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 cost for my first property. However he is been elusive.
I nonetheless keep 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 increased virtually every day. My agency had simply gone public, immediately turning the companions into decamillionaires. The power was electrical – optimism in every single place, fortunes being made, CNBC blaring nonstop.
Quick ahead to as we speak: tech shares are main once more, crypto traders are shopping for Lambos, and AI is woven into the whole lot – our telephones, portfolios, and every 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 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 one of the vital 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 development shares, just a little 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 tougher, however smarter. Now, with traders 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 tips on how to navigate this AI-driven rocket responsibly.
As a result of frankly, with way 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 engaging male physique sort, 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.
- Steadiness 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 circulate. As well as, the most important tech firms are producing monumental free money circulate.
- Shoppers are additionally a lot stronger. Family leverage is decrease than in 1999 and 2007 as effectively.
- Financial coverage is popping supportive once more. Amazingly, the Fed is resuming its rate of interest cuts with the whole lot at all-time highs, offering a tailwind for danger belongings.
That stated, the psychology of manias by no means adjustments. Folks overestimate short-term positive aspects 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 strategies in case you’re feeling swept up by the hype. As we should always all keep 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 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 personal consolation stage. In line with trendy portfolio idea and supporting research, holding round 20 to 30 positions is usually sufficient to realize 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 must view it within the context of your total internet price. Take a look at how a lot you’ve got 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 internet 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 total internet price, which I can comfortably abdomen.
Confirm how a lot of your internet price you are comfy shedding.
2. Shift Extra In direction of Actual Property
1999 by means of 2009 taught me that shares are humorous cash with no actual utility. You’ll be able to’t drink your shares, reside in your shares, or bodily get pleasure from them. The one option to profit is to promote some shares sometimes 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 house admire in worth whilst you truly get pleasure from residing in it. When you have youngsters, that satisfaction multiplies. You’re not simply constructing wealth, you’re offering stability and recollections 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 firms are increasing, housing demand is rebounding, and actual property stays one of many few tangible hedges in opposition to each tech volatility and inflation.
3. Rising Non-public Firm Publicity
I am investing immediately into AI firms by means of numerous 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 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 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 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 purpose, a common companion should both have a large monitor report 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 preserve a minimum of one yr of residing bills in money or money equivalents like Treasury payments, and I nonetheless do. Liquidity buys peace of thoughts. It permits 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. When you don’t have liquidity prepared, you’ll be compelled to take a seat in your fingers 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, 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 case you had been solely 50% on margin again then, chances are high you had been worn out.
Right now, 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 positive aspects in a single day. That almost all current day was October 10, 2025, when widespread liquidations (~$20 billion) erased total portfolios on account of leverage.
When you 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 state of affairs: not solely are you able to lose the whole lot, 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 destructive steadiness. Investing on margin long-term is a nasty concept. Resist the temptation.
6. Embrace The Dumbbell Investing Technique
Throughout manias, investing FOMO usually pushes traders to take extreme danger. You purchase stuff you don’t totally perceive just because you possibly can’t stand watching others get wealthy with out you. Most of the time, this kind of investing results in damage.
One option 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 strategy permits 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 recurrently 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 Take pleasure in 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 indicate for the positive aspects.
For instance, in 2003, I used earnings from VCSY in 2000 to purchase a two-bedroom condominium 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 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 dad and mom all depend. Nice experiences usually admire in worth in ways in which cash can’t measure, particularly now that we are able to report them in gorgeous 4K.
So long as you proceed taking earnings to accumulate 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 ultimately finish badly. We may even face one other misplaced decade, the place danger belongings present little to no actual returns. It may 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 stunning once they arrive. Listed here are some key statistics:
- 5% corrections: occur 3–4 occasions 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 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, that you must make changes.
You’ll be able to even use my FS-SEER system to quantify your danger tolerance when it comes to 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 usually get missed in a bull market. That’s why it’s essential to checklist out your numerous sources of earnings 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 possibly can afford to take extra danger. But when lots of your earnings streams are more likely to collapse in a downturn, that you must modify your publicity accordingly. Make a sensible estimation of how far they could decline.
The secret is to construct numerous sources of earnings 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, mates, and household.
Again in 2009, my stress ranges had been by means of 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 virtually inconceivable 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 method out of dedicating my life to finance.
Right now, I attempt for steadiness, a aim made far simpler with no 60-hour-a-week job. I begin the day with 1-2 hours of writing, then usually play tennis, coach my youngsters, and remind myself that wealth is meaningless in case you don’t have the power 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. Positive aspects 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 the whole lot they’d constructed on account of extreme leverage. The barber on the basement of 1 New York Plaza not bragged to me about his wins whereas he reduce my hair. In actual fact, 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 among the finest hedges in opposition to monetary loss is emotional contentment.
Throughout growth occasions, it’s simple to maintain elevating the bar – more cash, extra property, extra automobiles, extra partying, extra the whole lot. However in case 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 regulate 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 simply price it in case 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 underneath any state of affairs.
Trip the Wave, However Know A Jagged Shore Could Await
The power as we speak feels electrical, similar to 1999. And I like it. I wish 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 in the future. Superb!
Buyers may expertise an epic blow off like we 26 years in the past. Simply understand how 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 sensible. 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 growth, or does it really feel like one thing fully new? Are you positioning your self for an additional potential blow-off high that might make us all so much wealthier or are you bracing for the inevitable hangover? And for youthful traders who didn’t reside 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
When you have over $100,000 in investable belongings—whether or not in financial savings, taxable accounts, 401(ok)s, or IRAs—you may get a free monetary check-up from an Empower monetary skilled by signing up right here. It’s a no-obligation option to have a seasoned knowledgeable, who builds and analyzes portfolios for a residing, assessment your funds.
A recent set of eyes can uncover hidden charges, inefficient allocations, or missed alternatives to optimize. A 1999-style bull market has a method of creating even essentially the most disciplined investor just a little delusional. That’s when correct danger administration tends to vanish.
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