What was the Dot-Com bubble like?
What was the Dot-Com bubble like?
I’m a younger investor so I wonder if there’s something to glean from older and more experienced Bogleheads experience during the tech bubble. Was it obvious then as it was occurring? Did you figure something was “off”? Did you have any specific investment strategy? Do you see parallels to our current time?
Re: What was the Dot-Com bubble like?
Yes and no.
It was a time of incredibly high and increasing productivity. This point is often overloo. Things were changing at a fast pace.
To take 1 example, consider these 3 companies that gad shy high values, Pets.com, eToys, and Amazon. You knew that 2 out of 3 would go bust.
IIRC there was a analysis who calculated that internet traffic was doubling every 4 months. That was wildly off - it was every 6 months. Note, it took 18 months to figure that the estate was off. Anyways, there was a massive investment in fiber optic networks. After the crash it took 5 years before that old capacity was fully used.
In short, it is hard to time the market.
We are in a different situation now. It is not technology but
interest rates that are the issue.
It was a time of incredibly high and increasing productivity. This point is often overloo. Things were changing at a fast pace.
To take 1 example, consider these 3 companies that gad shy high values, Pets.com, eToys, and Amazon. You knew that 2 out of 3 would go bust.
IIRC there was a analysis who calculated that internet traffic was doubling every 4 months. That was wildly off - it was every 6 months. Note, it took 18 months to figure that the estate was off. Anyways, there was a massive investment in fiber optic networks. After the crash it took 5 years before that old capacity was fully used.
In short, it is hard to time the market.
We are in a different situation now. It is not technology but
interest rates that are the issue.
Former brokerage operations & mutual fund accountant. I hate risk, which is why I study and embrace it.
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Re: What was the Dot-Com bubble like?
OpOrangutan wrote: ↑Sun Feb 14, 2021 5:46 pm I’m a younger investor so I wonder if there’s something to glean from older and more experienced Bogleheads experience during the tech bubble. Was it obvious then as it was occurring? Did you figure something was “off”? Did you have any specific investment strategy? Do you see parallels to our current time?
I made 70k from 10K 1997 to 2000 which was used to buy my first home, and it was ok since I was 40 years old and pullback was opportunity to buy more since I was 27 years away from retirement.
No it was not obvious when the crash occurred, it was by chance I decided to take funds off the table.
check out this post on overvaluation:
viewtopic.php?f=10&t=338184
So it depends on whether or not you need the money, crashes are good, have dry powder, last year I made 354K on my portfolio, I went from 1.8 million to currently 2.353 million.
I have a stable job and still working, no chance of being unemployed at 60, plan to retire summer 2021.
Last edited by retire2022 on Sun Feb 14, 2021 6:05 pm, edited 1 time in total.
Re: What was the Dot-Com bubble like?
I had my retirement money (not much at that time) in an actively managed fund with a reputable company (?) that had good talk. The fund crashed 50% and never recovered, unlike the actual market. By a couple years after the crash the fund didn't exist anymore. Just one of hundreds of examples of actively managed mutual funds that look great in good times, only to fail and get swept under the rug and never mentioned again during bad times. It is still going on. I'd guess ARK is going to take this path some time in the next 10 or 15 years as well. But of course I don't know
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Re: What was the Dot-Com bubble like?
I was just beginning to invest in the midst of the Dotcom tech bubble.
It was obvious to me.Was it obvious then as it was occurring? Did you figure something was “off”?
I worked in tech at the time, and the vast majority of hot new Internet IPOs were from companies that produced no useful product, communicated only vague long term goals, and had no realistic pathway to accomplishing anything significant.
Anytime I went to a trade show, 95% of what company representatives, whether in leadership, sales, or engineering, told me was incomprehensible. Buzzwords, other nonsense. Venture capital threw money at anything and everything in the hopes that something would stick.
Yes. I deliberately avoided hyped IPOs and Janus, and invested in the Vanguard 500 Index instead. That didn't completely insulate me from the bubble bursting in 2001, but I didn't lose all my capital either.Did you have any specific investment strategy?
No and Yes.Do you see parallels to our current time?
No: The hot stocks of 2020, like NVDA and TSLA, I can understand. I could write in one concise paragraph the overall goal of the company, what useful products and services they offer to their customers, their key advantages in the marketplace, and why they will be financially successful now and in the future. High flying tech stocks like the FAANGs and Microsoft are creating and profitably selling their products and services.
