Deja vu again.

Bitcoin flew past the $120,000-per-thingy mark (in US$) in October. Now it’s at ninety grand and, analysts say, on its way to $80,000. That would be the loss of a third of its value in two months. Ouch.

But equity investors should not be smug. The S&P, the Dow and even Bay Street have been spanked this week. Record high after record high since the Liberation Day collapse back in the spring have turned greed into fear. Pronto. All of a sudden the financial press brims with stories featuring “Dot-com” in their headlines.

The kiddos among us may not remember Nortel, pets.com and CEOs on skateboards, but they should learn. Investors could not feast fast enough on Internet startups as society was being told that everything was about to change. Eventually, everything did. But along the way companies with huge, unearned valuations and no profits collapsed.

The high-flying, tech-heavy Nasdaq lost 80% of its value. The dot-com collapse robbed millions of investors of billions. Nortel – which once dominated the Toronto market – went to zero.

That all happened twenty-five years ago. I was in the middle of it, weirdly. A financial broadcasting, streaming and media company I started was courted by a well-funded, cash-rich dot-com juggernaut. I sold half the enterprise to it and in a twist of fate a year later ended up controlling everything as the skateboarders were slaughtered by Mr. Market. Happily I took their cash, first.

Well, are we here again? As AI the new dot-com?

Regular addicts will know my trophy colleague Ryan wrote a long piece about that this past weekend. There was no conclusion – just a solid discussion on the reasons artificial intelligence investment makes sense, and the reasons it may be faery dust and duct tape. Without a doubt, we have to ask hard questions when, for the first time ever, a publicly-traded company (Nvidia) is worth $4 trillion. And then, presto, it’s worth $5 billion. (As I write this, it’s back to $4.6 trillion prior to its earnings report tomorrow.)

This week there have been some heavy losses on the markets. Tech is being whacked, and taking others with it. The betting is US interest rates may not be falling as decisively as expected (Canadians rates appear stalled), and there is genuine worry about the US economy after the recent shutdown in Washington wiped away key data.

Thursday will be a big day for data.

The important jobs report comes out in two days. Meanwhile Home Deport has been shedding value as the American real estate market (like ours) is in stress – as evidenced by Trump’s ridiculous 50-year mortgage suggestion. US consumer prices are rising, household finances are more difficult and the fact 42 million families are on federal food assistance speaks volumes about the path America seems to be on.

There is money for a crystal ballroom at the White House and a $20-billion loan to Argentina, but not enough for food stamps while Elon Musk gets a $1 trillion pay package and health premiums for 20 million middle-class homes double.

The fact remains 70% of the US economy is based on consumer spending. So when consumers are feeling distressed, pressured and pissy, there are consequences. Tariffs are increasing prices, a fact Trump quietly acknowledged this week as he shed them on beef and bananas.

In this world, approval ratings have tanked for the American president. The Epstein debacle has weakened him within the party. Nick Fuentes, Tucker Carlson and the new-nazi Groypers have started to seriously taint MAGA. The recent votes in NJ, Virginia, NYC and California may have been a harbinger of the 2026 midterms which may turn Trump into a limping duck.

In short, there’s a lot going on having to do with how Americans think, and how they will spend. While Mr. Market has been obsessed with AI, hundreds of millions of people who actually create the economy are more concerned with eating, working and making rent.

Analysts warn markets are poised for a drop after hitting so many new highs based primarily on one sector with a scant track record and outsized promises. AI is probably transformational, but widespread and profitable applications could be far off. It would be wise to have exposure to it, while also owning a bunch of safe and boring stuff.

It’s a dicey time. For example, if the jobs report in the US is strong on Thursday the Fed may shelve more rate cuts, worrying about inflation. If the report is weak, markets will fret over the health of the economy. And meanwhile – every single day – Congress and the political class lose creds.

The best defence is to remain balanced and diversified. Keep a global portfolio. Invest through ETFs, not in individual stocks. Own REITs, preferred shares and bonds as well as equities. The best mix remains about 60% in growth assets and the remainder in boring stuff. Have some cash if you want, but be wary about locking wealth up in long-term near-cash investments like GICs that hardly pace inflation.

This will all be over sooner than we expect.

About the picture: “Thanks for all the great work you do,” writes Bonnies. “Here is a pic of a very friendly dog we met at Miracle Beach on Vancouver Island. The owner said it was a spaniel mix.”

To be in touch or send a picture of your beast, email to ‘garth@garth.ca’.

Source: https://www.greaterfool.ca/2025/11/18/deja-vu-again-3/