1999 is again, and I’ve missed it. Ever since then, I’ve been chasing that subsequent 50-bagger, the sort of life-changing winner that helped me give you the down cost for my first property. However he is been elusive.
I nonetheless bear in mind sitting on the worldwide buying and selling flooring at Goldman Sachs at 1 New York Plaza, glued to my display as web names like Commerce One and Yahoo soared greater nearly each day. My agency had simply gone public, immediately turning the companions into decamillionaires. The vitality was electrical – optimism in all places, fortunes being made, CNBC blaring nonstop.
Quick ahead to at this time: 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 through 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. Now we have the potential to get extraordinarily wealthy over the following 5 years.
Then the 2000 dot-com crash vaporized trillions in wealth and taught me one of the crucial 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, personal progress shares, a bit of little bit of Bitcoin, and San Francisco actual property, which all really feel poised for continued progress.
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 progress, that point has come.
So how will we stability greed with knowledge? How will we journey this wave of innovation with out repeating the errors of the previous? Let’s discover what historical past teaches us and how you can 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 essentially 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. In contrast to many dot-com concepts that by no means made cash, AI is already saving firms billions.
- Stability sheets are stronger. Company debt hundreds are more healthy than in 1999 and 2007, and lots of corporations are flush with money.
- Sturdy revenue and money stream. As well as, the most important tech firms are producing huge free money stream.
- Shoppers are additionally a lot stronger. Family leverage is decrease than in 1999 and 2007 as effectively.
- 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 property.
That mentioned, the psychology of manias by no means adjustments. Individuals overestimate short-term features and underestimate long-term disruption. AI is actual, however that doesn’t imply each AI inventory is. Some firms 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 strategies for those who’re feeling swept up by the hype. As we must always all bear in mind, there are not any ensures in threat property. All the time 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 totally 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. It is best to give you your individual consolation degree. In line with trendy portfolio idea and supporting research, holding round 20 to 30 positions is usually sufficient to realize a lot of the advantages of diversification alongside the environment friendly frontier, roughly a 3% to five% allocation per place.
It’s not sufficient to only monitor your funding portfolio’s composition, you additionally have to view it within the context of your total internet value. Have a look at how a lot you might have in money, actual property, alternate options, bonds, and low-risk property.
Personally, I purpose to maintain public equities between 25% and 35% of my complete internet value. That allocation provides me the arrogance to remain the course throughout downturns. If the typical bear market declines about 35%, that may translate to roughly a ten% hit to my total internet value, which I can comfortably abdomen.
Confirm how a lot of your internet value you are comfy dropping.
2. Shift Extra In the direction of Actual Belongings
1999 by means of 2009 taught me that shares are humorous cash with no actual utility. You may’t drink your shares, stay in your shares, or bodily take pleasure in them. The one approach to profit is to promote some shares once in a while to fund a greater life.
The very best asset I’ve discovered that provides each potential appreciation and real-world utility is actual property. There’s no higher feeling than watching your private home recognize in worth when you really take pleasure in dwelling in it. You probably have kids, that satisfaction multiplies. You’re not simply constructing wealth, you’re offering stability and recollections in your most treasured property.
I’m lengthy as a lot San Francisco actual property as I can comfortably deal with, a major residence and three leases. AI firms are increasing, housing demand is rebounding, and actual property stays one of many few tangible hedges towards each tech volatility and inflation.
3. Growing Personal Firm Publicity
I am investing straight into AI firms by means of varied closed and open-ended enterprise 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 Enterprise is open to everybody and would not cost any cary.
Again in 1999, I had ~$8,000 to take a position after receiving my signing bonus ($5,000 + my current $3,000 from part-time jobs in school). So I invested $3,000 in VCSY, a Chinese language web firm that 50Xed. Nonetheless, to make life-changing cash requires a a lot bigger quantity of invested capital. So this time round, I am investing seven figures whereas staying inside my 20% publicity restrict.
Beneath 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 motive, a basic associate should both have a large monitor file or the fund should already personal firms you strongly imagine in earlier than it’s value investing. I am hedged by investing in each varieties 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 preserve a minimum of one yr of dwelling bills in money or money equivalents like Treasury payments, and I nonetheless do. Liquidity buys peace of thoughts. It allows you to each survive and purchase 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 pressured to take a seat in your palms as a substitute of take full benefit.
5. Do Not Purchase Threat Belongings 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 finally fell 78% from peak to trough by 2002. Even for those who have been solely 50% on margin again then, chances are high you have been worn out.
In the present day, loads of traders are making the identical mistake in cryptocurrencies (altcoins), leveraging 2X to 50X in pursuit of fast riches. Some have made fortunes, however many have additionally misplaced years of hard-earned features in a single day. That almost all latest day was October 10, 2025, when widespread liquidations (~$20 billion) erased whole 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 property for leveraged punts. And go in figuring out the worst-case situation: not solely are you able to lose every thing, you may also 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 destructive stability. Investing on margin long-term is a nasty concept. Resist the temptation.