Yes: SPACs (Special Purpose Acquisition Companies) are being used to make other companies public without providing the same level of transparency as normal IPOs. NKLA is probably the most egregious example, and its backers appear to have fooled many investors, Twitter personalities, and General Motors to boot. All completely avoidable, based on even moderate due diligence of the physics of fuel cells, sketchy reputation of the founder, and lack of product prototypes for people to try for themselves. But a lot of folks had the wool pulled over their eyes by the smooth talking founder (who is now ousted from the company).
Taking a break as of 2 Mar. 2021; First Principles: (1) Diversify (2) Low Cost (3) Stay the Course | 3-Fund Index Portfolio
Re: What was the Dot-Com bubble like?
In 2000, you were able to get 3+% real return (in excess of inflation) on I bonds. FDIC insured CDs were yielding 6 or 7%. The average real estate investment trust was yield maybe 8%. Very different than today.
"The safe assumption for an investor is that over the next hundred years, the currency is going to zero." - Charlie Munger
Re: What was the Dot-Com bubble like?
That is so crazy to think about what interest rates used to be like. I think my money market funds gave me 1 penny per thousand dollars last month.
Thank God for Wall Street Bets.
Re: What was the Dot-Com bubble like?
Lost a lot on Lucent - broke me of single stock investing and went with broad market, low cost index funds.
Re: What was the Dot-Com bubble like?
I remember "things are different this time," and "this is the new normal."
Nothing to say, really.
Re: What was the Dot-Com bubble like?
Really well said. I’ll add a couple of other things.hagridshut wrote: ↑Sun Feb 14, 2021 6:20 pm
I was just beginning to invest in the midst of the Dotcom tech bubble.
It was obvious to me.Was it obvious then as it was occurring? Did you figure something was “off”?
I worked in tech at the time, and the vast majority of hot new Internet IPOs were from companies that produced no useful product, communicated only vague long term goals, and had no realistic pathway to accomplishing anything significant.
Anytime I went to a trade show, 95% of what company representatives, whether in leadership, sales, or engineering, told me was incomprehensible. Buzzwords, other nonsense. Venture capital threw money at anything and everything in the hopes that something would stick.
Yes. I deliberately avoided hyped IPOs and Janus, and invested in the Vanguard 500 Index instead. That didn't completely insulate me from the bubble bursting in 2001, but I didn't lose all my capital either.Did you have any specific investment strategy?
No and Yes.Do you see parallels to our current time?
No: The hot stocks of 2020, like NVDA and TSLA, I can understand. I could write in one concise paragraph the overall goal of the company, what useful products and services they offer to their customers, their key advantages in the marketplace, and why they will be financially successful now and in the future. High flying tech stocks like the FAANGs and Microsoft are creating and profitably selling their products and services.
Yes: SPACs (Special Purpose Acquisition Companies) are being used to make other companies public without providing the same level of transparency as normal IPOs. NKLA is probably the most egregious example, and its backers appear to have fooled many investors, Twitter personalities, and General Motors to boot. All completely avoidable, based on even moderate due diligence of the physics of fuel cells, sketchy reputation of the founder, and lack of product prototypes for people to try for themselves. But a lot of folks had the wool pulled over their eyes by the smooth talking founder (who is now ousted from the company).
I could never wrap my head around what most of the companies were talking about. Either they were nuts, or I was stupid. But most of them are gone now, so.....
Everybody everywhere was talking about the stock market. That’s all anybody talked about at dinner parties, etc.
Companies were only reporting “pro-forma” earnings, and nobody questioned it. They were also taking massive write- offs for. “Goodwill”, which just seemed like big losses to me.
Lucent, Nortel, and JDSUniphase were telecom darlings of CNBC. If you’re under 40, have you ever heard of them? They were on the scale of Cisco.
Myspace, AOL, Yahoo were big tech companies at the time. Amazon was too. At that time, Amazon was consistently losing a lot of money, and serious people wondered if they’d ever be able to turn the corner. A lot of folks thought that Target and Walmart would strongly compete with Amazon once they decided to......
It doesn’t feel that way to me now. For the most part, we have real companies, executing really well and making lots of money.
Re: What was the Dot-Com bubble like?
