This week’s “Chart for the Curious” follows up on our CFTC from last week and our piece on Andrei Shleifer’s legendary book on Behavioral Finance. In those pieces, we discussed how investors piled into Gold after the GFC implosion, which ended up being precisely the wrong time to do so.
Will Consensus on Electric Vehicles, Solar and Wind Crush Investors?
How similar is cleantech today to 1999? Here’s a quote from CNNMoney published on December 31, 1999:
Wall Street finished the 1900s at an all-time peak Friday — capping a century of unprecedented growth punctuated by two market crashes, the longest-running stock rally in history, and the emergence of technology companies as leaders for the 21st century. …
The market captured the imagination and interest of millions of Americans who participated in some form, either by tracking their own stocks online in the comforts of their homes…
Practically anything with a “dot.com” at the end of its name could expect to see its stock price double, triple or quadruple in a few months, profit or no profit. And investors, eager to cash in, joined the party by the thousands, thanks in large measure to discount brokerage firms, mutual funds and online trading accounts.
Wall Street experts … have become household names.
KCR suggests we are in a nearly identical place today. That article was written before the dot.com crash. So once again, we are at record highs punctuated by two market crashes, and retail investors are “all-in” chasing quick profits. The major difference in our view is that instead of anything with “dot.com,” it is “anything to do with cleantech.”
The Wall Street experts of 1999 have been “replaced” by newly minted super-star fund managers and CEOs. Their investment advice advocates for disruptive technology that is often priced to perfection if at all-profitable. Comments fly around in public that sound almost like a guarantee of future results to our conservative ears.
Is Clean Energy the New “Dot.Com”?
We believe the analogs between “clean tech” and the “dot.com” stocks are painfully obvious. As we will discuss in our piece next Wednesday, we believe this problem is exacerbated by unsustainable corporate leverage.