1999 is again, and I’ve missed it. Ever since then, I’ve been chasing that subsequent 50-bagger, the form of life-changing winner that helped me provide you with the down cost for my first property. However he is been elusive.
I nonetheless keep 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 power was electrical – optimism all over the place, fortunes being made, CNBC blaring nonstop.
Quick ahead to immediately: tech shares are main once more, crypto traders are shopping for Lambos, and AI is woven into every part – 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 massive 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 probably the most 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 progress shares, just a little 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 steadiness 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 tips on how to navigate this AI-driven rocket responsibly.
As a result of frankly, with much 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, secure, 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 hundreds are more healthy than in 1999 and 2007, and lots of companies are flush with money.
- Sturdy earnings and money move. As well as, the most important tech corporations are producing huge free money move.
- 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 every part at all-time highs, offering a tailwind for danger property.
That mentioned, the psychology of manias by no means modifications. Folks overestimate short-term beneficial properties 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 in the event you’re feeling swept up by the hype. As we should always all keep in mind, there are not any ensures in danger property. At all times do your due diligence and make investments in accordance with your individual objectives and danger tolerance.
1. Keep Invested, However Keep 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. It is best to provide you with your individual consolation stage. In response to fashionable portfolio principle 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 simply monitor your funding portfolio’s composition, you additionally have to view it within the context of your total web value. Take a look at how a lot you’ve gotten in money, actual property, alternate options, bonds, and low-risk property.
Personally, I goal to maintain public equities between 25% and 35% of my complete web value. That allocation offers me the boldness to remain the course throughout downturns. If the typical bear market declines about 35%, that will translate to roughly a ten% hit to my total web value, which I can comfortably abdomen.
Verify how a lot of your web value you are snug shedding.
2. Shift Extra In the direction of Actual Property
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 option to profit is to promote some shares infrequently to fund a greater life.
The most effective asset I’ve discovered that provides each potential appreciation and real-world utility is actual property. There’s no higher feeling than watching your own home recognize in worth whilst you truly take pleasure in residing in it. If in case you have youngsters, that satisfaction multiplies. You’re not simply constructing wealth, you’re offering stability and recollections in your most valuable property.
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. Rising Non-public Firm Publicity
I am investing straight into AI corporations 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 present $3,000 from part-time jobs in faculty). So I invested $3,000 in VCSY, a Chinese language web firm that 50Xed. Nevertheless, 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.
Under is a chart that ought to each scare and excite you. Each enterprise capital common 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 purpose, a common associate should both have a super monitor document 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 preserve no less than one 12 months 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. Should you don’t have liquidity prepared, you’ll be pressured to sit down in your arms 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, keep in mind what got here subsequent: the NASDAQ crashed 39% in 2000 and finally fell 78% from peak to trough by 2002. Even in the event you have been solely 50% on margin again then, likelihood is you have been worn out.
At the moment, 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 beneficial properties in a single day. That almost all latest day was October 10, 2025, when widespread liquidations (~$20 billion) erased complete portfolios as a result of leverage.
Should you 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 understanding the worst-case situation: not solely are you able to lose every part, 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 steadiness. Investing on margin long-term is a foul thought. Resist the temptation.
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6. Embrace The Dumbbell Investing Technique
Throughout manias, investing FOMO typically pushes traders to take extreme danger. You purchase stuff you don’t totally perceive just because you’ll be able to’t stand watching others get wealthy with out you. Most of the time, one of these investing results in break.
One option 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 strategy 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 commonly utilizing the dumbbell technique to spend money on each non-public AI corporations and in Treasury payments and bonds. This manner, it doesn’t matter what occurs, I am hedged.
7. Spend And Get pleasure from 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, no less than I’ll have one thing to indicate for the beneficial properties.
For instance, in 2003, I used earnings from VCSY in 2000 to purchase a two-bedroom apartment with a park view in Pacific Heights, a property I nonetheless personal immediately. It housed my girlfriend and me for 2 years and now generates semi-passive earnings to assist fund our retirement.
You don’t have to take a position your humorous cash in actual property. High-quality artwork, uncommon books, historical cash, and even memorable experiences like a household trip or a cruise in 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 document them in beautiful 4K.
So long as you proceed taking earnings to amass significant experiences or materials stuff 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 might even face one other misplaced decade, the place danger property 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.
Nevertheless, when you examine historical past and perceive how extreme losses can get, the ache isn’t as surprising once they arrive. Listed here 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 have to make changes.
You may even use my FS-SEER method to quantify your danger tolerance by way of time, serving to you intend your allocations extra confidently.
7. Revisit your earnings streams.
Your earnings streams are essential for staying afloat throughout a bear market, but they typically get ignored in a bull market. That’s why it’s vital to checklist out your varied sources of earnings 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 residing bills, you’ll be able to afford to take extra danger. But when lots of your earnings streams are prone to collapse in a downturn, you have to modify your publicity accordingly. Make a sensible estimation of how far they could decline.
The secret’s to construct various sources of earnings earlier than you really want 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, mates, and household.
Again in 2009, my stress ranges have been by means 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 not possible to drive or sit, and I used to be grinding my enamel relentlessly. My TMJ was so unhealthy I couldn’t discuss comfortably for greater than 5 minutes at a time. I needed to discover a approach out of dedicating my life to finance.
At the moment, I attempt for steadiness, a aim made far simpler and not using 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 in the event 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 finally.
Don’t Confuse Brains With a Bull Market
It’s intoxicating to really feel sensible in a rising market. Positive factors reinforce confidence, and confidence feeds risk-taking. However the fact is, in bull markets everybody seems to be sensible, till the rocket blows up.
When the 2000 crash hit, I I watched multimillionaire colleagues lose every part they’d constructed as a result 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. In truth, 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 among the best hedges towards monetary loss is emotional contentment.
Throughout increase occasions, it’s straightforward to maintain elevating the bar – extra money, extra property, extra vehicles, extra partying, extra every part. However in the event you’re already at a 7 or 8 out of 10 on the happiness scale, chasing a ten may truly ship you backward.
Happiness comes from steadiness: significant work, good well being, household time, mates, and sufficient cash to manage your schedule. All the pieces 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 in the event you’re truly 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.
Experience the Wave, However Know A Jagged Shore Might Await
The power immediately feels electrical, identical to 1999. And I like it. I need to see individuals 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. Superb!
Buyers might 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’ll be able to.
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 immediately’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 totally new? Are you positioning your self for one more potential blow-off high that might 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 ignored alternatives to optimize. A 1999-style bull market has a approach of constructing even essentially the most disciplined investor just a little delusional. That’s when correct danger administration tends to vanish.
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