I was in a dot-com start up. One month we had less cash left than some people in the company had in their checking account. Three months later we were acquired for $20 million. Six months after that the company that bought us was acquired for $4 billion. Less than a year after that everything came crashing down.
I was in my twenties and didn't really have a frame of reference. I knew nothing I personally was doing seemed to justify the value of my stock options. It seemed unlikely that anything our start up was doing was worth these insane values either.
On the other hand I had temped at a wide range of companies and it seemed pretty normal for there to be a complete disconnect between what I was paid and whether or not I was doing anything of value (or anything at all).
So no, it wasn't obvious to me.
I was in my twenties and didn't really have a frame of reference. I knew nothing I personally was doing seemed to justify the value of my stock options. It seemed unlikely that anything our start up was doing was worth these insane values either.
On the other hand I had temped at a wide range of companies and it seemed pretty normal for there to be a complete disconnect between what I was paid and whether or not I was doing anything of value (or anything at all).
So no, it wasn't obvious to me.
Last edited by justkevin on Sun Feb 14, 2021 7:05 pm, edited 1 time in total.
Re: What was the Dot-Com bubble like?
I had all my money in a 401k. I was contributing and getting quarterly statements. Then when 9/11 happened, I decided not too look at the market for a year. I have no idea how bad it got, but I also never felt that the market would not recover as a whole and I was able to stay the course.
Re: What was the Dot-Com bubble like?
In 2000 I just got a brand new job at Sun Microsystems. Got a lot of stock options as part of the package. They were never worth anything.
On the plus side, my investments were zero as I was just starting my career so I have not lost any in the crash.
The boom then felt similar to the the one we have today. Lots of paper wealth created for no rational reason. Though I agree that the reasons are totally different.
It *was* obvious then that stocks were overvalued (like they are today), but not obvious when/if to expect the crash.
On the plus side, my investments were zero as I was just starting my career so I have not lost any in the crash.
The boom then felt similar to the the one we have today. Lots of paper wealth created for no rational reason. Though I agree that the reasons are totally different.
It *was* obvious then that stocks were overvalued (like they are today), but not obvious when/if to expect the crash.
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Re: What was the Dot-Com bubble like?
Did you ever make any money off your stock options?justkevin wrote: ↑Sun Feb 14, 2021 7:03 pm I was in a dot-com start up. One month we had less cash left than some people in the company had in their checking account. Three months later we were acquired for $20 million. Six months after that the company that bought us was acquired for $4 billion. Less than a year after that everything came crashing down.
I was in my twenties and didn't really have a frame of reference. I knew nothing I personally was doing seemed to justify the value of my stock options. It seemed unlikely that anything our start up was doing was worth these insane values either.
On the other hand I had temped at a wide range of companies and it seemed pretty normal for there to be a complete disconnect between what I was paid and whether or not I was doing anything of value (or anything at all).
So no, it wasn't obvious to me.
I had a family friend during the dot com bubble who had $1 million worth of stock options that went to $0.
Re: What was the Dot-Com bubble like?
Dot com bubble was like thousands of GameStop Companies on heroine. And hangover was until the next housing market crash. That is what you may experience some day. There were months when everything was going down , bonds, stocks, gold. No place to hide.Orangutan wrote: ↑Sun Feb 14, 2021 5:46 pm I’m a younger investor so I wonder if there’s something to glean from older and more experienced Bogleheads experience during the tech bubble. Was it obvious then as it was occurring? Did you figure something was “off”? Did you have any specific investment strategy? Do you see parallels to our current time?
Last edited by Ed 2 on Sun Feb 14, 2021 7:18 pm, edited 1 time in total.
"The fund industry doesn't have a lot of heroes, but he (Bogle) is one of them," Russ Kinnel
Re: What was the Dot-Com bubble like?
I was in my late 20’s and only had money invested in my 401k. It did feel like you were missing out if you weren’t part of the dot com blitz as stocks would shoot up when they announced a website. I had some friends make some $$$ because they knew their company was announcing their website in a couple of weeks. Even then thought it wasn’t a good idea because to me, their business model wasn’t changing and the stock shouldn’t change. The day it was announced it went from $2 to $20 then the next day to $40 so I felt like I missed out but really didn’t have much to invest. My friends all sold around $15 so they missed some of the run up. One relative heard me talking about it and bought at $40 (I was saying how it shouldn’t be that high!) not soon afterward, dot com crash, back down to $2.
