Hype. It's a word tossed around constantly by younger generations, describing everything from a new video game to a much-anticipated concert. Excitement. Energy. Expectation. But the word carries a history far older, and far more cynical, than today's youthful enthusiasm.
Between the 1910s and 1920s, “hype” referred to the grift a con man might employ to swindle or overcharge a mark. By 1967, its meaning had evolved to signify “excessive or misleading publicity or advertising.”
These past definitions, steeped in deception, still resonate. Especially on Wall Street. Hype, in the market, tempts investors to chase stocks already wildly popular. A dangerous game.
For brief, exhilarating periods, chasing the hype can produce staggering gains. But holding onto those gains? That’s another story entirely. Once the buzz dies, stocks typically plummet. Consider Cisco Systems, Inc. (CSCO) during the dot-com boom. Over three years, it soared more than 1,300%! Just one year after its peak, the stock had collapsed over 80%. It took 26 years to regain that peak price. A cautionary tale.
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