What bubbly asset class—whose sky-high valuation rests on an immature, but very fashionable technology—is selling off sharply?

This time the answer isn’t cryptocurrencies. We’re talking about lithium miners.

Shares in suppliers of the critical battery component are falling following news that one of the world’s biggest producers, Sociedad Quimica y Minera de Chile, won approval to raise production after resolving a long dispute with the Chilean government. New York-listed rival Albemarle Corp. was down as much as 16% from Tuesday’s high on Thursday. Other lithium heavyweights also slid.

With markets testing new highs all over, it may be tempting to dismiss this spot of trouble in lithium-land, like the end of the cryptocurrency fairy-tale. But that could prove costly.

When liquidity is abundant and broad-based growth lacking—as for most of the past decade—plowing funds into speculative tech plays that might someday deliver big profits carries less risk. With money cheap to borrow and alternatives thin, they can seem immune to negative news.

Lithium bubbling up. Photo: Ivan alvarado/Reuters

But today’s rebounding global growth and inflation means investors at long last have alternatives: Industrial and consumer companies are minting real profits now—not promising profits tomorrow—and U.S. Treasurys yields are testing 2.6%. At the same time, major central banks finally look poised to cut their liquidity drips.


One result: Plays on moon bases, hyperloops and dogecoins may suddenly be susceptible to bad news again, as bitcoin and lithium demonstrated this week.

Lithium and its battery cousin cobalt may indeed power our electric-vehicle future, but in the right-now present there are plenty of good mining and industrial companies benefiting from actual growth—and not trading at 36 times past-12 months earnings, as SQM does. And it’s worth noting that at the moment all commodities are doing well, including palladium, whose demand depends on the old-economy catalytic converter.

That makes the speculative standouts look vulnerable. Lithium and cobalt prices have roughly doubled and tripled respectively since early 2016. Copper prices are up 60%.

It’s a good bet that the next big correction will come before flying electric vehicles arrive. And when it does, the commodities that fare best may be those that fill actual current demand.


Write to Nathaniel Taplin at Nathaniel.Taplin@wsj.com