Re: What was the Dot-Com bubble like?
I have a cousin who was working in yahoo at the time with stock options valued in the millions at 1999 but worth less than toilet paper by 2001. The Silicon Valley was devastated, no more line in front of usually crowed restaurant, significant cut to rent, many was selling their newly acquired Porsche on the cheap. I have several acquaintances filing for bankruptcy due to AMT on their exercised options (that was the favor form of stock comp at the time, not rsu). It was brutal, my own company went thru 6+ rounds of layoffs in a 18 months period, reducing headcount by 60%.
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Re: What was the Dot-Com bubble like?
Things went down consistently for basically 3 years. March 2000 to March 2003. Three lost years cos of the excess of the 90s. As somebody who started working and investing in 2000 it left a sour taste in my mouth. Then as soon as I started to trust the market, 2008 happened.Ed 2 wrote: ↑Sun Feb 14, 2021 7:16 pmDot com bubble was like thousands of GameStop Companies on heroine. And hangover was until the next housing market crash. That is what you may experience some day. There were months when everything was going down , bonds, stocks, gold. No place to hide.Orangutan wrote: ↑Sun Feb 14, 2021 5:46 pm I’m a younger investor so I wonder if there’s something to glean from older and more experienced Bogleheads experience during the tech bubble. Was it obvious then as it was occurring? Did you figure something was “off”? Did you have any specific investment strategy? Do you see parallels to our current time?
Re: What was the Dot-Com bubble like?
Remember it well. Everyone was talking about a bubble so, in the end, the bust was no big surprise.
Re: What was the Dot-Com bubble like?
Same.manatee2005 wrote: ↑Sun Feb 14, 2021 7:24 pmThings went down consistently for basically 3 years. March 2000 to March 2003. Three lost years cos of the excess of the 90s. As somebody who started working and investing in 2000 it left a sour taste in my mouth. Then as soon as I started to trust the market, 2008 happened.Ed 2 wrote: ↑Sun Feb 14, 2021 7:16 pmDot com bubble was like thousands of GameStop Companies on heroine. And hangover was until the next housing market crash. That is what you may experience some day. There were months when everything was going down , bonds, stocks, gold. No place to hide.Orangutan wrote: ↑Sun Feb 14, 2021 5:46 pm I’m a younger investor so I wonder if there’s something to glean from older and more experienced Bogleheads experience during the tech bubble. Was it obvious then as it was occurring? Did you figure something was “off”? Did you have any specific investment strategy? Do you see parallels to our current time?
My introduction to investing was losing money. I started working in 1999.
Re: What was the Dot-Com bubble like?
There was a long similar thread about this last summer.
viewtopic.php?t=319873
Here is a post that I had in that thread.
viewtopic.php?t=319873
Here is a post that I had in that thread.
Watty wrote: ↑Sat Jul 11, 2020 6:54 am It affected people in ways other than their investments.
I was a software developer working in corporate IT.
That was right after Y2K where there had been a huge boom in IT work in the late 1990's to update old code to get ready for Y2K, replace old systems with ones that were Y2K compliant, and to test everything to make sure that there were no problems. Companies had really ramped up their IT hiring for Y2K and were already starting to cut back staff a lot as those projects finished up.
The companies that went out of business obviously laid people off but even non-tech companies that had technical staff were also laying computer people off in large numbers.
The computer job market basically collapsed and people that graduated with a computer related degree then were facing a bleak job market and many of them never found any computer related work. People that had computer jobs that got laid off were also in trouble since virtually no companies were hiring computer people.
It was unrelated to the dot com bust but that is about when the company I was working for went through a merger and my office was closed. I had the choice of taking a modest severance package or moving to the other side of the country. With few job prospects in my old city because no one was hiring that was a pretty easy choice so I moved. It worked out well but those were scary times.
When people post about being making some insane salary with a computer job in some place like the Bay Area I try to warn and encourage them not to count on that continuing for the long run but I suspect that few of them listen.
Re: What was the Dot-Com bubble like?
While on vacation in 2000, I remember walking into a bar in the tourist area of San Fransisco during the day and seeing CNBC on the TV. Made a huge impression on me. Sold a (far too small) portion of my grossly tech heavy portfolio.
Re: What was the Dot-Com bubble like?