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6. Embrace The Dumbbell Investing Technique
Throughout manias, investing FOMO typically pushes traders to take extreme threat. You purchase belongings you don’t totally perceive just because you may’t stand watching others get wealthy with out you. Most of the time, this kind of investing results in smash.
One approach to handle that is with a dumbbell technique: cut up your portfolio or new investments between low-risk or risk-free property and high-risk, speculative bets. This method allows 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 frequently utilizing the dumbbell technique to put money into each personal AI firms and in Treasury payments and bonds. This fashion, it doesn’t matter what occurs, I am hedged.
7. Spend And Get pleasure from A Portion Of Your Earnings
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, a minimum of I’ll have one thing to indicate for the features.
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 at this time. It housed my girlfriend and me for 2 years and now generates semi-passive revenue to assist fund our retirement.
You don’t have to take a position your humorous cash in actual property. Nice artwork, uncommon books, historical cash, and even memorable experiences like a household trip or a cruise in your mother and father all depend. Nice experiences typically recognize in worth in ways in which cash can’t measure, particularly now that we are able to file 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 preserve 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 property 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 research historical past and perceive how extreme losses can get, the ache isn’t as stunning after they arrive. Listed below are some key statistics:
- 5% corrections: occur 3–4 occasions per yr on common.
- 10% corrections: occur about as soon as per yr.
- 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 period: 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 dropping that a lot and ready roughly two years to get again to even? If sure, you’re good to go. If not, it is advisable to make changes.
You may even use my FS-SEER system to quantify your threat tolerance by way of time, serving to you propose your allocations extra confidently.
7. Revisit your revenue streams.
Your revenue streams are essential for staying afloat throughout a bear market, but they typically get missed in a bull market. That’s why it’s vital to checklist out your varied sources of revenue and rank them by reliability. When the bear market hits, how safe will they be?
If you realize you’ll at all times earn sufficient to cowl your loved ones’s dwelling bills, you may afford to take extra threat. But when lots of your revenue streams are more likely to collapse in a downturn, it is advisable to modify your publicity accordingly. Make a practical estimation of how far they might decline.
The hot button is to construct numerous sources of revenue earlier than you really want them. By the point you do, it could already be too late.
8. Focus On Well being And Life-style
Bull markets could make you overlook what actually issues: well being, pals, and household.
Again in 2009, my stress ranges have been by means of 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 nearly unattainable to drive or sit, and I used to be grinding my tooth relentlessly. My TMJ was so dangerous I couldn’t discuss comfortably for greater than 5 minutes at a time. I needed to discover a method out of dedicating my life to finance.
In the present day, I try for stability, a objective made far simpler with out a 60-hour-a-week job. I begin the day with 1-2 hours of writing, then typically play tennis, coach my children, and remind myself that wealth is meaningless for those who don’t have the vitality to take pleasure in it.
In your pursuit of riches, please don’t neglect your well being! It should come to chew you within the arse finally.
Don’t Confuse Brains With a Bull Market
It’s intoxicating to really feel sensible in a rising market. Good points reinforce confidence, and confidence feeds risk-taking. However the reality is, in bull markets everybody seems good, till the rocket blows up.
When the 2000 crash hit, I I watched multimillionaire colleagues lose every thing they’d constructed as a consequence of extreme leverage. The barber on the basement of 1 New York Plaza now not bragged to me about his wins whereas he lower my hair. Actually, he mentioned he needed to promote his two Mercedes after the crash. Markets giveth, and markets taketh away.
Don’t let a bull market persuade you that you just’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 the most effective hedges towards monetary loss is emotional contentment.
Throughout increase occasions, it’s simple to maintain elevating the bar – more cash, extra property, extra vehicles, extra partying, 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 really ship you backward.
Happiness comes from stability: significant work, good well being, household time, pals, and sufficient cash to regulate your schedule. The whole lot 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 really free. We are able to forestall ourselves from being slaves to cash by having a correctly structured portfolio and a monetary plan beneath any situation.
Trip the Wave, However Know A Jagged Shore Could Await
The vitality at this time feels electrical, identical to 1999. And I like it. I need to see folks make nice fortunes to allow them to have the liberty to do what they need. Think about telling your micromanaging boss to screw off sooner or later. Wonderful!
Traders may expertise an epic blow off like we 26 years in the past. Simply understand how 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 clever. Collectively, they make you full.
So let’s benefit from the journey, however with our eyes open!
For many who’ve been investing since 1999 or earlier, how does at this time’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 solely new? Are you positioning your self for one more potential blow-off prime that would make us all lots wealthier or are you bracing for the inevitable hangover? And for youthful traders who didn’t stay by means of 1999, how are you managing your FOMO as everybody round you appears to be getting wealthy once more?
Get A Free Monetary Evaluation Provide From Empower
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A contemporary set of eyes can uncover hidden charges, inefficient allocations, or missed alternatives to optimize. A 1999-style bull market has a method of creating even essentially the most disciplined investor a bit of delusional. That’s when correct threat administration tends to vanish.
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