Sjuggerud: This is NOT what a ‘Melt Up’ top looks like

From Dr. Steve Sjuggerud, Editor, True Wealth Systems:

I’ve said it for years… The biggest gains will come in the final innings of the bull market.

My friend, the final innings have arrived. The big moment is here.

Yesterday, I explained my “Melt Up” thesis, and why I believe these final innings could lead to massive gains.

It’s already happening… Stocks are up big over the last 18 months. But I don’t believe we’re at the top yet.

The reason is simple… Things don’t look anything like they did at the top of the last Melt Up.

Let me explain…

During the last Melt Up, we saw the biggest gains in the tech-heavy Nasdaq Composite Index. It soared 200%-plus in 18 months as the Melt Up concluded. And prices hit truly ridiculous valuations along the way.

A lot of people point to today’s valuations in the U.S. as a reason the recent gains can’t continue. But here’s the thing…

During the last Melt Up, valuations were already ridiculously high – before it all began.

The chart below shows the price-to-sales (“P/S”) ratio for the Nasdaq during the 1990s. (This ratio is one of the best ways to measure real value in the stock market.) Take a look…

The Nasdaq’s P/S ratio doubled from 1.5 to 3 in 1998-1999. It then roughly doubled again before finally hitting its peak.

This proves a powerful point… Valuations alone don’t stop this kind of boom.

And that was just the broad index. The Nasdaq’s top holdings hit even crazier levels…

The table below shows the Nasdaq’s top 10 holdings at the end of 1999. Many of these are household names today. But back then, they were the most exciting and highest-growth businesses in America.

Importantly, as the table shows, these companies saw their P/S ratios explode during the last Melt Up. Take a look…


These numbers are hard to believe, but they’re true…

Microsoft was priced at a ridiculous 17 times sales when the Melt Up began. Its valuation increased nearly 60% from there. Qualcomm went from being dirt-cheap at 1.3 times sales to a true bubble valuation of 27 times sales.

Only one stock on this list – WorldCom – saw its P/S ratio decline during the Melt Up.

Most of them saw their P/S ratios increase by multiple times – and they eventually reached crazy levels.

This is all the proof I need that the Melt Up in the U.S. isn’t over yet.

Valuations are high… But they’re nothing like the last Melt Up. And that tells me stocks can still soar dramatically from here.

Good investing,


P.S. Big gains are still ahead… But this bull market is accelerating. That’s why I want you to check out my free emergency briefing for a crucial update to my Melt Up thesis. I’ll tell you which parts of the market will soar the most in the coming months… And Porter Stansberry will explain how you can still prosper, and even profit, when we finally enter the “Melt Down.” Get all the details by clicking here.

× Subscribe to Crux
Want more posts like these?
Like us on Facebook?
Crux Contributors