History is not a straight line forward.
Setbacks are usual on the road. Plus, it takes time for new ideas to evolve into a better version of itself. As long as it represents a future that’s needed, it will come back from “disillusion”.
Instead of chasing the very new idea, investors looks back and brings past “bubbles” back to life – when they can show some real progress/changes.
Cannabis, Bitcoin and 3D printing are just three examples. It’s interesting to see the cycles forming, although 2-3 years might not be long enough to be called “big cycles”. That’s how the future arrives.
Future ways of living, of production and of how to organize the society are always the areas to invest – but be careful with bumps on the road.
1/ Cannabis
Cannabis stocks had a great performance in the second half of 2018 before they crashed. In the past few month, they are back to life with some 100-200%+ returns.
What has changed? People are expecting the US market to open up as legalization on the federal & states levels is under way. Price stabilizes, oversupply concerns are going away, more consolidation in the industry, and companies post strong growth and healthier gross margin in Q3.
Jan 1, 2017 – Jan 8, 2021 | ~2 years from the previous peak
2/ Bitcoin
Bitcoin was called a “bubble” and is still called a “bubble” today. Bitcoin price hit $20k 3 years ago. Now it’s doubling the previous high to $40k.
What has changed? More people are seeing it as a hedge against USD depreciation as bitcoin’s supply is limited – it’s younger generation’s gold.
Jan 1, 2017 – Jan 8, 2021 | ~3 years from the previous peak
3/ 3D printing
3D printing was in a “hype” mode back in 2014 and quickly lost most of its “market cap” afterwards – just like cannabis and bitcoin.
What has changed? During COVID-19, when global supply chain was disrupted, people realized the value of flexibility of 3D printing, especially in medial equipment solutions. The 3D printing companies are also developing more “recurring” business model. With auto and other manufacturing sectors are expected to recover in 2021 and beyond, people are betting on a more “agile” future of the industrial world, with more customization and more flexible capex.
Jan 1, 2012 – Jan 8, 2021 | ~7 years from the previous peak
Charts are created by author, soured from WSJ