1/10 – A few thoughts on the historic “dash for trash” (electrical-vehicle-anything, SPACs, e-commerce-anything and Bitcoin) from last month. The valuation of high growth companies began the year at dizzying highs and has since soared to levels that are completely untenable.

2/10 - Many high growth companies may eventually succeed as businesses, but that does not mean that investors in their stocks will do well. We keep hearing and reading that stock XYZ will “grow into its valuation” and therefore investors should not be worried.

3/10 - Investors are not purchasing shares to sit on them for years while a company “grows into the share price” – they are speculating on prices continuing to rise rapidly and will dump those shares just as fast when the trend changes.

4/10 - You can lose a lot of money investing in a business if the price you pay is too high, even if the business is ultimately successful – Will Datadog (28.7x P/S), Snowflake (160.8x P/S) or Tesla (17.8x P/S) ever earn enough profits to justify their stock prices?

5/10 – We are now in the quality/growth-at-any-price (QAAP) phase. Rising prices are creating narratives around companies and how “great” they are. When stock prices falter, many of these businesses will be revealed as being far less “great” than commonly believed.

6/10 - In financial markets trends can grow and garner the feeling of inevitability. In the words of George Soros, market trends are tested, and each successful test reinforces the trend – until the gap between expectations and reality can no longer be sustained and it collapses.

7/10 - Low interest rates, social media, and the gamification of investing have led to a speculative frenzy. The YTD performance of consumer facing tech stocks has misled people into thinking that the only thing one must do in order to get rich is to buy PTON, TSLA, and ZM.

8/10 – SPACs are just one of the symptoms of the craze. Investors have allocated over $30 billion dollars to such SPACs in 2020 in the expectation that they will do further unspecified “deals”. No mind that the median SPAC has delivered a -29% return to investors since 2015.

9/10 – Over the past 20 years investors in CSCO lost 64% of their money (ex-dividends), despite the company growing earnings by 5.3x, and revenue by 4.4x. How many “Cisco(s)” are among today’s tech darlings? Investors paying 45x sales for SHOP in 2020 will suffer a similar fate.

10/10 – We are in the middle of a speculative bubble of historical proportions. I have no idea when it ends. Chuck Prince of C once said “as long as the music is playing, you’ve got to get up and dance”. C is -88% since then. Have the courage not to dance.