Stocktake: In this ‘annoying’ bull market, the dafter the idea, the greater the gains

No one is attempting to justify some bubble valuations

We are, says Ritholtz Wealth Management's Ben Carlson, living through the most annoying bull market of all time. One can see what he means. Dogecoin, the meme cryptocurrency invented as a joke, was briefly valued at more than $50 billion last week. It has enjoyed bigger percentage gains over the past four months than the S&P 500 has over the past 40 years.

Although well off their highs, meme stocks such as Gamestop and AMC Entertainment remain at levels that defy the most generous of valuation metrics.

Hometown International, a New Jersey deli that has registered $35,000 in sales over the past two years, was last week valued at more than $100 million.

Many see such activity as classic bubble behaviour, “the greater fool theory in action”, as Neil Wilson of markets.com put it. True, although the current market bubbles are unique in that there is no attempt at all to justify them on fundamental grounds.

For example, valuations during the 1999 dotcom bubble were clearly excessive, notes Ritholtz Wealth Management's Nick Maggiuli, but investors "could at least try to justify these valuations based on projected cashflows and the expected growth of the internet".

There is no such pretence today; the dafter the idea, the greater the gains. Today’s bubbles – “the joke as investment idea”, as Maggiuli puts it – are uniquely crazy.