1999 is again, and I’ve missed it. Ever since then, I’ve been chasing that next 50-bagger, the sort of life-changing winner that helped me provide you with the down cost for my first property. However he is been elusive.
I nonetheless bear in mind sitting on the worldwide buying and selling ground at Goldman Sachs at 1 New York Plaza, glued to my display as web names like Commerce One and Yahoo soared larger virtually each day. My agency had simply gone public, immediately turning the companions into decamillionaires. The power was electrical – optimism all over the place, fortunes being made, CNBC blaring nonstop.
Quick ahead to in the present day: tech shares are main once more, crypto traders are shopping for Lambos, and AI is woven into every thing – our telephones, portfolios, and each day conversations. San Francisco, as soon as quiet in the course of the pandemic, is buzzing once more. Startups are hiring and everybody’s speaking in regards to the subsequent large factor.
And I’ll admit, I’m hyped.
Then the 2000 dot-com crash vaporized trillions in wealth and taught me some of the vital classes of my life: euphoria at all times feels rational till it doesn’t. Ah, cheers to irrational exuberance.
The Return Of The 1999 Environment
I’m investing in public tech shares, non-public development shares, somewhat little bit of Bitcoin, and San Francisco actual property, which all really feel poised for continued development.
Again in 1999, I promised myself that if the mania ever returned, I’d lean in tougher, however smarter. Now, with traders as soon as once more betting on infinite development, that point has come.
So how will we stability greed with knowledge? How will we experience this wave of innovation with out repeating the errors of the previous? Let’s discover what historical past teaches us and learn how to navigate this AI-driven rocket responsibly.
As a result of frankly, with way more capital at stake, I don’t need to lose my shirt once more. However even when I do, I’ve heard the “dad bod” is probably the most enticing male physique kind, making us really feel approachable, steady, and mature.
What Makes This Time Totally different (and What Doesn’t)
Sure, this time is completely different, and that’s precisely what everybody says earlier than each bubble bursts. However there are some key distinctions value acknowledging.
- AI has tangible productiveness results. Not like many dot-com concepts that by no means made cash, AI is already saving corporations billions.
- Stability sheets are stronger. Company debt masses are more healthy than in 1999 and 2007, and plenty of companies are flush with money.
- Robust revenue and money move. As well as, the most important tech corporations are producing monumental free money move.
- Financial coverage is popping supportive once more. Amazingly, the Fed is resuming its rate of interest cuts with every thing at all-time highs, offering a tailwind for threat belongings.
That mentioned, the psychology of manias by no means modifications. Individuals overestimate short-term positive factors and underestimate long-term disruption. AI is actual, however that doesn’t imply each AI inventory is. Some corporations will go to the moon; the overwhelming majority will go to zero.
That’s why perspective and diversification matter greater than ever.
How I’m Positioning for The New Mania
Right here’s how I’m approaching this cycle, and a few options for those who’re feeling swept up by the hype. As we must always all bear in mind, there aren’t any ensures in threat belongings. At all times do your due diligence and make investments in accordance with your individual objectives and threat tolerance.
1. Keep Invested, However Keep Publicity Limits
I’m absolutely taking part on this bull run however will trim particular person positions as soon as they exceed 10% of my portfolio. A concentrated portfolio works, till it doesn’t.
The ten% threshold is considerably arbitrary. You need to provide you with your individual consolation stage. Based on modern portfolio theory and supporting research, holding round 20 to 30 positions is often sufficient to attain many of the advantages of diversification alongside the environment friendly frontier, roughly a 3% to five% allocation per place.
It’s not sufficient to simply monitor your funding portfolio’s composition, you additionally must view it within the context of your overall net worth. Take a look at how a lot you’ve gotten in money, actual property, alternate options, bonds, and low-risk belongings.
Personally, I goal to maintain public equities between 25% and 35% of my whole internet value. That allocation offers me the boldness to remain the course throughout downturns. If the common bear market declines about 35%, that may translate to roughly a ten% hit to my total internet value, which I can comfortably abdomen.
Verify how a lot of your internet value you are comfy shedding.
2. Shift Extra In direction of Actual Property
1999 by 2009 taught me that stocks are funny money with no actual utility. You possibly can’t drink your shares, stay in your shares, or bodily get pleasure from them. The one method to profit is to promote some shares sometimes to fund a greater life.
The very best asset I’ve discovered that provides each potential appreciation and real-world utility is real estate. There’s no higher feeling than watching your property recognize in worth whilst you truly get pleasure from dwelling in it. When you have kids, that satisfaction multiplies. You’re not simply constructing wealth, you’re offering stability and recollections on your most treasured belongings.
