Statistically and Historically Speaking, 2 of Wall Street's Highest-Flying Stocks Are in Epic Bubbles That I Fully Expect to Burst

Group 1: Market Overview - Two ultra-popular stocks have seen their shares skyrocket by approximately 2,000% and 2,600% since the start of 2023 [1] - Wall Street has historically been a platform for wealth creation, with stocks providing unmatched annualized returns over the past century [1] Group 2: Investor Behavior - Investors often chase high-flying stocks in hopes of achieving significant returns in a short time frame, driven by fear of missing out (FOMO) [2] - Emotional investing can impact equities, especially when select stocks deliver extraordinary gains [2] Group 3: Palantir Technologies - Palantir Technologies has gained over 2,000% since the beginning of 2023, but is viewed as being in a monumental bubble [6][10] - The company has a sustainable competitive advantage with its AI and machine learning platforms, Gotham and Foundry, which lack direct competition [7] - Palantir is experiencing consistent double-digit annual sales growth, particularly from its government contracts [8] - Historical trends indicate that most groundbreaking technologies face bubble-bursting events early in their expansion [9] - Palantir's price-to-sales (P/S) ratio is significantly high at 108, compared to historical peaks of 30 to 43 for similar companies [12][13] Group 4: Strategy (formerly MicroStrategy) - Strategy's shares have surged by almost 2,600% in 2023, largely due to CEO Michael Saylor's aggressive Bitcoin acquisition strategy [15][16] - The company has spent approximately $40.8 billion to acquire 582,000 Bitcoin, averaging $70,086 per token, representing 2.77% of all Bitcoin to be mined [18] - Historical leverage-driven scenarios similar to Strategy's approach have often ended poorly for investors [19] - Strategy's valuation is significantly inflated, with a market cap of $106.1 billion compared to a net asset value (NAV) of $60.45 billion for its Bitcoin holdings [22][24] - The competitive advantages of Bitcoin are diminishing, and the company’s heavily leveraged model may not withstand future market downturns [25]