Editor's note: This historic bull market won't end until investors experience "irrational exuberance," our colleague Steve Sjuggerud says.

Today's Masters Series is excerpted from Episode 72 of the Stansberry Investor Hour podcast.

In it, Steve and senior analyst Brett Eversole look at the ends of previous bull markets... discuss which companies will reward investors the most during the Melt Up... and tease the stock they're revealing on Wednesday night...

These Will Be the Biggest Winners of the 'Melt Up'

An interview with Steve Sjuggerud and Brett Eversole

Brett Eversole: Steve, you mentioned irrational exuberance.

I wasn't in the investment space in the late 1990s, but I think about bitcoin last November and December... I threw a birthday party for my wife, whose birthday is in mid-December. The entire party, I was talking to friends about these crappy "altcoins" that everyone was buying. They thought they were getting paper rich at the time. None of it made any sense to me, but you could cut the irrational exuberance with a knife. It was ridiculous.

You talked about how people in 1994 were still skeptical, but the market went up. Were people skeptical from 1994 to 1996? What happened to make investors switch one day?

Steve Sjuggerud: That's a great question, Brett. The short answer is yes, you are correct. People were skeptical in 1994, 1995, 1996, and 1997. The market had been in a bull market since the early 1980s. This was one of the longest bull markets ever. There was a bit of a recession around 1990, but for the most part, stocks had gone up for 15 years.

Brett: The economy had been great for a decade-plus, too.

Steve: There has to be a catalyst, but you never know what is actually going to tip things into irrational exuberance.

But really, the promise of the Internet was the catalyst for that. And I know that seems obvious in hindsight, but everyone was excited about it. The reality was different than the promise because people were paying outrageous prices for the companies and technology that would lead the way. Many of those companies either went away, or it took them many years to actually grow into the promise that they were offering.

The greatest booms almost always happen in technology and biotech. That's where the innovation is happening. This time around – and I really think our visit to China and seeing Tencent really opened our eyes to it – it will be the social media and ecosystem-type businesses. Because when you see what Tencent really does, it's far beyond what a company like Facebook could ever do.

We kind of saw into the future. We call it this global ecosystem "social media" here in the U.S., but it's much more than that. When investors start to realize what's possible there, it's going to be tech and biotech leading the way in this boom. But I don't feel that at all yet. We talk about the "FAANG" stocks and these big tech names, but they're not at crazy valuations yet.

Brett: It seems like a niche of the overall market. It doesn't seem like the overall market feels like a bubble. It's just a little piece here, a little piece there.

Steve: That's the way it goes, though. That's another good point... As you reach these peaks, the number of stocks leading the way continues to shrink, so it's not the overall market. In fact, I think Warren Buffett was essentially flat during the last 12 months of the previous Melt Up. So the greatest investor of all time delivered a roughly 0% return while the Nasdaq went up 100%.

You can't just buy the whole stock market and expect to maximize your gains. To give you an idea, we're looking at a company and how powerful these top names are. For example, Tencent is China's most important company, and I believe it will be the world's biggest company someday.

Tencent owns WeChat, which is sort of the Facebook of China, but it's also the world's largest gaming company... bigger than Microsoft's Xbox, bigger than any of the gaming companies you can imagine.

But what's interesting to me is that even my wife is a mobile gamer. Now, I'm not talking about Call of Duty or something. But on her cellphone when she burns time, she's playing some kind of game. Brett, do you experience this at all?

Brett: Yeah, my wife plays some game whenever we're on an airplane. She's hooked on it whenever she has nothing to occupy her for more than 10 minutes at a time.

Steve: The way you get these games, of course, is on Apple's App Store or on Android's Google Play Store. Every one of these games, Apple and Google take 30% of the price. Any money spent, they take 30% off the top. When you go to China and you see the absolute proliferation of mobile gaming, it's insane. These major players are taking incredible amounts off the top.

I have a teenage son, and as much of as a sports fan as he is, I think he would rather watch excellent Fortnite players than to go to a Florida Gators football game or something. It's just a different generation, and I think we're going to see an entirely different universe soon.

Brett: That has always kind of been your pitch on Tencent... that it controls screen time in China better than any company in the world. It's not going to be unseated in that regard, and it's still figuring out how to turn that into dollars.

But look at what Facebook has done since it went public in 2012. People weren't really sure how it was going to turn all those eyeballs into dollars, and it has done a really good job of it, and now it's one of the most valuable companies in the world.

Steve: That reminds me, we have our big Melt Up event on Wednesday, October 24. We'll be talking about these companies and how to take best advantage of this.

