Tesla Reminds Wells Fargo Strategist of When AOL Joined S&P 500
Why does Tesla joining the S&P 500 remind Wells Fargo Securities’ head of equity strategy of AOL and the dot-com boom and bust era? He explained on the latest episode of the “What Goes Up” podcast, as well as why he’s sticking with his year-end estimate of 3,850 for the S&P 500 even after the benchmark index reached that level in the first month of the year.
Some highlights of the conversation:
“I remember 1998, 1999 and I remember what was happening. You had a lot of speculation, you had a lot of retail investors getting involved. And we have a lot of funny things going on now, but what was amazing to me is AOL at the time was a game changer. It was an amazing technology. The stock had an incredible run, a run I really hadn't seen before.
“And it was added to the S&P late in a year at a very large market cap, or very large weighting. That to me was the beginning of the end, right? `99 was a fantastic year for stocks, but for, but after `99 many of your tech companies and many of your growth companies lost 50% to 100% of their value. Now you have another game-changing technology in Tesla. And you have a stock that has performed amazingly well. And it's going into the S&P 500 when? December last year. At a very large weight or market cap, right? This is signaling that we're close to the end of the growth-at-any-price type investment strategy. It's not a call out on a particular stock, but what it shows you is that we've reached a level.”
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