Sad Stories: 3 Recent Market Pumps

The tradition is as old as Wall Street itself, I’d think. In my experience it goes back to the Tech/Internet bubble, proceeds on through the Uranium bubble, Oil bubble and Silver bubble. Indeed, today we have the term “Everything Bubble” in honor of the 24/7, 365 asset pumping promoted by US and global Central Banks. But this post deals with three discrete sector situations where we were able to document ahead of time the sad future outcomes for those believing certain fairy stories.

This morning’s post about a new micro-pump going on in the Semiconductor sector begs a re-visit to all those pump-a-thons gone by that we have noted right here on the public site (usually after already noting them in NFTRH). After all, I’d had actual life experience with the Semi sector, 3D printing and especially the Medical Equipment/Device sector. So I guess I had a certain confidence level beyond the abstract world of finance and the equally abstract (and subjective) world of stock charting.

We begin with the Semiconductor pump in Q4 2017…

At that time we warned that LRCX and AMAT were not the “value” hallucinated by a fund manager promoted by the media at the top of the post-2012 Semiconductor bull phase. Here is the chart of AMAT (which I’ve held for much of 2019, finally selling this week). What followed that media pump was a drop, a slight higher high and promptly a stock cut in half before this year’s rebound.

amat

Let’s see, what other sad stories have we chronicled here at nftrh.com? Oh yes, here’s a classic.

3D Printing; No Barrier to Future Losses for Investors

Using prime (hype) offender DDD as the example, in February 2014 we noted that 3D printed Super Bowl cleats and Hershey Treats were not going to get the job (of fitting these competition-vulnerable and over hyped stocks into proper valuation) done. 3D printing is cool, but everybody and his uncle produces these things now and Chinese competition was quickly coming online. DDD, SSYS and XONE were spun to an unsuspecting stock consuming public as disruptive. The industry is fairly disruptive, but industry dynamics preclude any one company from taking advantage of that.

The Armani and expensive shoe wearing set never set foot on a dirty manufacturing floor and so, were wrong again. But then again, they made their pitches, their stock sales and moved on. Right boyz? Who was left to wade amid the wreckage? Oh yes, the true believers of an abstracted story. Sad.

ddd

Finally, who could forget the INGN debacle. Personally, I saw it as a bubble, shorted it, lost money as it bubbled up even higher, until finally the pig and its analytical supporters and public sponsors eventually gave in to reality. June 25th, 2018…

INGN: The Biggest Valuation Pig I know of in the Market

Why am I not an accomplished short seller? Oh yes, this…

ingn

From that post the future of the chart would show more obnoxious bull pumping by Wall Street suits who’d never stepped on a shop floor. Well I had, for many years. I knew this maker of a nice, but virtually commoditized box of air was in trouble. The damage? Only 280 to to 46 bucks in a year. Sad.

We can’t control the markets, but we sure can control our gullibility by learning our way through it. I got caught in the aforementioned Tech bubble in 2000, believing that infrastructure like optical networking and content management software were less vulnerable than the pure dot.coms. Err, no sir. It was the most valuable market lesson I’ve ever received. Luckily, I learned my lessons just as today’s newer investors are learn (or had better learn) theirs.

Lessons don’t have to have bearish resolutions. For example, today’s backdrop is one of decelerating manufacturing and wavering market and economic signals. But as the first link above points out, there is and has been reason to be constructive on the cycle-leading Semiconductor sector. While I favor an interim bearish view for the market, my collected experiences tell me to keep an open mind, unlike the victims of the three promotions above.

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