Daily Missive

One Reason to Bet on a Sideways Summer

Loading ...Andrew Packer

July 16, 20251 minute, 31 second read



One Reason to Bet on a Sideways Summer

Alan Greenspan famously warned about “irrational exuberance” in the stock market in late 1997.

Stocks surged higher for two years before the dotcom boom went bust.

Likewise, we see high market valuations today, as the AI story and a passive bid of investment capital continue to move markets higher.

The trend likely isn’t over yet – there are still plenty of voices also warning on today’s valuations. And plenty of cash on the sidelines that could fuel one last speculative jump higher.

What does matter is that the AI boom is playing out just like the dotcom boom. It’s eerie. Just check out the chart:

Turn Your Images On

Since the start of the AI boom in late 2022, stocks are following the dotcom pattern eerily closely.

Given how closely that markets have followed a similar path to the dotcom boom, a few months of sideways trading appears to be in store. That also fits in with usual seasonal patterns of a market trending lower in August and September, before rallying to close the year.

Yesterday’s news that Nvidia would be allowed to sell advanced chips to China sent shares back to all-time highs. However, given the extent of the market bounce from its April lows, it may be prudent to trim back some portfolio positions now.

Doing so will allow you to take advantage of the high yields in cash – especially with 30-year bond yields back to 5%.

~ Andrew

P.S. Tariffs are still hitting the news, and could lead to a wild market performance in the next few weeks. It’s still part of President Trump’s Great Reset plan, designed to reshore high-paying jobs, increase private sector growth, and push to improve America’s financial standing.

As always, your reader feedback is welcome: feedback@greyswanfraternity.com (We read all emails. Thanks in advance for your contribution.)


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Small caps tend to be more dependent on borrowing to finance operations than the cash-rich mega-cap players.

So it’s no surprise that as the Fed acquiesced to cutting interest rates Wednesday, small caps, as measured by the Russell 2000 Index (IWM) broke out of a four-year range.

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