Without a doubt, we are talking about businesses like Tencent. People have no idea how many different businesses Tencent actually owns a percentage of and is involved in. We have found an incredible business that will take advantage of this theme. During the event, we're going to share the incredible story behind this stock.

The upside is just extraordinary. It checks all of the boxes. We'll reveal the name and ticker of this stock for free at our event on October 24. It takes advantage of everything we're talking about: Tencent, mobile gaming, social media.

Brett: It's always great to see companies that have actually partnered with Tencent. Tencent is an investor, which is always great to see.

Steve: You would be stunned at how many businesses Tencent has a stake in. It's brilliant.

Everyone knows Uber, the ride-sharing service. Uber tried to go into China and spend tens of billions of dollars doing all of the correct things with the government, hiring local drivers, schmoozing, and doing all of the right things.

Tencent owns a stake in Didi, which is sort of China's Uber. But here's the thing... People don't like to leave their WeChat app in China. It seems ridiculous. They don't want to swipe out of it and go to Uber's app. Within WeChat, you have a button for Didi where you can hail a taxi without leaving your usual ecosystem.

It would be like being able to call an Uber while using the Facebook app. People simply didn't want to leave the app. And so, no matter what Uber did in China – spending billions of dollars, schmoozing all the right people, making it attractive to customers – the fact that Didi was already within Tencent's ecosystem caused Uber to fail in China. There is no Uber in China.

Brett: It was dead on arrival because of that.

Steve: Tencent owns a stake in a lot of different things. Around Beijing, the bike-sharing is unique. You hop on a bike wherever it is, and if it's a yellow or an orange one, it's a Tencent-owned bike. Tencent owns, say, 10% of it. You hop on, swipe your QR code, ride it to wherever you need, get off, and pay for that bike. It's incredible.

A company called Naspers owns one-third of Tencent. We had an executive from Naspers speak at our conference in Las Vegas, and one of his slides was incredible. It said that in China, 56% of people's online time was spent on Tencent properties – whether they're playing a mobile game, chatting on WeChat, buying something from a store, watching the NBA... all of these things are controlled by Tencent.

Brett: It's a brilliant model. You talk about Didi, the ride-sharing, or the bike-sharing, or anything like that. Tencent will find a company that has the infrastructure, invest in it, and then put it on the Tencent platform. It almost guaranteed that Didi was going to be the successor, but it bought part of Didi beforehand. Tencent had the ability to invest in these good companies and almost guarantee that they would be successful at putting them on its platform because no one else can compete. Because, like you said, if 56% of your time is spent in WeChat... it's incredible.

Steve: We try to mitigate that. One of the questions I get a lot is, "How do you know when the Melt Up is over?" I don't have perfect foresight, so I can't tell you that. But what I can do is let my winners run and cut my losers. My plan is to capitalize on all of the upside, participate all the way up, and then use a trailing stop to get us out on the way down.

The principle here is that you want to have your downside risk be smaller than your upside potential. That's it. If you can invest that way, it's simple math. That's it.

Brett: All you can really do is put yourself in the position to get the analysis, and hopefully get things right. But you've got to protect yourself because you can't bat a thousand. Nobody bats a thousand. A lot of the best investors bat below 50%, but they manage their risk very, very well.

Steve: Yeah. This is really simple stuff. Let's say that you think an investment has 30% upside potential. What you want is to ideally have three times the upside potential as your downside risk. So if you think your upside potential is 30% and you set a 10% stop loss, then now you're in a great position. You have three times the upside potential as downside risk. In other words, you could actually be wrong two-thirds of the time and still make money. That's the simple idea of this sort of "gambling" strategy.

Before we go, I want to urge folks to tune in for the Melt Up event on Wednesday, October 24. This is truly going to be an incredible event. We have some of the biggest names in finance on board for it. The skepticism that I've seen over the potential for a Melt Up leads me to believe that the upside potential here is absolutely incredible.

We won't see a great 10-year bull market like this end with a whimper – it will end with a bang. And on Wednesday, October 24, we're going to go through exactly why... how long it should last... how high it could go... how we expect the end to happen... and what you should buy.

We will also share, as I mentioned, one specific name that is perfectly poised to take advantage of this and could rise 1,000% from here. This is the biggest event I've ever been a part of in my career at Stansberry Research.

Editor's note: The event Steve is hosting on Wednesday, October 24, at 8 p.m. Eastern time, could help create more millionaires than anything else we've ever done in Stansberry Research history. Not only will he update everyone on the latest twist to his Melt Up thesis, he'll also give away the name and ticker of a company with the potential to return 1,000% in the next year – absolutely free – just for tuning in.

Plus, he'll reveal a way to potentially double your money in the coming months... with a guarantee attached. Add your name to the guest list for this historic night right here.