1999 is again, and I’ve missed it. Ever since then, I’ve been chasing that next 50-bagger, the type 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 flooring at Goldman Sachs at 1 New York Plaza, glued to my display screen as web names like Commerce One and Yahoo soared increased nearly day by 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 at this time: tech shares are main once more, crypto buyers are shopping for Lambos, and AI is woven into all the pieces – our telephones, portfolios, and day by 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 massive factor.
And I’ll admit, I’m hyped.
Then the 2000 dot-com crash vaporized trillions in wealth and taught me probably the most vital classes of my life: euphoria all the time 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, somewhat 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 more durable, however smarter. Now, with buyers as soon as once more betting on infinite progress, 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 methods to navigate this AI-driven rocket responsibly.
As a result of frankly, with much more capital at stake, I don’t wish to lose my shirt once more. However even when I do, I’ve heard the “dad bod” is essentially the most enticing male physique sort, making us really feel approachable, secure, and mature.
What Makes This Time Totally different (and What Doesn’t)
Sure, this time is totally different, and that’s precisely what everybody says earlier than each bubble bursts. However there are some key distinctions price acknowledging.
- AI has tangible productiveness results. Not like many dot-com concepts that by no means made cash, AI is already saving corporations billions.
- Steadiness 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 biggest tech corporations are producing huge free money stream.
- Financial coverage is popping supportive once more. Amazingly, the Fed is resuming its rate of interest cuts with all the pieces at all-time highs, offering a tailwind for danger belongings.
That mentioned, the psychology of manias by no means modifications. Folks overestimate short-term positive aspects 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 strategies should you’re feeling swept up by the hype. As we should always all bear in mind, there aren’t any ensures in danger belongings. All the time do your due diligence and make investments in response to your personal objectives and danger 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. You must provide you with your personal consolation degree. In response to modern portfolio theory and supporting research, holding round 20 to 30 positions is usually 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 only 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 might have in money, actual property, options, bonds, and low-risk belongings.
Personally, I goal to maintain public equities between 25% and 35% of my whole web price. That allocation offers 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 general web price, which I can comfortably abdomen.
Verify how a lot of your web price you are snug shedding.
2. Shift Extra In the direction of Actual Belongings
1999 by means of 2009 taught me that stocks are funny money with no actual utility. You may’t drink your shares, stay in your shares, or bodily take pleasure in them. The one method to profit is to promote some shares occasionally 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 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 reminiscences in your most treasured belongings.
I’m lengthy as a lot San Francisco actual property as I can comfortably deal with, a main 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 Non-public Firm Publicity
I am investing instantly into AI corporations by means of numerous closed and open-ended venture capital funds with as much as 20% of my investable capital. All the 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.
Beneath is a chart that ought to each scare and excite you. Each enterprise capital common accomplice thinks they’ve invested, or will make investments, within the subsequent AI winner. However as a 20-year restricted accomplice in enterprise capital, I’ve seen that roughly 90% of investments both go to zero or return solely modest capital.
For that purpose, a common accomplice should both have a great observe file or the fund should already personal corporations you strongly consider in earlier than it’s price investing. I am hedged by investing in each kinds 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 all the time maintain at the very least 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. For those who don’t have liquidity prepared, you’ll be pressured to take a seat in your fingers as a substitute of take full benefit.
5. Do Not Purchase Danger 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 in the end fell 78% from peak to trough by 2002. Even should you had been solely 35% on margin again then, chances are high you had been worn out.
At the moment, loads of buyers 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 aspects in a single day. That the majority latest day was October 10, 2025, when widespread liquidations erased complete portfolios attributable to leverage.
For those who 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 figuring out the worst-case state of affairs: not solely are you able to lose all the pieces, 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 unfavorable 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 buyers to take extreme danger. You purchase belongings you don’t totally perceive just because you possibly can’t stand watching others get wealthy with out you. As a rule, this sort of investing results in destroy.
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 commonly utilizing the dumbbell technique to spend money on each private AI companies and in Treasury payments and bonds. This fashion, 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, at the very least I’ll have one thing to indicate for the positive aspects.
For instance, in 2003, I used earnings from VCSY in 2000 to purchase a two-bedroom rental 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 income to assist fund our retirement.
You don’t have to speculate your humorous cash in actual property. Tremendous artwork, rare books, historic cash, and even memorable experiences like a household trip or a cruise in your dad and mom all rely. Nice experiences typically recognize in worth in ways in which cash can’t measure, particularly now that we will 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 maintain rewarding you lengthy after it’s technically over.
7. Mentally Put together For Monetary Ache & Psychological Anguish
A 1999-style bull market will ultimately finish badly. We might even face one other misplaced decade, the place danger belongings present little to no actual returns. It might actually 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 surprising after they arrive. Listed here are some key statistics:
- 5% corrections: occur 3–4 instances 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 period: 11 months, with a median 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 may even use my FS-SEER formula to quantify your danger 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 during a bear market, but they typically get neglected in a bull market. That’s why it’s vital to record 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 all the time earn sufficient to cowl your loved ones’s dwelling bills, you possibly can afford to take extra danger. But when lots of your revenue streams are prone to collapse in a downturn, you might want to modify your publicity accordingly.
The bottom line is to construct various 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.
Again in 2009, my stress ranges had been by means of the roof as I watched roughly 40% of my web price vanish in six months that took a decade to construct. My again ache made it nearly not possible to drive or sit, and I used to be grinding my tooth relentlessly. My TMJ was so dangerous I couldn’t speak comfortably for greater than 5 minutes at a time. I needed to discover a approach out.
At the moment, I try for stability, a aim 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 should you don’t have the power 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 ultimately.
Don’t Confuse Brains With a Bull Market
It’s intoxicating to really feel sensible in a rising market. Features reinforce confidence, and confidence feeds risk-taking. However the fact is, in bull markets everybody seems to be good, till the rocket blows up.
When the 2000 crash hit, I I watched colleagues lose all the pieces 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 would sound counterintuitive, however among the finest hedges in opposition to monetary loss is emotional contentment.
Throughout increase instances, it’s straightforward to maintain elevating the bar – more cash, extra property, extra all the pieces. However should you’re already at a 7 or 8 out of 10 on the happiness scale, chasing a ten would possibly really ship you backward.
I’ve realized that happiness comes from stability: significant work, good well being, household time, mates, and sufficient cash to manage 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 just price it should you’re really free.
Journey the Wave, However Know A Jagged Shore Might Await
The power at this time feels electrical, identical to 1999. And I find it irresistible. I wish to see folks make nice fortunes to allow them to have the liberty to do what they need.
Traders might expertise an epic blow off like we 26 years in the past. Simply know the way rapidly the music can cease. Diversify, keep humble, and take some chips off the desk when you possibly can.
Bull markets make you wealthy. Bear markets make you smart. Collectively, they make you a whole grizzled veteran.
So let’s benefit from the experience, however with our eyes open!
Query for Skilled Traders:
For individuals 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 completely new?
Are you positioning your self for one more potential blow-off prime that might make us all rather a lot wealthier or are you bracing for the inevitable hangover?
And for youthful buyers 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?
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