The fact that there was a huge bubble in the stock market came to my attention when I was conversing with a friend. My pal Tess told me one day that she was rich. I asked her how that could be, and she said that her stocks were up more than 1,000 percent. This occurred at the end of 1999.
Most people know that we had a bubble in this country, but they don’t exactly know what that means. I will explain this now.
Qualcomm Inc.’s stock price increased by 2,619 percent. There were also 12 other stocks that enjoyed an increase in price of at least 1,000 percent, and one of them is the one that Tess owned. In addition, seven other stocks increased by 900 percent.
A majority of the above-mentioned companies are listed on the Nasdaq Composite. Because Qualcomm and the other companies increased in value by such a significant amount, it meant that a gargantuan bubble was forming.
Presently in 2017, we are experiencing another bubble, and it is telling me that the same thing is about to occur.
In 1999, I sold all of my stocks. Then, all I could do was watch the stock market make incredible gains of 20 percent, 30 percent and even 50 percent on a daily basis. At that time, I thought that I had made an incredibly stupid choice. In 2000 and 2001, these stocks started to lose value, and I knew that my money was safe.
I reached out to Tess several times to tell her that the ride may be coming to an end, but she didn’t listen to me. She remained in her positions, and the stocks that rose high enough to make her rich suddenly lost everything that they had gained.
It looks to me like there is something similar happening in the cryptocurrency market. Bitcoin and Ethereum are two examples of cryptocurrencies, and they are in a bubble right now that I believe will crash.
— Paul Mampilly (@Paul_M_Guru) November 16, 2017
Over the Thanksgiving holiday, your family members and friends may have had many stories to tell you about the money they were making in these two markets. They were telling you the truth because a lot of people have made millions of dollars with bitcoin, for example. In the past year, bitcoin’s value increased by 1,172 percent. The high was at $11,000 at one point. Last month, bitcoin went up by 50 percent. In just the past seven days, it continued on its trajectory and is up by 17 percent.
A lot of people have written to me recently, and they are under the impression that I am negative about bitcoin because I missed the chance to get into the market. Interestingly enough, this is exactly what people told me in 1999 when I said that there was a bubble building and it would burst one day. When I told Tess that she should sell the stock that was increasing her bottom line, she refused to have anything to do with me.
That’s how it is with bubbles. No one who is in the market wants to get out. After the price peaks, they wait to sell at what they hope will be the peak. They continue to wait, and all of their gains are eventually erased.
It’s obvious that the warning I gave to people to stay out of the bitcoin market was premature. Now, it has become clear that cryptocurrencies are headed for a crash, and it will be in the near future rather than later. I’ll tell you why.
In 1999, there wasn’t anything substantial that was causing the bubble stocks to increase and that can be said for bitcoin. The only news that is taking the price of bitcoin higher is the fact that the price is moving higher. That is what it means to be a bubble. Because people believe that the price will increase, that is all that matters to them.
When there is a bubble forming, all of the people who want to invest in the product decide to do that. Then, everyone starts selling. When they start selling their cryptocurrencies, people are going to lose all of the value that they have gained.
I feel like I felt in 1999 because I have been wrong in the past, but I have experienced several bubbles in the more than 25 years that I have been investing, and I wholeheartedly believe that the cryptocurrency market is experiencing a bubble that will have a disastrous end.
Paul Mampilly earned his Bachelor of Business Administration in 1991 from Montclair State University. He earned his Master of Business Administration in 1997 from Fordham Graduate School of Business.
In 1991, Paul Mampilly went to work as an assistant portfolio manager at Bankers Trust. When he moved on to Deutsche Bank and ING, he quickly rose in the ranks and occupied several highly important positions with these companies.
The pace that he had to keep up with Wall Street gradually wore him out, and Paul Mampilly decided to retire. Now, he has the time to use his considerable skills to benefit average Americans who don’t have millions of dollars to invest. For them, he writes the newsletters Profits Unlimited and Extreme Fortunes.