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 give you 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 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 the moment: tech shares are main once more, crypto buyers 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 concerning the subsequent large 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 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 Ambiance
I’m investing in public tech shares, non-public 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 more durable, however smarter. Now, with buyers as soon as once more betting on infinite progress, that point has come.
So how can we stability greed with knowledge? How can we journey this wave of innovation with out repeating the errors of the previous? Let’s discover what historical past teaches us and the way 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 enticing male physique kind, making us really feel approachable, secure, and mature.
What Makes This Time Completely 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 price 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 plenty of corporations are flush with money.
- Robust revenue and money stream. As well as, the most important tech firms are producing huge free money stream.
- Customers are additionally a lot stronger. Family leverage is decrease than in 1999 and 2007 as nicely.
- 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 threat belongings.
That stated, the psychology of manias by no means adjustments. Individuals overestimate short-term positive factors 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 ideas in case you’re feeling swept up by the hype. As we must always all bear in mind, there aren’t any ensures in threat belongings. At all times do your due diligence and make investments in response to your personal objectives and threat 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 give you your personal consolation degree. In line with trendy portfolio principle and supporting research, holding round 20 to 30 positions is often sufficient to realize many 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 must view it within the context of your total internet price. Have a look at how a lot you may have in money, actual property, alternate options, bonds, and low-risk belongings.
Personally, I purpose to maintain public equities between 25% and 35% of my complete internet price. That allocation provides me the boldness to remain the course throughout downturns. If the common bear market declines about 35%, that will translate to roughly a ten% hit to my total internet price, which I can comfortably abdomen.
Verify how a lot of your internet price you are comfy dropping.
2. Shift Extra In direction of Actual Belongings
1999 by 2009 taught me that shares are humorous cash with no actual utility. You may’t drink your shares, dwell in your shares, or bodily get pleasure from them. The one solution to profit is to promote some shares every so often to fund a greater life.
One of the 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 house respect in worth when you really get pleasure from residing in it. In case you have youngsters, that satisfaction multiplies. You’re not simply constructing wealth, you’re offering stability and reminiscences to your most valuable belongings.
I’m lengthy as a lot San Francisco actual property as I can comfortably deal with, a main 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 Non-public Firm Publicity
I am investing instantly into AI firms by 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 does 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 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 common companion thinks they’ve invested, or will make investments, within the subsequent AI winner. However as a 20-year restricted companion in enterprise capital, I’ve seen that roughly 90% of investments both go to zero or return solely modest capital.
For that motive, a common companion should both have a great observe file or the fund should already personal firms you strongly consider in earlier than it’s price investing. I am hedged by investing in each forms 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 hold a minimum of one 12 months of residing 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. For those who don’t have liquidity prepared, you’ll be compelled 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 in the end fell 78% from peak to trough by 2002. Even in case you have been solely 50% on margin again then, likelihood is you have been worn out.
At present, 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 positive factors in a single day. That the majority latest day was October 10, 2025, when widespread liquidations (~$20 billion) erased complete portfolios as a result of 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 understanding the worst-case situation: not solely are you able to lose every part, you may additionally 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 stability. Investing on margin long-term is a nasty thought. Resist the temptation.
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6. Embrace The Dumbbell Investing Technique
Throughout manias, investing FOMO typically pushes buyers to take extreme threat. You purchase stuff you don’t totally perceive just because you’ll be able to’t stand watching others get wealthy with out you. As a rule, one of these investing results in spoil.
One solution to handle that is with a dumbbell technique: break up your portfolio or new investments between low-risk or risk-free belongings 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 repeatedly utilizing the dumbbell technique to put money into each non-public AI firms 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 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 point out for the positive factors.
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 the moment. 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. High quality artwork, uncommon books, historic cash, and even memorable experiences like a household trip or a cruise to your mother and father all depend. Nice experiences typically respect 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 amass significant experiences or materials stuff you worth, a 1999-style bull market can hold 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 threat 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 examine 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 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 dropping that a lot and ready roughly two years to get again to even? If sure, you’re good to go. If not, you want to make changes.
You may even use my FS-SEER system to quantify your threat tolerance when it comes to 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 ignored in a bull market. That’s why it’s essential 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 already know you’ll at all times earn sufficient to cowl your loved ones’s residing bills, you’ll be able to afford to take extra threat. But when lots of your revenue streams are more likely to collapse in a downturn, you want to alter 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 might already be too late.
8. Focus On Well being And Way of life
Bull markets could make you overlook what actually issues: well being, buddies, and household.
Again in 2009, my stress ranges have been by the roof as I watched roughly 40% of my internet price 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 enamel 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 of dedicating my life to finance.
At present, I try for stability, 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 case you don’t have the vitality to get pleasure from it.
In your pursuit of riches, please don’t neglect your well being! It would 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. Features reinforce confidence, and confidence feeds risk-taking. However the fact is, in bull markets everybody appears good, 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 not bragged to me about his wins whereas he minimize 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 top-of-the-line hedges towards monetary loss is emotional contentment.
Throughout growth occasions, it’s simple to maintain elevating the bar – more cash, extra property, extra vehicles, extra partying, extra every part. However in case you’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, buddies, and sufficient cash to manage your schedule. Every 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 price it in case you’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.
Journey the Wave, However Know A Jagged Shore Could Await
The vitality at the moment feels electrical, similar 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. Wonderful!
Buyers might 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’ll be able to.
Bull markets make you wealthy. Bear markets make you smart. 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 the moment’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 growth, 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 loads wealthier or are you bracing for the inevitable hangover? And for youthful buyers who didn’t dwell by 1999, how are you managing your FOMO as everybody round you appears to be getting wealthy once more?
Get A Free Monetary Evaluation Supply From Empower
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A recent 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 a bit of delusional. That’s when correct threat administration tends to vanish.
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