The Bull Market is Back Baby… Or is it?
After facing a ruthless bear market earlier in 2022, markets did a complete 180° this month by rising more than 23% from the bottom, leaving investors to chomp at the bit and buy the dip.
But is the correction really over?
Since there are too many factors at play, we will refrain from making any market predictions, but we do suggest that you study previous market bubbles and crashes to gain a clearer picture of what might happen.
For, as the great American writer Mark Twain would say:
“History Doesn’t Repeat Itself, but It Often Rhymes”
Here is how major indexes performed this week:
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Top News
Ethereum Surges after Final “Merge” Test is Complete
It has been a rocky 2022 for Ethereum (ETH) so far after falling 78% from its all-time high achieved in late 2021.
With so many controversies surrounding cryptocurrencies and blockchain at this moment, it is difficult to tell where this revolutionary technology is headed, but there is a glimmer of hope with the completion of its final test before shifting to PoS.
💎 This week, Ethereum ran its final dry run for the “merge,” a key event expected to improve speed and increase energy efficiency on the blockchain.
⛏ The merge will see the Ethereum blockchain transition from proof-of-work (crypto miners verify transactions on the blockchain) to proof-of-stake (validators must hold a certain amount of tokens to participate & verify.)
🧪 Ethereum developers simulated the actual transitory process, that will happen in September, using their test network Goerli.
📈 Ether (ETH) is up 92.54% from its 52-month low in June but is still down -58.65% from its 2021 high.
What will Ethereum’s (ETH) price be once the “merge” is complete?
Here is what our IG community had to say 👈🔥
Biden signs Chips & Science Act into Law
In an effort to keep up with the rising global competition within the computing technology space, President Joe Biden and his administration announced the signing of the Chips and Science Act into Law.
The law will help boost investments in domestic semiconductor manufacturing, which is increasingly important as tensions regarding the China-Taiwan conflict are on the rise.
🏗 President Biden announced at the signing ceremony, “Today is a day for builders. Today America is delivering.”
🌎 The US currently produces about 10% of the world’s supply of semiconductors, but otherwise relies on East Asia for 75% of global production; Taiwan alone produces 65% of the world’s semiconductors and almost 90% of the advanced chips.
🤑 The bill includes more than $52 billion for US computer chip manufacturers and billions more in tax credits.
💰 Multiple chip manufacturers have already announced new investments due to the bill:
- Micron (MU): $40 billion
- Qualcomm (QCOM): $4.2 billion
- Intel (INTC): $100 billion
Are you bullish on chip manufacturing in North America?
Bed Bath & Beyond (BBBY) shares jump 40% due to Reddit Traders
Just when you thought the meme stock era was over, Reddit Traders are proving once again that retail investors are not subject to the rules of Wall Street.
In what seems to be the tenth “short squeeze” of the year, the popular WallStreetBets forum ganged up on unsuspecting BBBY short sellers, leaving them scrambling to meet their margin calls.
😱 In total, a whopping 46% of the stock’s float is sold short.
🚀 Shares rocketed over 60% at one point due to the actions of these investors
💸 Despite the surge in stock price, Bed Bath & Beyond is struggling like many retailers with high inflation, excess inventory, and declining consumer confidence.
🏚 For context, BBBY experienced continually declining revenues in the past three years and hasn’t been profitable since 2018; BBBY’s market cap is currently $1.022 billion.
👑 Regardless, meme traders are reeling in profits with one investor (TheDude0007) turning $45,000 into $450,000, and another, “took out a 27k loan, went all in on BBBY.”
Are “short squeezes” a viable investment strategy for retail investors these days?
DID YOU KNOW?
During the Dot Com Bubble, the Nasdaq had 16 Bear Market Rallies >10%
Rather than try to make any predictions about where we are heading, part of being a successful investor is exploring history and attempting to understand how the markets behaved in the past.
While nothing is guaranteed in such an unpredictable environment, human nature tends to act similarly during periods of euphoria and duress.
To illustrate this, here is how markets behaved during three market bubbles (1937, 2000, 2008):
1937 – The Recession of 1937
2000 – Dot Com Bubble
2008 – The Great Recession
Do you think history will repeat itself?