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 provide you with the down fee 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 screen 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 as we speak: tech shares are main once more, crypto buyers are shopping for Lambos, and AI is woven into all the pieces – 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 concerning the subsequent huge factor.
And I’ll admit, I’m hyped. We have now 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 essential 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 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 more durable, however smarter. Now, with buyers as soon as once more betting on infinite development, that point has come.
So how can we steadiness greed with knowledge? How can we experience this wave of innovation with out repeating the errors of the previous? Let’s discover what historical past teaches us and find out 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 essentially the most engaging 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 corporations billions.
- Stability sheets are stronger. Company debt masses are more healthy than in 1999 and 2007, and lots of corporations are flush with money.
- Sturdy revenue and money circulate. As well as, the most important tech corporations are producing huge free money circulate.
- Customers are additionally a lot stronger. Family leverage is decrease than in 1999 and 2007 as properly.
- 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 stated, the psychology of manias by no means modifications. Individuals overestimate short-term features 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 should you’re feeling swept up by the hype. As we must always all bear in mind, there are not any ensures in danger belongings. At all times do your due diligence and make investments in accordance with your individual targets and danger tolerance.
1. Keep Invested, However Preserve Publicity Limits
I’m totally collaborating 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 degree. In keeping with fashionable portfolio concept and supporting research, holding round 20 to 30 positions is usually sufficient to attain 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 must view it within the context of your general web value. Have a look at how a lot you’ve in money, actual property, alternate options, bonds, and low-risk belongings.
Personally, I intention to maintain public equities between 25% and 35% of my whole web value. That allocation provides me the boldness to remain the course throughout downturns. If the common bear market declines about 35%, that might translate to roughly a ten% hit to my general web value, which I can comfortably abdomen.
Confirm how a lot of your web value you are snug shedding.
2. Shift Extra In the direction of Actual Property
1999 by way of 2009 taught me that shares are humorous cash with no actual utility. You possibly can’t drink your shares, stay in your shares, or bodily get pleasure from them. The one option to profit is to promote some shares infrequently to fund a greater life.
The perfect 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 get pleasure from residing in it. When you have kids, that satisfaction multiplies. You’re not simply constructing wealth, you’re offering stability and recollections in your most valuable belongings.
I’m lengthy as a lot San Francisco actual property as I can comfortably deal with, a major residence and three leases. AI corporations are increasing, housing demand is rebounding, and actual property stays one of many few tangible hedges towards each tech volatility and inflation.
3. Growing Non-public Firm Publicity
I am investing immediately into AI corporations by way of varied closed and open-ended enterprise capital funds with as much as 20% of my investable capital. All the closed-end enterprise capital funds cost 2% and 20% of income or extra, and are invite solely. Whereas Fundrise Enterprise is open to everybody and does not cost any cary.
Again in 1999, I had ~$8,000 to speculate after receiving my signing bonus ($5,000 + my present $3,000 from part-time jobs in faculty). 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 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 basic accomplice should both have a great monitor document or the fund should already personal corporations you strongly consider in earlier than it’s value investing. I am hedged by investing in each forms of enterprise capital funds.
4. Preserve Liquidity To Purchase The Dip And Survive
After the 1999–2000 and 2008–2009 downturns, I promised myself I’d at all times preserve at the very least one yr of residing bills in money or money equivalents like Treasury payments, and I nonetheless do. Liquidity buys peace of thoughts. It helps 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 arms as an alternative of take full benefit.
5. Do Not Purchase Threat 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 should you have been solely 50% on margin again then, likelihood is you have been worn out.
Right this moment, loads of buyers 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 the majority latest day was October 10, 2025, when widespread liquidations (~$20 billion) erased complete portfolios attributable to 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 realizing the worst-case situation: 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 adverse steadiness. Investing on margin long-term is a foul concept. 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 may’t stand watching others get wealthy with out you. As a rule, the sort of investing results in spoil.
One option to handle that is with a dumbbell technique: cut up your portfolio or new investments between low-risk or risk-free belongings and high-risk, speculative bets. This method helps 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 usually utilizing the dumbbell technique to put money into each personal AI corporations 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” income. This ensures that if, and when, the bear market returns, at the very least I’ll have one thing to point out for the features.
For instance, in 2003, I used income from VCSY in 2000 to purchase a two-bedroom apartment with a park view in Pacific Heights, a property I nonetheless personal as we speak. 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 speculate your humorous cash in actual property. Superb artwork, uncommon books, historical 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 are able to document them in gorgeous 4K.
So long as you proceed taking income to amass 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 ultimately finish badly. We may even face one other misplaced decade, the place danger 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 surprising after they arrive. Listed here are some key statistics:
- 5% corrections: occur 3–4 instances 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 shedding that a lot and ready roughly two years to get again to even? If sure, you’re good to go. If not, you have to make changes.
You possibly can even use my FS-SEER components 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 throughout a bear market, but they typically get missed in a bull market. That’s why it’s essential to record 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 residing bills, you may afford to take extra danger. But when a lot of your revenue streams are prone to collapse in a downturn, you have to regulate your publicity accordingly. Make a practical estimation of how far they might decline.
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 Life-style
Bull markets could make you neglect what actually issues: well being, buddies, and household.
Again in 2009, my stress ranges have been by way of the roof as I watched roughly 40% of my web value vanish in six months that took a decade to construct. My again ache made it nearly inconceivable to drive or sit, and I used to be grinding my tooth relentlessly. My TMJ was so unhealthy I couldn’t discuss comfortably for greater than 5 minutes at a time. I needed to discover a manner out of dedicating my life to finance.
Right this moment, I attempt for steadiness, a objective 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 should you don’t have the vitality to get pleasure from it.
In your pursuit of riches, please don’t neglect your well being! It’s going to come to chunk you within the arse ultimately.
Don’t Confuse Brains With a Bull Market
It’s intoxicating to really feel good in a rising market. Good points reinforce confidence, and confidence feeds risk-taking. However the reality is, in bull markets everybody seems sensible, till the rocket blows up.
When the 2000 crash hit, I I watched multimillionaire colleagues lose all the pieces they’d constructed attributable to extreme leverage. The barber on the basement of 1 New York Plaza not bragged to me about his wins whereas he reduce my hair. The truth is, he stated 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 would sound counterintuitive, however the most effective hedges towards monetary loss is emotional contentment.
Throughout increase instances, it’s straightforward to maintain elevating the bar – extra money, extra property, extra automobiles, extra partying, 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.
Happiness comes from steadiness: significant work, good well being, household time, buddies, and sufficient cash to manage your schedule. Every little thing 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 barely value it should you’re really free. We are able to stop ourselves from being slaves to cash by having a correctly structured portfolio and a monetary plan below any situation.
Journey the Wave, However Know A Jagged Shore Might Await
The vitality as we speak feels electrical, similar 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 at some point. Wonderful!
Buyers 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 clever. Collectively, they make you full.
So let’s benefit from the experience, however with our eyes open!
For many who’ve been investing since 1999 or earlier, how does as we speak’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 fully new? Are you positioning your self for one more potential blow-off high that would make us all rather a lot wealthier or are you bracing for the inevitable hangover? And for youthful buyers who didn’t stay by way of 1999, how are you managing your FOMO as everybody round you appears to be getting wealthy once more?
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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 manner of constructing even essentially the most disciplined investor somewhat delusional. That’s when correct danger administration tends to vanish.
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