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.)

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.

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

~ Andrew

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

My mum remembers the gold fever – and indeed the silver fever (silver spiked to $50 three days earlier on January 18). Even today, 45 years on, the silver price is lower than it was then – that’s how insane that spike was.

She recalls people queuing up to sell their family silver. Not to buy it. To sell it.

So that is something I am looking for to tell than this bull market is close to an end: when retail, ordinary people, start selling their physical in droves.

We are not there yet.

After yesterday’s meeting between Presidents Trump and Xi, the world’s two largest economies agreed to reduce the 20% fentanyl-related tariffs to 10%, while Beijing paused its rare earth export restrictions.

The markets would normally have cheered such détente. But investors were still haunted by Jerome Powell’s warning that the Fed may not cut rates again in December. And a renewed awareness that the AI bubble may, in fact, be in the “melt-up” phase… driven by expansive capital expenditures, financed by debt.

In his press conference after lowering interest rates a quarter point this week, Federal Reserve Chairman Jerome Powell laid out the case that the AI boom was nothing like the dotcom bubble.

There’s just one problem. The market is following the dotcom boom nearly perfectly – with 2025 following closely to 1998.

Milei, meanwhile, is doing something different. He’s cutting budgets, trimming employees, and chopping off unnecessary bureaucratic appendages. He’s been in office for a little shy of two years. During that time, he’s reduced inflation by about 90% and cut the budget deficit by 100%. Argentina has climbed out of its almost permanent recession to have the fastest growing economy in the Americas, with GDP growth more than twice that of the US. Real wages have tripled. And poverty has been cut by 40%.

She recalls people queuing up to sell their family silver. Not to buy it. To sell it.

So that is something I am looking for to tell than this bull market is close to an end: when retail, ordinary people, start selling their physical in droves.

We are not there yet.

In his press conference after lowering interest rates a quarter point this week, Federal Reserve Chairman Jerome Powell laid out the case that the AI boom was nothing like the dotcom bubble.

There’s just one problem. The market is following the dotcom boom nearly perfectly – with 2025 following closely to 1998.