Yes it was!!!. But I am glad it was because I was buying a lot back then.manatee2005 wrote: ↑Sun Feb 14, 2021 7:24 pmThings went down consistently for basically 3 years. March 2000 to March 2003. Three lost years cos of the excess of the 90s. As somebody who started working and investing in 2000 it left a sour taste in my mouth. Then as soon as I started to trust the market, 2008 happened.Ed 2 wrote: ↑Sun Feb 14, 2021 7:16 pmDot com bubble was like thousands of GameStop Companies on heroine. And hangover was until the next housing market crash. That is what you may experience some day. There were months when everything was going down , bonds, stocks, gold. No place to hide.Orangutan wrote: ↑Sun Feb 14, 2021 5:46 pm I’m a younger investor so I wonder if there’s something to glean from older and more experienced Bogleheads experience during the tech bubble. Was it obvious then as it was occurring? Did you figure something was “off”? Did you have any specific investment strategy? Do you see parallels to our current time?
"The fund industry doesn't have a lot of heroes, but he (Bogle) is one of them," Russ Kinnel
Re: What was the Dot-Com bubble like?
Back then everyone was talking only about which Best CD to invest in. No one wanted any stock talk))
"The fund industry doesn't have a lot of heroes, but he (Bogle) is one of them," Russ Kinnel
Re: What was the Dot-Com bubble like?
This was the best entree point for you to start investing .rockstar wrote: ↑Sun Feb 14, 2021 7:27 pmSame.manatee2005 wrote: ↑Sun Feb 14, 2021 7:24 pmThings went down consistently for basically 3 years. March 2000 to March 2003. Three lost years cos of the excess of the 90s. As somebody who started working and investing in 2000 it left a sour taste in my mouth. Then as soon as I started to trust the market, 2008 happened.Ed 2 wrote: ↑Sun Feb 14, 2021 7:16 pmDot com bubble was like thousands of GameStop Companies on heroine. And hangover was until the next housing market crash. That is what you may experience some day. There were months when everything was going down , bonds, stocks, gold. No place to hide.Orangutan wrote: ↑Sun Feb 14, 2021 5:46 pm I’m a younger investor so I wonder if there’s something to glean from older and more experienced Bogleheads experience during the tech bubble. Was it obvious then as it was occurring? Did you figure something was “off”? Did you have any specific investment strategy? Do you see parallels to our current time?
My introduction to investing was losing money. I started working in 1999.
"The fund industry doesn't have a lot of heroes, but he (Bogle) is one of them," Russ Kinnel
Re: What was the Dot-Com bubble like?
I'm too young to speak on the matter but I can't imagine it's the exact thing as today when you look at:
1-) How profitable companies today are
2-) The drastic difference in interest rates
1-) How profitable companies today are
2-) The drastic difference in interest rates
Re: What was the Dot-Com bubble like?
I was 24 at the time, a year and a half out of college and in my first job in tech (established company, still around and doing well today). I had just started investing, minimum going into the company 401k plan to get the match. Everything else was going to my newly opened brokerage account where I was trading Cisco, Microsoft, Infospace, some telecoms, and feeling really good about myself.
Then it all crashed, I lost about $40-50k, and learned some good lessons along the way. It’s a good thing this happened at the very beginning of my working/investing life. I managed to recover quickly, fortunate to still have a job, then moved to a better job, and things have been good since.
There are a few parallels to today, especially with the markets just going up every day, but also differences that have been pointed out by others. Can you imagine I-bonds yielding 3% and CDs > 5%?
I keep thinking a similar crash is around the corner for the past 2 years at least, but fortunately haven’t done anything foolish like going to 100% cash and no plans to do so.
Then it all crashed, I lost about $40-50k, and learned some good lessons along the way. It’s a good thing this happened at the very beginning of my working/investing life. I managed to recover quickly, fortunate to still have a job, then moved to a better job, and things have been good since.
There are a few parallels to today, especially with the markets just going up every day, but also differences that have been pointed out by others. Can you imagine I-bonds yielding 3% and CDs > 5%?
I keep thinking a similar crash is around the corner for the past 2 years at least, but fortunately haven’t done anything foolish like going to 100% cash and no plans to do so.
40% SPY | 10% stonks | 50% Cash
Re: What was the Dot-Com bubble like?
