And the 10% falls happened quickly – just like the fall we saw last month. They all took place in a month or less. But at the time, they were still painful. At 10%-plus, they each reached the level of a full-blown correction – even worse than the move in early October. Once investors get used to a one-way market, they forget that stocks go down as well as up. If you were invested back in 1999, all five of these moves would have made you question whether staying long stocks was the right choice. But today, nobody remembers any of it. The way most folks talk about the dot-com boom now, you’d think stocks did nothing but soar the entire time... We’ve seen some terrible volatility... But a pullback in stocks does not signal the end of the Melt Up. The Nasdaq more than doubled during the final 12 months of that boom. That’s the part everyone remembers. The reality is, pullbacks and corrections are normal... even during a blow-off top. And if today’s Melt Up plays out anything like the last great Melt Up, then we could see as many as five corrections – worse than what we just went through – before the market peaks. So yes, we’ve seen some terrible volatility... And no, you don’t have to like it. But a pullback in stocks does not signal the end of the Melt Up.
And it’s not the only big issue that folks seem to have with my Melt Up prediction. They raise another big objection, over and over again... The Melt Up skeptics say stocks are too expensive. After all, they say, prices have gone up and up for almost 10 years. They believe stocks HAVE to crash from today’s levels... that prices can’t possibly move higher from here. The funny thing is that folks have had this problem for years. They don’t seem to understand the reality of the situation. Let me explain... HECK NO, STOCKS AREN’T TOO EXPENSIVE TO BOOM One of the biggest mistakes of my career was missing out on the last great Melt Up... At the time, the dot-com boom didn’t make any sense to me. Stocks soared on hype, but the businesses behind them had no real future. I watched friends get “paper rich” in dot-com stock options. And instead of joining the mania, I stood on the sidelines. “It can’t go on any longer,” I told myself. But it did go on longer. I learned an important lesson from that. And in my career, it’s helped me to stand strong in bull markets around the world over the nearly two decades since the dot-com boom. It’s one big reason why I’ve stood strong in this bull market. The lesson has two parts... Just because stocks are expensive, it doesn’t
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November 2018
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