Bad News! The Equity ‘Melt-Up’ Already Happened

Have you heard the good news? There’s a “melt-up” coming and it’s part and parcel of a “blow-off top” in stocks.

I know this because CNBC anchors with Twitter accounts told me about it. They also said the only way to play it is to pile into ETFs so that I can ensure I have absolutely no downside protection in the event something goes wrong. The other thing they told me is that people who don’t position for this melt-up using straight-up, balls-to-the-wall, tech ETF exposure are drug-addicted goblins who are out to pilfer my money and maybe even murder me and my family as we sleep.

Here’s what we said a couple of weeks ago about this:

Of course at this point, I’m not really sure what counts as a “blowoff” top.

That term has been bandied about ceaselessly of late, and there are plenty of folks who will tell you they can define it, but that’s silly. It’s a Trump-ish superlative like “tremendous,” or “phenomenal,” or “big league.” Same goes for “melt-up.” What the hell is a “melt-up,” exactly, if not what we’ve been seeing every single day for years? I don’t know. And contrary to what they’ll tell you, neither does anyone else.

“Later stages of bull markets are dominated by sentiment rather than valuations,” Bloomberg’s Tanvir Sandhu wrote last month. Duly noted, but please point me to a time over the last year when it would have been plausible to say that valuations at the index level were some semblance of compelling, because I must have been off the desk that day.

Implicit in that is the notion that to the extent a “melt-up” is a real thing, it’s already happened folks. And sure, things could always get “melt-up-ier” and then I guess “melt-up-iest“, but again, at that point you’re playing Mad Libs with Trump.