A Valuable History Lesson

Every market cycle produces its share of “shiny objects.” They arrive quickly, capture our attention, often come wrapped in irresistible narratives, and then fail to deliver. This AI boom will undoubtedly be full of them, so I thought it would be insightful (and perhaps fun) to look back on some recent examples that have had some time to mature.

Let’s travel back in time about six years. Cryptocurrencies promised a new monetary system. NFT¹ art was the collectible of the future. SPACs² offered the average investor access to private companies going public. Meme stocks turned investing into a social movement.

Each of these had its moment in the sun, but did they stand the test of time?

When belief drives price

At their peak, these trends shared a common feature: their value relied less on underlying cash flows and balance sheets and more on a collective leap of faith. Belief in an idea can be powerful, but it can also fade with time.

Consider the moment that arguably defined the NFT art era. In March of 2021, a digital artwork by Beeple sold at Christie’s for $69 million, instantly becoming one of the most expensive works ever sold by a living artist. It reflected a convergence of new technology, cultural momentum, and a rapidly expanding buyer base. But was it worth it?

It is not for sale, so its current value is known only in the minds of those who would be interested in purchasing it. But the NFT art market that supported that sale has seen trading volumes fall by more than 90% from peak levels. And some iconic pieces of the time, like (I still can’t believe I’m typing this) “The Bored Ape Yacht Club,” have fallen in value by over 96%.³

History repeated

This pattern is not unique to NFTs. Meme stocks followed a similar arc. Companies like GameStop and AMC became symbols of retail enthusiasm, driven by community conviction, not fundamentals. Prices rose sharply, then fell just as quickly once momentum faded. The poster children of the movement, AMC, Bed Bath & Beyond, and GameStop, saw their shares fall 99%, 95%, and 55% from 2021 peaks.

SPACs offered another version of the same story. At their peak, they provided an appealing narrative: access to early-stage growth companies without the traditional IPO process. The pitch was essentially, “you write us a blank check, and we promise we’ll buy something good with it.” In practice, many struggled to meet lofty expectations. S&P briefly published a SPAC index. From its late 2021 peak to its closure in early 2024, SPACs in the index underperformed the S&P 500 by 48%. Defiance Next Gen SPAC (SPAK) was an attempt to launch an ETF with a SPAC theme (even though many of its holdings were not SPACs). In its less than two years of existence, it underperformed the S&P 500 by 66%.

Cryptocurrencies are a bit more complicated. Their story is still playing out. Long-term holders of Bitcoin will have done very well. But the bellwether digital coin is down over 50% from its 2025 peak, highlighting how fickle markets are that rely on faith. Other famous coins like Dogecoin, which was literally a joke that some took seriously, have fallen nearly 90% from their peaks.

Of course, not every outcome has been negative.

Some winners. Many less fortunate.

The intrigue for some is that millionaires and even billionaires have been minted through these shiny objects. Early investors in certain cryptocurrencies, for example, saw astronomical gains. Some NFT purchasers undoubtedly sold at a profit before prices cratered. Select companies that came through SPAC structures are now viable businesses.

But the dispersion of outcomes has been enormous, with most investors left with little to show.

Entertainment, not investment

While I have just used the term “investors,” I would argue that none of these shiny objects are investments. They are gambles, built on nothing more than a belief that someone else will pay more for them in the future. Their shared feature is that they have little-to-no cash flows and little-to-no tangible assets (particularly for NFT art and crypto). Their value is belief, and when belief is the primary driver, outcomes tend to be binary. Prices can rise quickly, but they depend on continued enthusiasm. When that enthusiasm wanes, the adjustment can be just as fast.

But admittedly these can be fun. If your goal is entertainment, have at it. I’m sure many within our walls at Strategic have ventured into the shiny object realm for fun. Just make sure it is coming from your Vegas entertainment budget that you are prepared to lose, not your retirement savings.

A preference for science

Returning to today, this market once again seems ripe for the creation of shiny objects. We’re seeing it a bit in the IPO market, with SpaceX commanding a trillion‑dollar‑plus valuation despite losses and astronomical revenue expectations. So much of that valuation is built on faith.

We prefer an investment approach that values science over speculation. If there is little to nothing underpinning the value of an investment, we are happy to step aside and let others play that game. We like cash flow. We like earnings. We like balance sheets with tangible assets. This may sound boring, but consider the $69 million Beeple NFT art purchased back in March of 2021. I’m sure Mr. Sundaresan is very happy with his prized possession, but had he invested it in the earnings power of U.S. companies through an S&P 500 ETF, he’d be sitting on over $140 million in liquid assets he could turn into cash tomorrow.

Now that’s a shiny object I can get behind.

1. Non-fungible Tokens (NFT)

2. Special Purpose Acquisition Company (SPAC)

3. www.coingecko.com, May 1, 2022 – June 29, 2026