The Mother Of All Blow-Off Tops, Part 2

In case we were not clear in Part 1, let us repeat: The Mother of All Blow-Off Tops is now underway. For want of doubt, just consider the implications of yesterday’s $153 billion market cap gain at NIVIDIA (NVDA).

In a single day of mindless trading frenzy, Wall Street awarded as much additional value to the already insanely over-valued NVDA as the current total market value, accumulated over decades, of the following iconic American companies.

• American Express ($161 billion).

• Texas Instruments ($157 billion).

• Nike ($153 billion).

• Union Pacific ($152 billion).

• Amgen ($149 billion).

• Philip Morris ($148 billion).

• Morgan Stanley ($146 billion).

Of course, that’s just one day’s equivalent accretion. During the 50 trading days since the beginning of 2024, NVDA has actually accumulated $1.2 trillion of additional market cap. That’s equal to the total value of Meta ($1.26 trillion), 37% more than Berkshire Hathaway ($877 billion) and 120% more than JPMorgan Chase ($551 billion).

Needless to say, all of this represents irrationality beyond measure, as millions of homegamers and big swinging hedge funds alike chase the brightest shiny object soaring skyward on their computer screens. But this madness is not the natural propensity of free market capitalism at work; it’s the consequence of a liquidity-soaked stock market that has been house-trained to buy stocks hand-over-fist in anticipation of the next outbreak of fevered money-printing by the Fed.

To be sure, history makes absolutely clear that trading the last rips of these blow-off tops is never a winning proposition. But don’t cry for Wall Street. The dealers and fast money traders down there see the top crumbling before everyone else.