Look Out for Signs We're Entering a Bubble

Editor's note: According to Dr. David "Doc" Eifrig, CEO of our parent company MarketWise, we're starting to see signs of an AI frenzy. In this piece, adapted from Doc's Health & Wealth Bulletin e-letter, he looks to the 2017 crypto boom to reveal what's different today... and what we should be looking for when this bubble gets ready to pop.

It took just one word to send a beverage company's stock on a 183% rally...

In late 2017, Long Island Iced Tea was in trouble.

Ambitious executives had wrestled the small company onto the Nasdaq Capital Market a year earlier, where it traded under the ticker LTEA. But it couldn't maintain the Nasdaq's minimum $35 million market cap. The company was going to be delisted.

Long Island Iced Tea was only selling about $5 million worth of tea and lemonade per year. That didn't impress investors. They didn't see the company being worth $35 million.

So management tried something new.

Their company wouldn't be about iced tea anymore. It would be about cryptos... And instead of Long Island Iced Tea, it would be called Long Blockchain.

As management put it, the company was "shifting its primary corporate focus towards the exploration of and investment in opportunities that leverage the benefits of blockchain technology." The tea business would become a subsidiary.

The renamed company reserved the web domain "longblockchain.com." It asked for a ticker change to LBCC. And it made plans to buy some equipment to mine bitcoin.

If that sounds like a bunch of hooey, it was. But if you thought investors would see right through it, they did not.

One thing is clear – this is just the sort of warning sign you can expect at the start of a speculative mania.

The Crypto Mania vs. Today

In 2017, bitcoin was all anyone could talk about. By December, it had shot up nearly 2,000% since the beginning of the year. Folks were calling me right and left, asking whether they should take out loans to buy more of the crypto.

Long Blockchain hit the markets at just the right time. The word "blockchain" was enough to nearly triple the company's value in a matter of days.

This success didn't last, of course.

The company had absolutely no ties to blockchain and no experience with it. It had no crypto-related business plan. It never even managed to mine any bitcoin.

Before long, Nasdaq booted Long Blockchain off its exchange. And the company's leading shareholder got charged with insider trading for tipping off a friend about the company's coming crypto "pivot."

This price chart shows the company's rapid rise and fall...

You see a lot of stupid stuff during a speculative mania. People try to make a quick buck and ignore all reason.

You can see it with Long Blockchain during the 2017 bitcoin frenzy. And you can find countless examples from the dot-com bubble, when folks flocked to would-be Internet companies with no connection to the Internet... no products... and no revenues.

Today, instead of cryptos or the Internet, it's AI that has everyone excited.

AI dominates the news cycle, and everyone is trying to invest in companies that will benefit from it. Many AI stocks have posted monster returns.

Because of this, some folks are throwing around terms like "AI bubble" and "AI mania."

It's true that things are starting to feel a bit frothy. We recently saw a similar warning sign. In April, shoe company Allbirds (BIRD) announced a pivot to AI data centers. The stock briefly skyrocketed, then swiftly fell back to earth as the excitement cooled off.

But the stock market isn't flooded with no-revenue companies going public at absurd prices.

And I'm not getting inundated with calls from folks asking about the next great AI stock.

Now, I'm a conservative investor. I prefer safe dividend payments to richly valued companies that might grow revenues by hundreds of percent a year.

That's still true. I'm probably never going to invest in the hottest AI stocks.

The difference is, unlike Long Blockchain, these are real companies.

Also, many of the largest tech companies embracing AI today have real profits.

The chart below shows the net income and free cash flow for some of the biggest tech leaders, as of the end of 2025...

Yes, we're in an AI boom – but that doesn't mean we're at the peak of a bubble.

What we're seeing today doesn't match what I saw at the height of the dot-com craze or the 2017 bitcoin mania.

That means there's still time to make money.

Here's to our health, wealth, and a great retirement,

Dr. David Eifrig

Editor's note: You don't have to let fears of an AI bubble keep you up at night... or, worse, lead you to sell too early. That's because our firm has discovered a simple way to position yourself to ride this "Melt Up"... and to help you know the exact day to get out. It's more critical than ever that your money is in the right place. The best part is, you don't need to do anything complicated to take advantage of it.