Are We In a Bubble? 1999 vs. America 2.0 Markets
The year of popular TV, fad trading and of course, the dot-com bubble.
Not even close!
This is NOT a bubble. This is a crossing of the tides.
We’re in America 2.0. This is not a fad. It’s a transformation at the core of how we do everything!
The stocks at the heart of this — the ones from our laser-focused Profits Unlimited portfolio — are up more than 26% this year vs. the nothing from the S&P 500 Index.
Today, we’ll pop the bubble rumors and tell you exactly why today is so vastly different from the ‘90s.
And how you can get the stocks that will carry our Main Street bull market higher and higher in America 2.0!
1999 Dot-com Boom
1999 … the year when popular TV shows like “Who Wants to be Millionaire?”, “SpongeBob SquarePants,” and “Family Guy” made their TV debut, was also an exciting trading year in the technology stock sector. I know, because at that time, I was a recent college grad, as seen in this throwback photo of me with my mom and grandma.
I was also a young analyst at Bloomberg and was completely caught up in the dot.com boom, buying various dot-com stocks and watching my portfolio go up and up with zeal. At the time, my portfolio consisted of stocks like etoys.com, pets.com, theglobe.com as well as ebay.com, amazon.com and priceline.com. Because it was 1999, about 8 years shy of my first Apple iPhone … I had to call my broker on my Nokia cell phone to get performance numbers on my stock holdings daily. Now looking back, unlike today, 1999 had all the markings of a bubble. 1999 had a completely different feel than now. Paul was at Deutsche at the time and it was not like today.
He noted, “In 1999, we did not have a pandemic where people were locked down and half the people were locked down in fear. We didn’t have $3 trillion sitting on the side in cash. We did not have a crash that took one-third of the market values of companies. It was also the beginning of fake innovation. What’s fake innovation? Everyone had this idea of dot-coms, but no one knew how. People had ideas and created companies, but most of these companies did nothing.”
He also went on to add this personal story … “My recollection about how crazy 1999 was, was that I was at Shea Stadium at a Mets game. This is how maniacal people were about the stock market then. They put up in between innings on the big scoreboard that the Dow was up however much. The whole stadium cheered.”
Crossing of the Tides
Based on our internal analysis, bubbles are apparent through behavior. Tech stocks today is a moment which is different, in the sense, that there is an enormous transition going on between two worlds. Some may construe it as being in opposition — America 1.0 and America 2.0, head to head in a battle “royale” – but it is not. It’s more like a crossing of the tides.
We are believers in the new way and other folks are not. As Paul aptly put, “The people who are negative on Tesla, negative on Slack, tell us Uber is worth nothing, Wayfair should not have its market cap, think EVs are a fad, tell us self-driving will take 50 years. Essentially in every aspect they are applying lessons from the previous generation where the innovation that carried through in the 80s and 90s was seeded in the 1960s.
There’s one more macroeconomic element we can add to support our non-bubble take. Check out this Bloomberg chart that shows how the Nasdaq 100 of today is different from the Dot-com Era.
This chart shows a very different macro backdrop versus 1999, which per Canaccord Genuity suggests any pullbacks we see in the Nasdaq 100, a tech heavy index should prove temporary. As Bloomberg put it, “back then, the Federal Reserve was tightening monetary policy, whereas now it has cut rates to near zero, providing support to the recent tech rally along with wider market participation.” As you can see, innovation wise and macro wise, the America 2.0 world is here for the long haul.
Editor, Profits Unlimited