GAMESTOP mania had encouraged the investing noobs to pile in and gamble on penny stocks, sheep to the slaughter that look set to lose every penny they put on what are just short squeeze pump and dump operations. Well it did not take long for that bubble to burst. A CLASSIC SMALL CAP PUMP AND DUMP!

But we do tend to get mass hysteria towards market tops which is why it is important to keep an eye on valuations, YES our tech stock valuations have increased, roughly by about 30%, but that does not put them into bubble territory.

Remember folks unlike the noobs out there we are NOT GAMBLING, WE ARE INVESTING IN MEGA-TRENDs. We understand that there is a lot of volatility out there both as a function of central bank rampant money printing and clueless Noobs trying to jump on board pump and dump schemes that I advise all steer well clear of!

Contrary to the fools in the financial press the GameStop saga was not the people vs Wall street, instead was clearly a well organised PROFESSIONAL PUMP AND DUMP OPERATION! For instance they picked the RIGHT stock with huge shorts on it and then PUMPED the HELL out of it across social media.

So keep an eye on valuations, look to accumulate key stocks on panic plunges, look to reduce exposure when stocks run ahead of valuations, and avoid becoming a sucker in pump and dump schemes like Gamestop. For instance I lightened my load on Amazon not because I doubt its future but because it had run way ahead of valuations. However the latest earnings have Amazon seeing revenues jump by 44% year on year with similar picture of earnings growth throughout the tech stocks sector. So no this is NOT 1999, we are nowhere near a bubble mania top! In advance of which I will definitely be selling the stocks I hold as they become more distant from valuation fundamentals which is what happens at Mania bubble tops. So unlike most of the fools who discuss stocks online THE STOCK PRICE DOES NOT MATTER!, It is the VALUATIONS that matter! Which is why throughout 2020 I repeatedly warned against selling holdings as some were asking my advice on from early April 2020.

But do take GameStop as a warning not to get sucked into PUMP and DUMP operations including IPO's. Which is one of the reasons why I never suggest anyone invest in a small cap stock as the risks are far too high i.e. it is better to let the likes of Google do their due diligence than for us small fry to try and separate the Wheat from the Chaff, yes once in a while we may get likely but most likely then not the small cap stock we invest in will soon be heading towards zero.

This article is an excerpt form latest extensive analysis that concludes in detailed stock market trend forecast for 2021 has first been made available to Patrons who support my work.

Dow Stock Market Trend Forecast 2021

UK Coronavirus Pandemic Current State
US Coronavirus Pandemic Current State
Stock Market Forecasts and Analysis Review of 2020
The Stock Market Big Picture
Post Covid Economic Boom
GAMESTOP MANIA BUBBLE BURSTS
FED Balance Sheet
Dow Short-term Analysis
Dow Long-term Trend Analysis
ELLIOTT WAVES
SEASONAL ANALYSIS / Presidential Cycle
Stocks Bear Market / Crash Indicator (CI18)
Dow Stock Market 2020 Outlook Forecast Conclusion

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AI stocks buying levels update
UK house prices trend forecast
Stock market trend forecast for 2021
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US Dollar and British Pound analysis

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Nadeem Walayat

http://www.marketoracle.co.uk

Nadeem Walayat has over 30 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis focuses on UK inflation, economy, interest rates and housing market. He is the author of five ebook's in the The Inflation Mega-Trend and Stocks Stealth Bull Market series that can be downloaded for Free.

Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication that presents in-depth analysis from over 1000 experienced analysts on a range of views of the probable direction of the financial markets, thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

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