Bitcoin has had a wild ride according to most. It hit $20,087 on December 17th and crashed back earth to settle around $6000, $6497 as I write.
It was $4400 a coin a year ago.
So, to some Bitcoin has made them a 47% return in a year and for others a 68% loss in 9 months.
This is how Bubbles work.
Today the latest bubble is Medical Marijuana stocks. Tilray is the poster boy for this bubble.
Bubbles always look like this:
Up like a rocket and down like a rock.
All an investor needs to know is the ballistic nature of such markets is unsustainable.
Buying at the top can only bring pain and loss.
Here is the Nasdaq again in 2000.
If you chop the bubble section of the bubble off the Nasdaq from 1999 to 2002, the market looks quite reasonable.
It is not the pre-bubble market that destroys wealth, or the boom that precedes the bubble that hurts or the post market, it is the violent rise that sucks in people to gamble and the following crash that kills. It is the verticals on both sides of the bubble that does the damage, when the participants have no idea of the fundamentals and do not care.
To make money you have to buy a boom and sell out in the bubble and buy the crash on the other side. It is as plain as the nose on your face in hindsight but few want to see this cycle run its course.
Having hosted a Medical Marijuana conference last year, I am sure that this is an industry that has a massive future, but that future will not be tied to the financial promotions of the stock market. The next big thing will come along and it will be promoted to the skies and it will create a boom and a bubble and a bust.
It is as inevitable. Bubbles can not be stopped. They are encoded in us and in markets.
So take a look at this:
Upton Sinclair the famous journalist wrote:
It is difficult to get a man to understand something when his salary depends on him not understanding it.
Verticals are unsustainable. You need to buy the boom, sell the bubble and buy the aftermath of the crash.
Up like a rocket down like a rock.