The FOMO Bull Market Is Back – Here’s How to Invest Before It Blows Up
Tom Yeung here with today’s Smart Money.
When investors get excited, that excitement rarely stays contained to a single corner of the market.
Money flows into one hot asset, early investors make fortunes, and suddenly everyone starts looking for the next big winner. Before long, the optimism spreads. Stocks rise, speculative bets multiply, and assets that seemed unrelated begin moving higher together.
That’s one reason I pay attention to Bitcoin (BTC-USD). Over the years, the cryptocurrency has served as a surprisingly useful barometer of investor enthusiasm. When speculative money starts flooding into Bitcoin, it often signals that investors are becoming more willing to take risks elsewhere as well.
The problem is that investors are not always rational.
The fear of missing out (FOMO) can be more powerful than the fear of losing money, and a boom in one corner of the market often sparks rallies in others. As economist Charles P. Kindleberger wrote in his classic 1978 book Manias, Panics, and Crashes, “There is nothing so disturbing to one’s well-being and judgment as to see a friend get rich.”
We saw exactly that dynamic play out in 2024. Bitcoin doubled in value, eventually climbing above $122,000 before suffering a rather inglorious selloff in late 2025. But the story wasn’t just about Bitcoin. The surge in risk-taking helped fuel rallies across commodities, biotech, AI, and other speculative corners of the market.
Now, that pattern appears to be repeating itself.
We’re seeing a new cohort of AI companies – from SpaceX Technologies Inc. (SPCX) to Smartbird Inc. (BIRD), formerly Allbirds – steal headlines.
So in today’s Smart Money, let’s look at how today’s AI boom is fueling a new wave of speculative enthusiasm across the market – and what that could mean for stocks in the months ahead.
Then, I’ll share one stock to help you start organizing your portfolio safely and profitably.
Let’s jump in…
This Rally Still Has Room to Run – but Not Forever
First, there’s a good chance this bull market lasts through the end of the year.
Full-year S&P 500 earnings growth is expected to hit 23.3%, and U.S. macroeconomic data are holding up well. America is vastly outperforming other developed economies on GDP growth, unemployment, and AI innovation. All else equal, that kind of earnings growth provides room for stock prices to move 20% to 25% higher as well.
We also know from history that American markets typically keep going up for a year after reaching a fresh record high. If historical averages hold, we’re looking at a bull market that should last until at least late September – one year since the S&P 500 “started the timer” by hitting a new peak.
However, I don’t think investors should approach this rally with the same optimism they had in 2024. FOMO rallies typically center on momentum plays, and the most popular of these are now too expensive to buy safely.
One of the clearest examples of that is the dynamic random-access memory (DRAM) market, which is historically dominated by three firms:
- Micron Technology Inc. (MU)
- SK Hynix Inc. (KRX: 0006600)
- Samsung Electronics Co. Ltd. (KRX: 005930).
The trio is now worth over $1 trillion each thanks to AI-driven demand for DRAM, and all three trade below 20X forward price-to-earnings (P/E) ratios because their “E” (earnings) denominator is so inflated.
However, the valuations of the “Big 3” assume that DRAM prices will remain in the stratosphere. It’s the same kind of optimism that drove memory stocks up 400%-plus in the years around 1995, 2000, and 2014.
Each time, investors thought industry cyclicality was a thing of the past. And each time, they were dead wrong.
Is this time different?
Well, maybe. Artificial intelligence requires far more computing power than anything before it, and the AI infrastructure buildout should last through at least 2031.
Then again, unusually high profits tend to attract new competitors.
We’re already seeing Chinese state-backed behemoths like ChangXin Memory Technologies (CXMT) and Yangtze Memory Technologies (YMTC) steal market share from Micron, SK Hynix, and Samsung. It’s not hard to imagine CXMT and YMTC becoming like the Chinese solar-panel makers that drove American manufacturers out of business between 2012 and 2017.
Bottom line: This bull market may have further to run, but many of the market’s most popular momentum trades no longer offer an attractive risk-reward balance.
That’s why Eric is becoming more selective. at his Fry’s Investment Report service.
Here’s how he’s doing that…
FOMO Is Played Out – Here’s What to Buy Instead
The 2024 FOMO rally provided plenty of investment opportunities. Companies like Alphabet Inc. (GOOGL) and Amazon.com Inc. (AMZN) still had fundamental upside thanks to the 2022 “Year of Efficiency” selloff, and commodity markets were still depressed from the Chinese housing market crash.
This time around, investors need to look further afield for cheap momentum.
That’s why I want to bring your attention to Coupang Inc. (CPNG), a Fry’s Investment Report holding that Eric considers a “Strong Buy.” Unlike many AI infrastructure plays, Coupang still combines reasonable valuations with solid earnings growth.
This South Korean e-commerce firm has both cheapness and momentum on its side. Net revenue is growing, with first-quarter earnings reporting an 8% increase year-over-year.
Also at Fry’s Investment Report, Eric is recommending a Chinese electronics recycling company and an American battery utility. Both have momentum behind them and are relatively cheap. The former trades at just 7.5X forward earnings, despite growing at 25% per year and carrying no debt. The latter is riding a wave of battery storage demand and still trades below its 2021 IPO price despite a 345% rally last year.
That said, there will still be profits to take as this bull market runs its course.
Because in a FOMO rally, the smartest investors aren’t the ones who ride it the longest; they’re the ones who know when “too much money chasing too few assets” has finally run out of road.
To learn more about how Eric is avoiding this ticking time bomb – and a tandem company to sell after adding Coupang to your portfolio – click here.
Until next time,
Thomas Yeung, CFA
Market Analyst, InvestorPlace
The post The FOMO Bull Market Is Back – Here’s How to Invest Before It Blows Up appeared first on InvestorPlace.
