{"id":188080,"date":"2025-08-30T22:50:12","date_gmt":"2025-08-30T22:50:12","guid":{"rendered":"https:\/\/www.europesays.com\/us\/188080\/"},"modified":"2025-08-30T22:50:12","modified_gmt":"2025-08-30T22:50:12","slug":"in-a-booming-stock-market-hype-is-all-that-matters","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/us\/188080\/","title":{"rendered":"In a booming stock market, hype is all that matters"},"content":{"rendered":"

Open this photo in gallery:<\/a><\/p>\n

Traders work on the floor of the New York Stock Exchange Aug. 22, 2025.Spencer Platt\/Getty Images<\/p>\n

Don\u2019t toss that SPF 50 just yet. Summer may be fading, but the stock market is still throwing off plenty of heat. <\/p>\n

Since the spring, stocks have staged a monster comeback from the brink of tariff<\/a>-induced despair to the unchecked exuberance we\u2019re seeing today. <\/p>\n

The S&P 500 INX<\/a> index is up 30 per cent from its low point. Canadian stocks, in apparent denial of the country\u2019s economic crisis, have gained 27 per cent.<\/p>\n

Everywhere in financial markets is the whiff of excess. Retail investors are all in. Valuations on U.S. stocks are towering. And the artificial-intelligence hype machine has drowned out concerns about tariffs and trade wars.<\/p>\n

TD, CIBC report higher-than-expected third-quarter results, driving confidence despite tariffs<\/a><\/p>\n

It\u2019s starting to feel a lot like 2021, when a booming bull market morphed into a speculative hysteria of meme stocks and non-fungible tokens.<\/p>\n

A harsh reckoning soon followed that episode. Is the current cycle doomed as well?<\/p>\n

It would be futile to say either way. Markets can continue to rise long past the point one might consider irrational. Only after everything has come crashing down does it become obvious the market was in a bubble.<\/p>\n

One thing is clear, however. There will be far fewer winners of the artificial intelligence<\/a> revolution than investors are currently clamouring for. <\/p>\n

When the stock market coalesces around a transformative technology like AI, it\u2019s easy for companies to bask in the glow of the new thing.<\/p>\n

Last week, a mattress company called Eight Sleep announced it had raised US$100-million to \u201cbuild the AI that finally fixes sleep.\u201d<\/p>\n

Best of luck to them \u2013 and their investors. But they should keep in mind that time sets the bar for success much higher than a euphoric stock market does.<\/p>\n

A mass culling in AI is inevitable. A Massachusetts Institute of Technology (MIT) paper that caused a stir in financial markets last week gave a glimpse into this near future. It found that 95 per cent of businesses it studied realized zero return from spending on generative AI projects.<\/p>\n

\u201cIn most \u2018new, new things,\u2019 investors tend to treat far too many companies \u2013 and often the wrong ones \u2013 as likely to succeed,\u201d renowned investor Howard Marks wrote in his latest newsletter.<\/p>\n

Back in 2017, it was blockchain technology that seized the investing masses. In a blatant attempt to cash in on the hype, a New York-based beverage company changed its name from \u201cLong Island Iced Tea Corp.\u201d to \u201cLong Blockchain Corp.\u201d Its stock price soon quintupled. <\/p>\n

Companies around the world launched more than 80,000 blockchain projects around that time. By mid-2019, at least 92 per cent of them had failed, according to the China Academy of Information and Communications Technology.<\/p>\n

Nvidia CEO says AI boom far from over after chip maker releases tepid sales forecast<\/a><\/p>\n

Blockchain has its practical uses today in the crypto asset space, but it vanished as an investment theme.<\/p>\n

In fact, the usefulness of the technology itself is kind of beside the point. The internet really did change the world, but that didn\u2019t stop the stock market from crashing when the dot-com bubble popped.<\/p>\n

In the case of crypto assets, which have next to no practical use, hype is everything.<\/p>\n

Much like the blockchain freeloaders of 2017, some underperforming companies have taken to simply buying bitcoin as a business model. They are following in the footsteps of Strategy Inc., a software company turned bitcoin hoarder that has amassed US$70-billion worth of the crypto asset.<\/p>\n

U.S.-based thermal energy company KULR Technology Group Inc. started buying up bitcoin in November, a move that initially elevated its stock by more than tenfold. <\/p>\n

Never mind that crypto has nothing to do with your core business. It\u2019s a foolproof way to attract attention and give a faltering stock a jolt of adrenaline.<\/p>\n

In July, a company called CEA Industries Inc., which owns a chain of vape stores in central Canada, announced it was raising US$500-million to buy Binance Coin. Its stock then shot up by 550 per cent in one day.<\/p>\n

Doesn\u2019t it feel like this market is starting to give off 2021 vibes, when NFTs of bored apes could go for millions of dollars? It does when you combine the hype with worrying signals around valuation and market concentration. A sampling of some of the indicators:<\/p>\n