Many people agree that Bitcoin is in a historic bubble. One financial expert and investor, Paul Mampilly, says that he’s seen a number of bubbles during his time, unfortunately taking part in a few of them, but nothing approaches what has been happening with Bitcoin and, to some degree, the other cryptocurrencies. Paul Mampilly was a Wall Street hedge fund manager for many years and his professional opinion is that it’s just a matter of when the bubble will burst and the values will come crashing to earth, not a matter of if.
As an example, Paul Mampilly points to the dot.com crash that occurred in 2000 and 2001. Prior to that, in 1999, pretty much every investor saw tech stocks as going absolutely nowhere but up, forever. He had a good friend named Tess who was investing everything in tech stocks. She was really excited because some of them were up by 1000% or more. Even companies that had been established long ago, like Qualcomm Inc, had their stock going nuts. Tech companies that were losing money, not making it, were also shooting up in value.
Around this time Paul Mampilly could see that everyone had lost their minds. He pulled everything he had out. He also advised his friends, such as Tess, that the tech bubble couldn’t possibly last. They scoffed at him and kept putting more and more money into the market. Eventually, as was really inevitable, the crash occurred wiped out the value of entire companies. Some people, like Tess, lost everything she had.
This serves as a cautionary tale that when everyone starts racing to invest in one thing, like Bitcoin, mania takes over. Eventually, the market for them runs out of buyers and when that happens the value drops fast and it drops hard. Whoever is the last one holding the bag will end up paying the price and no one knows who that is until after it happens.
Paul Mampilly took an early retirement from Wall Street because the lifestyle is too extreme and the only people getting wealthy or those who already are. Tired of this, he moved to North Carolina and started publishing a newsletter he named Profits Unlimited. He shares his views in this newsletter on what company’s will outperform according to his research. He lets his readers know when to buy and when to sell stocks so that they can save for their financial goals, like retirement.