I’m lengthy as a lot San Francisco actual property as I can comfortably deal with, a major residence and three leases. AI companies are expanding, housing demand is rebounding, and actual property stays one of many few tangible hedges in opposition to each tech volatility and inflation.
3. Growing Personal Firm Publicity
I am investing instantly into AI corporations by numerous closed and open-ended venture capital funds with as much as 20% of my investable capital. The entire closed-end enterprise capital funds cost 2% and 20% of earnings or extra, and are invite solely. Whereas Fundrise Venture is open to everybody and would not cost any cary.
Again in 1999, I had ~$8,000 to speculate after receiving my signing bonus. So I invested $3,000 in VCSY, a Chinese language web firm that 50Xed. Nonetheless, to make life-changing cash requires a a lot larger amount of invested capital. So this time I am round, I am investing seven figures whereas staying inside my 20% publicity restrict.
Under is a chart that ought to each scare and excite you. Each enterprise capital basic associate thinks they’ve invested, or will make investments, within the subsequent AI winner. However as a 20-year restricted associate in enterprise capital, I’ve seen that roughly 90% of investments both go to zero or return solely modest capital.
For that cause, a basic associate should both have a large observe report or the fund should already personal corporations you strongly imagine in earlier than it’s value investing. I am hedged by investing in each sorts of enterprise capital funds.
4. Keep Liquidity To Purchase The Dip And Survive
After the 1999–2000 and 2008–2009 downturns, I promised myself I’d at all times maintain not less than one 12 months of dwelling bills in money or money equivalents like Treasury payments, and I nonetheless do. Liquidity buys peace of thoughts. It enables you to each survive and buy the dip when markets crash.
Fortunately, money and Treasury payments now pay a good-looking ~4% risk-free return. That makes the so-called “money drag” in a 1999-style bull market far much less heavy.
Corrections are inevitable. If you happen to don’t have liquidity prepared, you’ll be compelled to take a seat in your palms as an alternative of take full benefit.
5. Do Not Purchase Danger Property On Margin
Though the temptation to leverage up in a 1999-style bull market is excessive, don’t do it. If we actually are reliving 1999, bear in mind what got here subsequent: the NASDAQ crashed 39% in 2000 and in the end fell 78% from peak to trough by 2002. Even for those who have been solely 35% on margin again then, chances are high you have been worn out.
At present, loads of traders are making the identical mistake in cryptocurrencies – leveraging 2X to 50X in pursuit of fast riches. Some have made fortunes, however many have additionally misplaced years of hard-earned positive factors in a single day. That almost all current day was October 10, 2025, when widespread liquidations erased complete portfolios as a consequence of leverage.
If you happen to completely can’t resist the urge, restrict your speculative capital. Carve out not more than 10% of your investable belongings for leveraged punts. And go in understanding the worst-case state of affairs: not solely are you able to lose every thing, you may additionally owe cash to your dealer.
In a flash crash, costs can hole down earlier than your dealer executes a cease restrict sale, leaving you with a unfavourable stability. Investing on margin long-term is a bad idea. Resist the temptation.
6. Embrace The Dumbbell Investing Technique
Throughout manias, investing FOMO typically pushes traders to take extreme threat. You purchase belongings you don’t absolutely perceive just because you may’t stand watching others get wealthy with out you. Most of the time, this kind of investing results in break.
One method to handle that is with a dumbbell strategy: cut up your portfolio or new investments between low-risk or risk-free belongings and high-risk, speculative bets. This strategy enables you to seize upside if the mania continues, whereas nonetheless defending your draw back if it fizzles out.
Over the previous a number of years, I have been recurrently utilizing the dumbbell technique to put money into each private AI companies and in Treasury payments and bonds. This manner, it doesn’t matter what occurs, I am hedged.
7. Spend And Take pleasure in A Portion Of Your Income
Yearly throughout a bull market, I attempt to purchase one thing tangible with my “humorous cash” earnings. This ensures that if, and when, the bear market returns, not less than I’ll have one thing to indicate for the positive factors.
For instance, in 2003, I used earnings from VCSY in 2000 to purchase a two-bedroom condominium with a park view in Pacific Heights, a property I nonetheless personal in the present day. It housed my girlfriend and me for 2 years and now generates semi-passive income to assist fund our retirement.
You don’t have to speculate your humorous cash in actual property. Positive artwork, rare books, historic cash, and even memorable experiences like a household trip or a cruise on your mother and father all rely. Nice experiences typically recognize in worth in ways in which cash can’t measure, particularly now that we will report them in gorgeous 4K.
So long as you proceed taking earnings to accumulate significant experiences or materials belongings you worth, a 1999-style bull market can maintain rewarding you lengthy after it’s technically over.
