2020 set a record for new IPO issuances, only to top it with another 1,000 new offerings in 2021.
Retail trading was experiencing a modern-day renaissance driven by young traders and hot stocks.
Start-ups like Robinhood and eToro were thriving. Everyone was stuck at home, YOLO’ing to pass the time.
We were tracking the popularity of stocks among retail traders and riding them higher with the mob.
Wall Street bets was the biggest story in financial news.
A guy with a cat avatar, dressed like the karate kid had started a movement pumping Gamestop stock.
The masses got behind his thesis that it was undervalued. And they all learned about the power of momentum and short-squeezes in real-time.
They put GME bumper stickers on their cars to flaunt their allegiance and tout their profits.
GME was at $1/sh when things started. It peaked at over $100/sh months later.
They called it meme-stock mania.
The crypto market was also erupting around this time. I was going to NFT conferences in Miami. Rick Ross was always there.
They were buying land in the metaverse for more than what real estate cost in New York City. We talked about holding conferences there in the future.
Elon Musk was tweeting about a new token called Dogecoin. It would go on to rally 45,000% from its 2020 lows to the 2021 highs.
What a time to be alive, right!?
The reason I’m reminiscing about the euphoria-fueled bull run off the 2020 lows is because I think that’s exactly where we are headed.
We’re going back there right now. I can feel it in my bones.
More importantly, I can see it in the charts.
When I think of speculative growth, or ARKK-y stocks, I also think of meme coins, microcaps, biotechs, heavily-shorted stocks… the “trash trade.”
The flagship ARK Innovation fund $ARKK is my go-to benchmark for getting a read on this theme.
They tell me this index is comprised of the worst stocks in the market.
I own so many of them right now. They are showing relative strength.
They told me these names would never see the inflated valuations of 2021 again.
Some are already more expensive today.
They say these stocks are the most interest-rate sensitive and could never work with rates this elevated.
They’ve been ripping over the past two months as yields have been ticking steadily higher.
These criticisms may or may not be true. I don’t overthink them. I don’t really care.
What I do care about is the rounding bottom that has formed in ARKK. It has been the single-best pattern this cycle.
We’ve been going back to the well with these primary trend reversals just as they complete, and that’s been the playbook to profit consistently through this bull market.
Are we supposed to treat this one differently because these are low-quality stocks?
Sometimes, low-quality stocks catch fire and become market leaders.
Back in 2020, speculative growth was the only game in town. If you weren’t buying these names, what were you even doing?
We are going back to that place.
With a breakaway gap and a momentum thrust confirming the completion of this base, this breakout looks like the real deal.
If it is, here’s what it means:
A new bull market is underway for the most speculative, lowest quality, and highest-beta stocks.
When these names work, they really work. They bring the juice like no other.
I’ve been waiting almost four years for this. I’m ecstatic.
The animal spirits have arrived. Things are about to get crazy.
Get ready for big laughs, bigger profits, and some baller bull market parties.
