1991

In those days I worked in the vast trading room of PaineWebber at 50th and 6th Avenue or Avenue of the Americas. I loved the excitement of the announcements by traders that we had buy or sell orders. “I have size to go in IBM.” Hopefully, with this knowledge one of dozens of institutional traders would call their counterparts at hedge funds to find the other side and cross the trade, thus keeping the commission on both sides.

That year was also (in)famous as the end of the speculative bull market in internet shares. Point moves of $50-$100 per share, per day were not uncommon! It was frightening. Security analysts of the sector were treated as gods. A handful of these folks dictated where shares would go. Because few knew the real impact of the internet we came to believe these research gods. We, as well as they, were fools. These gods didn’t really know the future and, at times, made it up. No one went to jail (well, a couple did but were latter exonerated) but many were discredited and some thrown out the of business. Remember that brokerage employees who recommended or sold securities had to pass tests and were licensed. So, stock and bond firms were state and federally regulated businesses.

It didn’t last, of course, and heads rolled and a bear market ensued. It was wild and almost everyone, including myself, got caught up in it.

That history repeats itself may be true with today’s stock market. While the overall market may be reasonably priced there are obvious pockets that should scare us. Beyond Meat has created a plant-based burger that folks seem to like. Shares move $15-30 points a day and are up 500% since its IPO last month. This is a burger folks. Almost all IPO’s over the last six weeks have shot up. First day gains of 30-75% are common. Most of these companies have no profits. The similarities to 1991 are too obvious to miss.