By Charles Mizrahi, Founder, Alpha Investor Dear American Investor, Did you notice which industry dominated the Super Bowl commercials yesterday?
I sure did.
Because only companies that have cash to spend can do that. And when I see one industry pay up for the privilege, the end may be near…
Barron’s legendary editor Alan Abelson pointed it out in 2000.
He wrote that the more money one industry’s companies spent on Super Bowl commercials: “The more likely the stocks of those companies — and others of a kindred ilk — will do poorly in the year ahead.”
Abelson was spot-on when he said this indicator was flashing red for the dot-com crew of the 2000 Super Bowl.
Of the 14 dot-com companies that paid for commercials that year, only four are still around. In fact, most of them went out of business the very next year in 2001 — like Pets.com.
And since then, the indicator continues to ring true… Half-Minute of Fame Last year, food and beverage commercials dominated the Super Bowl commercials.
Most of us were stuck at home because of the pandemic. Besides endless Zoom meetings, we were munching on snacks. But how did those companies do one year later?
Budweiser maker Anheuser-Busch InBev was off 14%, Unilever dropped 12% and Kellogg was only slightly higher on the year. And all of them trailed the S&P 500, which soared 28% in the same time frame.
In addition, first-time Super Bowl advertiser, Robinhood, was basking in the glow of the meme-stock mania. The company’s stock is now down over 62% since it went public in July 2021.
This year, the Super Bowl ads were dominated by cryptocurrency companies.
The Wall Street Journal noted that many crypto exchanges — including Coinbase, Crypto.com and eToro — paid up to $7 million for 30 seconds of airtime this Super Bowl Sunday.
Now, with all the eyeballs on these commercials, plenty of people are telling me that crypto and these exchanges are the way of the future.
But I don’t give a hoot because I heard the same thing in late 1999… Eyeballs and Zealots Back then, everyone I knew was buying dot-com stocks. It didn’t matter how dumb the idea was or if the company didn’t have revenue (like Pets.com).
It didn’t make any sense to me. How do you value a company that’s losing oodles of money and has a bad business model?
I couldn’t.
But leave it to the determination of the zealots. They came up with one: eyeballs. They believed the more eyeballs that looked at a site, the more it was worth.
When the bubble finally burst, many saw their net worth evaporate.
I don’t consider myself lucky for avoiding the losses. I simply was never tempted in the first place.
Now, more than two decades later, I’m being told that I’m out of step again for the same reason.
The zealots are saying that crypto is the money of the future, and exchanges are the places to invest.
But once again, I’ll pass…
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Roll Credits I can’t tell you if or when cryptos will meet the same fate as the dot-com companies. And I’m not calling a top, either.
All I’m doing is pointing out the obvious. I’ve laid out the case to let you draw a conclusion. But seeing all the pieces, it doesn’t take too long to see the big picture…
After watching the Super Bowl and seeing all those crypto commercials, I’d be very concerned if I owned cryptos. Because I’ve seen this movie before, and it doesn’t end well.
That’s why I have a simple rule…
If I can’t understand an asset, I can’t value it. If I can’t value it, I have no business investing in it. I hold onto my money and only invest in things I understand.
And I’ve shared with you several times that I don’t understand cryptos or how to value them.
I’ve even asked our vast subscriber base to share with me how to come up with the intrinsic value of cryptos like bitcoin or ethereum. So far, no dice.
Just keep in mind, all you need to do to make money in the stock market is to know a lot about a few things.
And if you’re part of the Alpha Investor family, you know that’s what I help you do. We invest in companies we can understand and value. So, stay tuned for more opportunities ahead.
Regards,
Charles Mizrahi
Founder, Alpha Investor
P.S. If you’re not an Alpha Investor yet, now’s a great time to consider joining us. The recent market downturns are giving us opportunities to finally buy into great companies at bargain prices.
So, check out all the details on how you can sign up right here. 
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