7. Mentally Put together For Monetary Ache & Psychological Anguish
A 1999-style bull market will finally finish badly. We may even face one other misplaced decade, the place threat belongings present little to no actual returns. It may definitely occur once more, particularly with the S&P 500 buying and selling at 23X ahead earnings.
Nonetheless, when you examine historical past and perceive how extreme losses can get, the ache isn’t as stunning once they arrive. Listed below are some key statistics:
- 5% corrections: occur 3–4 occasions per 12 months on common.
- 10% corrections: occur about as soon as per 12 months.
- Bear markets (-20%+ declines): from 1928–2025, there have been ~16, averaging one roughly each 5–6 years.
- Common bear market drawdown: ~35%.
- Median post-1946 bear market length: 11 months, with a mean decline of 33–35%.
- Median restoration time to all-time highs: 23 months.
In different phrases, mentally take your fairness publicity and lop off 35% of its worth instantly. Ask your self: are you able to deal with shedding that a lot and ready roughly two years to get again to even? If sure, you’re good to go. If not, you might want to make changes.
You possibly can even use my FS-SEER formula to quantify your threat tolerance when it comes to time, serving to you intend your allocations extra confidently.
7. Revisit your revenue streams.
Your revenue streams are essential for staying afloat during a bear market, but they typically get ignored in a bull market. That’s why it’s vital to listing out your numerous sources of revenue and rank them by reliability. When the bear market hits, how safe will they be?
If you understand you’ll at all times earn sufficient to cowl your loved ones’s dwelling bills, you may afford to take extra threat. But when a lot of your revenue streams are prone to collapse in a downturn, you might want to modify your publicity accordingly.
The secret’s to construct various sources of revenue earlier than you really need them. By the point you do, it might already be too late.
8. Focus On Well being And Way of life
Bull markets could make you overlook what actually issues.
Again in 2009, my stress ranges have been by the roof as I watched roughly 40% of my internet value vanish in six months that took a decade to construct. My again ache made it virtually unattainable to drive or sit, and I used to be grinding my enamel relentlessly. My TMJ was so dangerous I couldn’t discuss comfortably for greater than 5 minutes at a time. I needed to discover a means out.
At present, I try for stability, a aim made far simpler with no 60-hour-a-week job. I begin the day with 1-2 hours of writing, then typically play tennis, coach my youngsters, and remind myself that wealth is meaningless for those who don’t have the power to get pleasure from it.
In your pursuit of riches, please don’t neglect your well being! It can come to chew you within the arse finally.
Don’t Confuse Brains With a Bull Market
It’s intoxicating to really feel good in a rising market. Positive aspects reinforce confidence, and confidence feeds risk-taking. However the fact is, in bull markets everybody appears to be like sensible, till the rocket blows up.
When the 2000 crash hit, I I watched colleagues lose every thing they’d constructed over a decade. Markets giveth, and markets taketh away.
Don’t let a bull market persuade you that you simply’re invincible. Let it remind you that self-discipline is what retains you wealthy when you get there.
The Happiness Hedge
It’d sound counterintuitive, however top-of-the-line hedges in opposition to monetary loss is emotional contentment.
Throughout increase occasions, it’s simple to maintain elevating the bar – more cash, extra property, extra every thing. However for those who’re already at a 7 or 8 out of 10 on the happiness scale, chasing a ten may truly ship you backward.
I’ve discovered that happiness comes from stability: significant work, good well being, household time, buddies, and sufficient cash to regulate your schedule. All the things past that’s gravy over your ego.
So sure, I’m leaning into this AI-driven bull market. However I’m additionally reminding myself that monetary freedom is simply value it for those who’re truly free.
Trip the Wave, However Know A Jagged Shore Might Await
The power in the present day feels electrical, identical to 1999. And I find it irresistible. I need to see folks make nice fortunes to allow them to have the liberty to do what they need.
Traders may expertise an epic blow off like we 26 years in the past. Simply know the way shortly the music can cease. Diversify, keep humble, and take some chips off the desk when you may.
Bull markets make you wealthy. Bear markets make you sensible. Collectively, they make you an entire grizzled veteran.
So let’s benefit from the experience, however with our eyes open!
Query for Skilled Traders:
For many who’ve been investing since 1999 or earlier, how does in the present day’s market really feel in comparison with again then? What similarities and variations stand out to you?
Does the present AI-driven frenzy remind you of the dot-com increase, or does it really feel like one thing completely new?
Are you positioning your self for an additional potential blow-off high that would make us all quite a bit wealthier or are you bracing for the inevitable hangover?
And for youthful traders who didn’t stay by 1999, how are you managing your FOMO as everybody round you appears to be getting wealthy once more?
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