The Day the Music Died

A long, long time ago
I can still remember how that music
Used to make me smile
And I knew if I had my chance
That I could make those people dance
And maybe they’d be happy for a while.

-American Pie, Song by Don McLean

During the Great Financial Crisis Charlie Prince, Former CEO of Citigroup, delivered one of the most famous quotes in Wall Street history about Citigroup’s continued commitment to leveraged buy-out deals, despite the fears of reduced liquidity due to the sub-prime meltdown. Charlie said “As long as the music is playing, you’ve got to get up and dance.”

Retail investors have sat out stock trading for almost 20 years, but the Covid shutdown reinvigorated their animal spirits to record levels across multiple asset classes. Now Wall street is dancing the happy dance! There is too much money chasing too few assets, driving up the prices in stocks, homes, bitcoin, art, baseball cards and anything else that someone can monetize.

We are officially in “keep playing until the music stops” mode, where timing is a delicate binary event that will leave some citizens feeling opulent, some feeling destitute, and some feeling mugged. The creative destruction of capitalism is going to play out in blockbuster fashion by the time the Fed’s largesse wears off. The Fed creates bubbles. It is a driver of the creative destruction that comes along with living in a capitalistic country. The good dramatically outweighs the bad, but the outcome always separates winners and losers in dramatic fashion.


The music has been playing for FAANG stocks 10 years. Who would ever sell a FAANG stock? This is somewhat of a consensus after a decade of massive outperformance and the market cap weighted S&P returns driven by this handful of stocks. I have no prediction on FAANG’s future, but market leadership rotates and a decade of outperformance is rarely repeated.

I called my custodian to check a borrow rate on Tesla with the intention to short the shares only to be greeted by laughter from the young person on the other end of the line. His reply, “there is plenty to borrow because no one shorts Telsa. No One Ever Shorts Tesla.” I guess then that no one shorts Apple, Amazon, Netflix, Facebook, or Microsoft. Can the large cap tech stocks that dominated performance from 2010-2020 repeat that performance again for another decade? Let us look at some of the former largest market cap names in S&P.

Three former “cannot lose” large cap stocks that faltered after becoming the largest companies in world are GE, Exxon, and IBM.