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
What happens in June?
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.
Andy,
Simply remove : logic, reasoning, price discovery, Market cap, P-E, stock options, future growth….
Then investing is fun.
When I’m elected president of America I will charge Jim Cramer with War crimes. I have never met anyone who actually did not see him as a clown. And Wall Street is filled to the brim with people like that.
As a business, Wall Street is in dire need for honest men.
Well, the CAPE ratio for US equities is around 40 right now.
The top of the Japan Bubble in the 1980s was around 90 or 100 or so before it finally popped.
So we still potentially have a very long long ways to go before the US bubble blows.. :-)
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%.
Wolf posts article after article showing the only way out of our (US) debt is to inflate it away. A main goal of the US govt is to devalue the debt. Why would you invest in an asset where the counterparty is telegraphing their plan to pay you negative real rates?
George is right. And all those inflationary dollars end up in the hands of corporate America. If you don’t own shares in those companies, you can’t catch any upside, but you catch all the downside of inflation.
The Oracle of Omaha has $380 billion in T-bills.
The greatest investor of all time sold everything not bolted down & bought T-bills.
That’s what you do if you think we’re in the end of days prophecy.
On the other end you have Michael Saylor who said to mortgage your home, charge of your credit card, empty JR’S college fund & buy bitcoin.
I hope you all understand on why I think Wall Street is just barely better than Joseph Stalin.
“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.
You’re right. It’s 1999 all over again. There’s a lot of speculation in markets and when it finally crashes, it will be catastrophic. America is basically a debt Ponzi now and there’s substantial borrowed money in stocks. Margin buying is real and it’s substantial. The crypto market has started crashing. When the crash starts, you can count on the FED lowering rates to near zero again. Will it work again….maybe but it shouldn’t.
“I’m not even sure why companies still even do earnings reports.”
You’re not shouting into the void. You have been heard. The SEC is working hard to meet you half way.
From the March 16 WSJ:
“SEC Prepares Proposal to Eliminate Quarterly Reporting Requirement
The Securities and Exchange Commission is preparing a proposal to eliminate the requirement to report earnings quarterly and instead give companies the option to share results twice a year, according to people familiar with the matter.”
S&P10 only, fixed it for you. It’s enough to bail out the top 10, the rest can linger just for appearance of diversification. With the upcoming rule changes to S&P500 – wait till SpaceX and other AI companies suck even more distribution from the bottom to the top.
The bottom 300 of S&P500 amount to ~13%. The top 10 >38%.
This is by design of the US economy and its laws. Everything feeds that top 0.1%.
I’ve contemplated this a lot – why does the bottom 90% not lookout for each other. There’s not much that separates the bottom 90%, than the top 0.1% compared to the top 5%.
This is not just about individual wealth, it’s been showing up in how companies and now how largely the economy behaves.
S&P500 is starting to look like wealth distribution across individuals in USA.
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…
We have the POTUS literally tweeting stock tickers and pumping and dumping the market on a weekly basis.
Nothing more going on here than the rich have lost all semblance of masking their market manipulation. Americans are too stupid and propagandized to see reality.
My parents both have a pretty solid university education. They don’t know what futures contracts are, they don’t understand stock buy backs or what the Glass-Steagall act was or what the SEC exists for, they can’t even understand why US consumers are paying more for oil when “we don’t even need gulf oil!” They just watch Fox News (which may as well be state media at this point) and youtube political influencers peddle anti-intellectualist conspiracy theories. They can’t even begin to fathom how the rich in this country and raking in billions of dollars day after day and the absolute crisis that is unfolding right now. You can’t reason with them and they cannot change their mind. Everything is a conspiracy theory by “them.”
And that is just for those two. Unfortunately I work with the brain dead dregs of society; truckers. These clowns are bafflingly stupid and brain washed. I literally hear day in and day out that Obama, Biden, and Clinton are draining Trumps bank accounts because they are deep state Satanists that making billions dumping toxins into clouds to turn children transexual.
We are utterly doomed. I know it is cliche but Idiocracy is coming to be a verbatim reflection of our society. I’m glad I don’t have children and if I cared about the future of humanity I would be horrified. I’m currently experiencing one hell of a rapid health decline and I’m largely indifferent towards it. An early expiration means I don’t have to see this bleak future. Even just in the trucking world, the broken AI integration, AI driver cameras and endless derision from worthless management has made the job nearly untenable. A man can only have an AI camera yell at him every 30 seconds for blinking too many times for 12 hours a day for so long. I only sleep 3-4 hours a day now with the AI routing alerts going off during my off duty time. Between that and getting your pay cut because you look at your mirrors at wrong intervals for the wrong amounts of time and the AI camera cuts your safety bonus I’m about done with all this crap. These AI systems exist to just make everyone miserable. The low level wage slaves to management, we’re all screwed. My manager has completely checked out and is about to be fired because they’ve integrated AI cameras in his office and has to babysit reprimands for drivers taking a sip of soda while driving or putting on sun glasses.
I reiterate: What a bleak future we have waiting for us.
Well-said.
I’m sorry to hear your story. It is one that needs to be told. I’m not your doctor but it wouldn’t surprise me if your health problems are worsened by sleep deprivation. I wonder if they could write a letter verifying you need your sleep. I don’t understand why the alerts can’t be silenced. You can always read them when you are ready to clock in.
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.
1:04 PM 4/17/2026
Dow 9,447.43 +868.71 1.79%
S&P 500 7,126.06 +84.78 1.20%
Nasdaq 24,468.48 +365.78 1.52%
VIX 17.48 -0.46 -2.56%
Gold 4,849.40 +41.10 0.85%
Oil 85.57 -9.12 -9.63%
Wolf, are you in on the opium, er, hopium smoking party? Life is groovy. No worries.
Nopium
Thanks for the article Wolf….
I wish everyone the best of luck…..
Might need it !!
🤞
It’s like the roaring 1920s, but this time we’ve got IRAs and 401Ks driving the markets up with 401K money coming in every 2 weeks, deployed in stocks, driving markets mechanically higher.
Kevin Warsh needs to become chair quickly and start reducing balance sheet and liquidity. This market is out of control.
“Forward into the past”
“Everything you know is Wrong”
“We are All Bozos on this bus”