money? Bond returns are down inflation adjusted from 10 years ago. Gold is too volatile. Real estate? Too much leverage. VT and chill is fine, it’s not perfect, but it’s fine
People made that argument “There is no alternative” when rates were 0. That argument is not valid when treasuries are returning anywhere from 3.5-5%.
“I have enough cash to last a while, as I refuse to put 100% into equities, but many, if not most, people seem to do so these days.”
If that is correct then that goes some of the way to explaining the great ‘unstoppable rise’. More money chasing the same stocks. Meanwhile the US attracts an outsized proportion of international investors, so count them into the mix too.
Not to mention US tax policy favours buy backs over dividends as an approach of returning profit to investors. (If dividend
It is a toxic soup when all anybody cares about is seeing the share price go up, who cares about the PE.
We know how all this ends. We just don’t know when it will end…
Though if you look at consumer confidence, inflation, rising interest rates… They are all things that could trigger the end.
But how high will the PE ratio get before things end? If 2000 is a guide we might have a fair ways to go…
There’s only that demand for stocks because they’re convinced they can’t lose. If something happens to make them think they CAN lose, they’ll panic and start running for the doors. Has always happened that way.
The endless face ripping rally is one of the reasons that the housing market is frozen and that “nobody” cares about inflation, seemingly. Good times.
“No one cares anymore about anything, as long as this stuff just keeps going up, driven by others that are buying it with the same attitude”
I mean what can go wrong, grifters/scammers running the regime and stock market might as well be Polymarket…this is the new norm and don’t let the good time ever stop
Take today for example, I don’t even think casinos can rival the level of animal spirit from this market. Bad news, good news, who gives a F, Strait open, close, open…and market overshoot to the moon in one day as if all middle east countries are hanging out singing kumbaya and they all became BFF overnight, nevermind that it’s now close again as of typing, and by Sunday open or close, wtf knows…..this mess is still no end in sight and market is already on board for the ticket to the moon…..just insane all around…
The stock markets to the Moon and beyond, then into the Sun!
Based on S&P 500 performance from January 2016 through April 2026, a $1,000,000 investment made at the beginning of 2016 would have grown significantly, driven by a strong, extended bull market.
Estimated Total Value (April 2026): Approximately $4,060,000 (assuming reinvestment of all dividends).
Total ROI (Nominal): Approximately 306%.
Annualized Return (CAGR): Approximately 14.65% per year. The highest of the highs are yet to come with all the (AI) IPO’s getting ready to launch last half of 2026. It’s seems that the Mag 7 can now critique and criticize each theories and turn around throw money at any fintech or failing software stock and breathe new life into their fortunes. The VIX or fundamentals no longer matter, I always admired Charlie Monger investing advice, in that it only takes 1 stock or one good company, patience and perseverance to payoff. No doubt there is an insiders sort of ponzi scheme being played in the stock market. 24/7 magic wand announcements of (AI) and technology investments before there’s any proof of accomplishment.