I do see parallels to today with speculative investments being made by the general public at large. A general observation is that back then was the speculation had to spread to all corners of the public, including many unsophisticated investors who were just jumping on a tech stock because it had to go up, and because it was "tech". It seems today, much of the speculation is being driven by a herd mentality among a younger segment of the public over social media, which seems to be in some cases making the influencers massively rich if they can pull it off without getting the attention of Wall St regulators- there was a story in my local paper today of a 34 year old making 14MM in less than a year through the Reddit website (he was one of the influencers).
There was a sense during the Dotcom era that "this time is different", and that the party wouldn't end- but we all know how that story ended (and probably this one too)...
My investment strategy during the early to late 90's was mostly in maxing out my 401k contributions, and investing in growth mutual funds (before I knew about indexing), and a few flyers on a large tech stock in my IRA- which worked out well (EMC), as I got out somewhat intact when the bubble burst. 2001-2003 was a tough period to look at your investment statements, and was better to just work and keep contributing into them as I came to realize they were on sale.
There was a sense during the Dotcom era that "this time is different", and that the party wouldn't end- but we all know how that story ended (and probably this one too)...
My investment strategy during the early to late 90's was mostly in maxing out my 401k contributions, and investing in growth mutual funds (before I knew about indexing), and a few flyers on a large tech stock in my IRA- which worked out well (EMC), as I got out somewhat intact when the bubble burst. 2001-2003 was a tough period to look at your investment statements, and was better to just work and keep contributing into them as I came to realize they were on sale.
Last edited by chw on Sun Feb 14, 2021 7:57 pm, edited 1 time in total.
Re: What was the Dot-Com bubble like?
It’s only numbers. There’s no difference my man. Same people- same behavior-same consequences. What goes up must come down. Market will correct anything eventually. There will be a trigger some sort .
"The fund industry doesn't have a lot of heroes, but he (Bogle) is one of them," Russ Kinnel
Re: What was the Dot-Com bubble like?
It was truly the Wild West and a gambling casino. Total insanity. Unbelievable wild price swings on individual stocks. Nothing like today.Orangutan wrote: ↑Sun Feb 14, 2021 5:46 pm I’m a younger investor so I wonder if there’s something to glean from older and more experienced Bogleheads experience during the tech bubble. Was it obvious then as it was occurring? Did you figure something was “off”? Did you have any specific investment strategy? Do you see parallels to our current time?
K.I.S.S........so easy to say so difficult to do.
Re: What was the Dot-Com bubble like?
I remember story’s same as now on TV “ millionaire in a week “hoops777 wrote: ↑Sun Feb 14, 2021 7:48 pmIt was truly the Wild West and a gambling casino. Total insanity. Unbelievable wild price swings on individual stocks. Nothing like today.Orangutan wrote: ↑Sun Feb 14, 2021 5:46 pm I’m a younger investor so I wonder if there’s something to glean from older and more experienced Bogleheads experience during the tech bubble. Was it obvious then as it was occurring? Did you figure something was “off”? Did you have any specific investment strategy? Do you see parallels to our current time?
"The fund industry doesn't have a lot of heroes, but he (Bogle) is one of them," Russ Kinnel
Re: What was the Dot-Com bubble like?
Thanks for reminding us of this, buried in the midst of a stock market bubble and crash was the golden era for I bonds. You could even buy them with credit cards iirc and get the cash back.
70% Global Stocks / 30% Bonds
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Re: What was the Dot-Com bubble like?
Let me talk about the time when we were in the bubble. It was a time of unbridled optimism as well as irrational exuberance. CEO at work would boast every quarter how the stock price was doubling. Companies were adding dot com to their names just to get on the bandwagon. Startups had astronomical valuations (some even with crazy ideas) and were burning through cash like hell. Some companies resorted to creative financial engineering by loaning money to other companies so that they could buy their products and thereby booking sales/profit in the same quarter. People were boasting how they made ton of money in a short time investing in various IPOs. People at work were constantly discussing about how well their 401K and stock options were doing. People outside the industry were looking for a career in technology field since there were a lot more jobs/money there. Consultants especially from the big 3 were making a killing and led an extravagant lifestyle; many stories were legendary. If you were in the job market it was easy to get multiple job offers with sign on bonus + stock options; there was a bidding war. Real estate was hot as well. Financial pundits were ridiculing the likes of Warren Buffett; that he had lost his magic and that he was old fashioned. Magazines and TV were full of interviews with star managers who made stellar returns investing in hot stocks. We couldn't believe our eyes.
