The ‘Go-Go’ 60s: A Decade of Big Bets and Bad Advice

The 1960s were a time of high hopes and hype on Wall Street.

New technologies like electronics and computing fired investors’ imaginations.

The parallels between the go-go 60s and the bull market of the 2020s are striking.

Both featured hot tech stocks, surging IPOs, and a feeling that the good times would never end.

In the 60s, companies slapped "tronics" or "tron" on their names to cash in on the electronics craze. The hot stocks back then had names like Astron, Vulcatron, and Transitron.

This behavior is eerily similar to today's market, where associating a company’s name with AI is all that matters.

Last year, it was "crypto" or "metaverse."

 Before then, it was 3D Printing or the "China Miracle."

Same hype. Different era.

One company selling record players in the 1960s changed its name to Space Tone before going public. Its stock quickly soared from $2 to $14 without any real business prospects.

It didn't matter what the companies did. The name was enough to send investors into a frenzy. Investors flocked to new issues based on buzzwords and promises of the future, not fundamentals.

Buyers paid insane multiples without even looking at financials. If it sounded electronic and exotic, investors wanted in.

Nixon’s Bad Advice

President Nixon inserted himself at the tail end of the era when he urged Americans to load up on stocks.

On April 28, 1970, he said, "If I had spare cash, I'd buy stocks now."

A year later, Nixon’s advice had proved timely.

Both the S&P 500 and the Dow were up more than 30% from where they were when Nixon made his recommendation.

Sadly, the returns for the rest of the decade were dismal.

While times change, investor psychology stays the same.

Fundamentals go out the window in pursuit of the next hot theme.

The SEC can mandate risk disclosures in IPO prospectuses.

But warnings fall on deaf ears. Greedy investors rush in, hoping to cash out at higher prices before the inevitable collapse.

And collapse is inevitable.

So what happened after the 60s party ended?

The Tronics bubble violently burst, crushing many players. Only a rare few timed it perfectly, buying early and selling at the peak.

The 70s were a significant hangover for investors, with the Dow barely budging for the entire decade.

Lessons From the 1960s

Exuberance left unchecked leads to excess. And excess always ends the same way - badly.

Those who learn from the past are poised to profit in the future.

By studying previous manias, you can spot today’s signals of speculative excess early.

That lets you ride the boom prudently while preparing for the inevitable bust. With smarts and discipline, investors can have their cake and eat it, too.

The 1960s Tronics mania holds three critical lessons for tech investors today:

Lesson #1: The life cycle of tech firms is predictable. An ambitious upstart emerges with a hot new technology. Established firms copy it. Legal battles follow as companies fight it out in court.

If the upstart grows too dominant, the government steps in to regulate. The upstart becomes an incumbent. It fails to adapt as new upstarts emerge. Its star fades as the cycle repeats.

Savvy investors play this cycle by buying low and selling high. They jump on emerging companies with cutting-edge tech. But they bail before creative destruction renders the disruptors obsolete.

Lesson #2: No tech stock rules forever. IBM, Xerox, and Kodak looked unbeatable in their day. Where are they now? Nokia and Blackberry dominated in 2007 before Apple obliterated them.

Nothing lasts in tech. Companies must constantly reinvent themselves and make bold bets. Or risk rapid extinction as the world passes them by.

Lesson #3: Technological change is messy and unpredictable. New technologies inevitably cannibalize old ones. Disruption is the essence of progress.

Apple’s iPhone killed the ubiquitous iPod. Netflix upended Blockbuster. Digital photography destroyed Kodak and film.

Embracing relentless change is critical. Companies that resist defending legacy tech court failure.

Those that instill a culture of innovation set the stage for long-term success.

That's far more than putting lipstick on a wannabe stock to become an object of speculation.

Consider yourself warned.

The next time you’re tempted to bet big on the next new thing, take a deep breath, count to 10, and close your computer.

You’ll thank me later.