Blowing A Fartcoin
Are meme coins heralding the next market crash?
“Fart for freedom, fart for liberty – and fart proudly.” - Benjamin Franklin
A Fartcoin doesn’t even have the intrinsic value of a fart, which at least contains methane, yet meme-coin enthusiasts have collectively valued it at $1.4 billion.
Laugh it off as crypto satire. Or take a big whiff. Because it smells like something is about to blow – and this ain’t you’re daddy’s whoopy cushion.
“We have reached the ‘Fartcoin’ stage of the market cycle,” Greenlight Capital founder David Einhorn wrote in a recent investor letter.
Einhorn expects a wild ride ahead. He may be just another bloviating hedge fund manager talking his book on CNBC, but he’s also the guy who famously shorted Lehman Brothers just before the 2008 financial crisis. And now it’s Fartcoin that has him pinching his nose.
“Other than trading and speculation, it serves no other obvious purpose and fulfills no need that is not served elsewhere,” Einhorn wrote.
Do people who complain about the price of everything – groceries, gasoline, rents, homes, cars insurance – still have money for Fartcoin? And if it’s not Fartcoin, are they buying the $Trump and $Melania meme coins launched just before President Donald Trump’s inauguration?
The financial sewage line gets wider with each passing day. The latest example: The Securities and Exchange Commission just removed a major barrier for banks to own cryptocurrencies, whose value largely depends on the greater fool theory.
Luckily for crypto investors, we are a nation of fools ready to pay more for anything. And shitcoins aren’t the only signs of our irrational exuberance. The stock market is now at all-time highs with the crass speculation that often presages a significant market decline.
The Wall Street Journal’s Spencer Jakab (who you can also catch here on Substack) notes that U.S. stocks are priced significantly higher than they were at the beginning of other presidential terms.
Measured by cyclically adjusted price-to-earnings ratios, they’re 83% higher than where they were when Bill Clinton first took office, 145% than they were for Barack Obama, and 400% higher than they were for Ronald Reagan, Jakab writes.
It’s easy to spot a bubble, but predicting when it will pop is another matter. In Trump’s last term, he used the Dow Jones Industrial Average as a measure of his success, but he’s not likely to make it four years before this gasbag blows.
There’s more to the story, but the rest is for paid subscribers.Please help make the business world a more honest, less reckless, less authoritarian place by:
Liking and commenting on posts, which boosts the Substack algorithm.
Sharing this newsletter with friends and associates.
Subscribing. Free or paid, I’m so glad you’re here.
And don’t miss these blunders.
Keep reading with a 7-day free trial
Subscribe to Business Blunders to keep reading this post and get 7 days of free access to the full post archives.