Re: What was the Dot-Com bubble like?
Oh yeah that's absolutely true, no doubt that this too shall end eventually. But IMO it isn't actionable, at least in 1999 you could take out money from stocks and invest in 6% bonds. You can't do that today, not without losing purchase power on your idle cash / bonds.
Re: What was the Dot-Com bubble like?
I earned so much cash back credits on IBonds that I bought SONY music system and much more. I had best IBond rate , just cashed them back in March to buy more equity.z3r0c00l wrote: ↑Sun Feb 14, 2021 7:53 pmThanks for reminding us of this, buried in the midst of a stock market bubble and crash was the golden era for I bonds. You could even buy them with credit cards iirc and get the cash back.
"The fund industry doesn't have a lot of heroes, but he (Bogle) is one of them," Russ Kinnel
Re: What was the Dot-Com bubble like?
I was just about ready to graduate from college with a computer science degree and I remember friends that graduated a year or two before tell me about how they'd show up to work and half the building would be dark. Some noticed "this is not good" and moved to the more well established companies, some went back to graduate school, but a few got burned hard by trying to live to the end. Right as that was happening the NASDAQ crashed and things were trying to claw back and then 9/11 happened and it hit everything.
It did suck when I graduated into the middle of a tech recession and no one was hiring.
It did suck when I graduated into the middle of a tech recession and no one was hiring.
Last edited by adestefan on Sun Feb 14, 2021 8:06 pm, edited 1 time in total.
Re: What was the Dot-Com bubble like?
Holding cash this day’s is only option same as used to be for bonds, thanks we don’t have inflation so far. I keep some extra cash just for the day when sh..t will hit the fan. When? Nobody knows at list inflation is under controlJSPECO9 wrote: ↑Sun Feb 14, 2021 7:56 pmOh yeah that's absolutely true, no doubt that this too shall end eventually. But IMO it isn't actionable, at least in 1999 you could take out money from stocks and invest in 6% bonds. You can't do that today, not without losing purchase power on your idle cash / bonds.
"The fund industry doesn't have a lot of heroes, but he (Bogle) is one of them," Russ Kinnel
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Re: What was the Dot-Com bubble like?
It was a time when you went to get a haircut and your barber told you she had just made $1M on JDS Uniphase.
Re: What was the Dot-Com bubble like?
I remember William Bernstein writing back then somewhere that young investors should be praying for a market crash to buy stocks when they’re cheap. And then it happened, but I had no money and a small child.
"It is difficult to get a man to understand something, when his salary depends upon his not understanding it!" - Upton Sinclair
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Re: What was the Dot-Com bubble like?
I was there, and I still clearly recall investing in a mutual fund called Munder NetNet. Yep, that was the name. Some young guy put together a mutual fund of the high flying Internet type companies and I got on for the ride. I watched my $4k play money grow to $11k, then quickly down to $2k where I pulled out. Glad it was just play money.
Now seems similar to then in that there was a lot of talk by people about day trading, just like now. And there was not a lot of justification for the stock prices.
Now also resembles what I recall of the housing bubble, where housing prices had shot up and there was a lot of house flipping going on, and I specifically recall thinking, this has to end. And it did. Maybe this time it is different. Back then, if you could breath, you could get a mortgage, maybe two or three. This time it may be a function of the low rates.
So, I wonder if this combination of the stock market bubble and the housing situation could mean real trouble? Remember, nobody knows nothing
Now seems similar to then in that there was a lot of talk by people about day trading, just like now. And there was not a lot of justification for the stock prices.
Now also resembles what I recall of the housing bubble, where housing prices had shot up and there was a lot of house flipping going on, and I specifically recall thinking, this has to end. And it did. Maybe this time it is different. Back then, if you could breath, you could get a mortgage, maybe two or three. This time it may be a function of the low rates.
So, I wonder if this combination of the stock market bubble and the housing situation could mean real trouble? Remember, nobody knows nothing
Re: What was the Dot-Com bubble like?
There was time when I was walking at the Plummer Park in West Hollywood ( some may know that famous Russian park) and there were guy’s trying to sell their “ special sauce technique “ how to buy hot stocks to their comrades. In the park LOLbaconavocado wrote: ↑Sun Feb 14, 2021 8:06 pm It was a time when you went to get a haircut and your barber told you she had just made $1M on JDS Uniphase.
