As one of the great hedge fund traders of all-time, Paul Tudor Jones, has said in the past: "the last third of a great bull market is typically a blow-off, whereas the mania runs wild and prices go parabolic.”
Today he equated the current environment to October 1999, when the tech stock mania was running wild and stocks went parabolic, doubling before topping in March of 2000, and subsequently crashing.
Here's a look back at that period …
So, are we starting another "blow-off/last third" tech rally and then bust?
There are some similarities. But this cycle’s winners are highly concentrated in dominant tech giants with moats, double-digit earnings growth, margin expansion, and valuations that are reasonable relative to that mix.
Add to this, in gold terms, the Nasdaq isn't as rich.
As you can see, we're nowhere near the peak Nasdaq-to-Gold ratio of the late 90s bubble. Moreover, the ratio has rolled over.
The first peak was late 2021, when Jerome Powell finally signaled a tightening cycle and began chasing four-decade high inflation. Stocks fell sharply, leading the Nasdaq/Gold ratio lower.
Then, last year, gold broke out — and the rise in gold has since outpaced the rise in the Nasdaq.
The Fed was telegraphing an easing cycle into record debt and deficits and record Treasury issuance, just as the Bank of Japan ended negative interest rates, yield curve control and ETF purchases (emergency policies) removing a key source of ultra cheap global liquidity to the world.
So, what is the Nasdaq/Gold ratio telling us?
In gold terms, your dollars and your stocks buy less than they did three years ago. The market is sniffing out dollar (and fiat currency, in general) debasement.
