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.)

Stocks have developed a habit of selling off into the weekend before rebounding this year.

One big explanation might be that traders don’t want to be leveraged going into two days where the market’s closed in New York – but stay open online.

Any random Trump tweet can and has moved the market!

Ostensibly, if the weekend is quiet, stocks can recoup their Thursday/Friday declines.

What we’ve seen since 2008 is nothing short of a theft of the commons. Except it happened in little pieces that seemed unrelated at the time. But if we look at the story holistically, it all comes together.

When we step back and view the entire picture, what emerges is not just a story of market excesses and economic shifts. What we see is the gutting of middle America – be it intentional or otherwise.

Now the question is – are we going to see the restoration of the American middle class in the coming years… or are we going to watch everything devolve into a modern redux of the War Between the States, more commonly but mistakenly known as the American Civil War?

Today’s Washington isn’t governed so much as stage-managed.

Politicians don’t solve problems; they perform them.

The current fixation is affordability — a word that will be repeated ad nauseam from now through the 2026 midterms, until it becomes as meaningless as “bipartisan.”

The script hasn’t changed in decades: promise relief, pass a law that raises costs, blame capitalism, hold hearings, fundraise, repeat.

Yes, Nvidia’s profits are up 500%, and its share price followed suit — a rare case where the story actually matches the math. But that’s the exception, not the rule.

Beneath the headlines, we’re starting to see the kind of financial gymnastics — circular lending, balance-sheet origami, and creative “partnerships” — that usually signal the boom is running out of breath.

If history rhymes, it looks like we’re closing in on the tail end of a mania.