"The fund industry doesn't have a lot of heroes, but he (Bogle) is one of them," Russ Kinnel
Re: What was the Dot-Com bubble like?
1) It seemed like every time Alan Greenspan (fed chairman) was interviewed from 1997-2000, he used the phrase, "Irrational Exuberance" at least once. So apparently it was obvious to him.Orangutan wrote: ↑Sun Feb 14, 2021 5:46 pmI’m a younger investor so I wonder if there’s something to glean from older and more experienced Bogleheads experience during the tech bubble.
1) Was it obvious then as it was occurring?
2) Did you figure something was “off”?
3) Did you have any specific investment strategy?
4) Do you see parallels to our current time?
2) The media were regularly interviewing, "the man on the street" who would say, "Sure I'm taking out a second mortgage! It's easy to make money in the stock market." Even the garbage man was talking about his portfolio.
3) Pre-Bogleheads for me, so I had zero idea what I was doing.
4) Don't care. With a sound, Boglehead portfolio I'm prepared for whatever.
"Never underestimate one's capacity to overestimate one's abilities" - The Dunning-Kruger Effect
Re: What was the Dot-Com bubble like?
My memories (age 18, 19) were hearing about friends of friends or parents of friends making a fortune in Qualcom or other stocks. I was not a participant so had no skin in the game but even at that young age when money didn't mean much, I did get a twinge of FOMO hearing people make a fortune with no effort. My parents were finally sold on a small mutual fund purchase, an overpriced Janus fund, and that pretty much marked the top of the bubble. Round about 2017 they sold the funds for a modest gain. The most memorable aspect, however, was a family friend who got addicted to day trading and lost her retirement savings. She passed in 2013 but for those 13 years, lived a diminished and spartan life due to a lack of money. I saw enough of the bad to know that the tales of easy money are only one side of the bubble story.
70% Global Stocks / 30% Bonds
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Re: What was the Dot-Com bubble like?
Third. I started my first real job in 1996. Everyone at work was leveraged into the market and all the TVs were tuned to the business channels. I sold everything outside my IRA in early 2000 to buy some property.rockstar wrote: ↑Sun Feb 14, 2021 7:27 pmSame.manatee2005 wrote: ↑Sun Feb 14, 2021 7:24 pmThings went down consistently for basically 3 years. March 2000 to March 2003. Three lost years cos of the excess of the 90s. As somebody who started working and investing in 2000 it left a sour taste in my mouth. Then as soon as I started to trust the market, 2008 happened.Ed 2 wrote: ↑Sun Feb 14, 2021 7:16 pmDot com bubble was like thousands of GameStop Companies on heroine. And hangover was until the next housing market crash. That is what you may experience some day. There were months when everything was going down , bonds, stocks, gold. No place to hide.Orangutan wrote: ↑Sun Feb 14, 2021 5:46 pm I’m a younger investor so I wonder if there’s something to glean from older and more experienced Bogleheads experience during the tech bubble. Was it obvious then as it was occurring? Did you figure something was “off”? Did you have any specific investment strategy? Do you see parallels to our current time?
My introduction to investing was losing money. I started working in 1999.
But I learned wrong lesson. I thought I knew better than the market so I market timed. I was surprised in 2009 and panic sold near the bottom. Stayed conservative because I never knew how to get back in. Missed the biggest bull market of our lives.
2019 we liquidated our investment properties and went back into the market. 2020 hit and my wife hated me for risking our retirement funds.
I hate, hate the market but I held on. So far so good. It's never easy.
We plan. G-d laughs.
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Re: What was the Dot-Com bubble like?
It was exactly like now if you change the fund and company names.
Re: What was the Dot-Com bubble like?
1. Not to me. But I had no idea what I was doing other than saving.
2. Same as above.
3. Here's where it gets amusing. All my "investments" were set up via monthly allotments. All I had was dialup modem for internet and it was deadly slow, consequently about all I did was email and read the news. I was clueless, I'd punch holes in my statements when they arrived in the mail each month and put in a three ring binder. Didn't even really review them... Truly a case of ignorance being bliss. So basically from the late 90's through the 2000's (and beyond) I was buying. And increasing my allotments as I got raises. I'll be the first to admit my "investment strategy" was pure dumb luck.
4. Not really, I'm not knowledgeable enough to know one way or the other.
But I will agree with the other posters, it seemed EVERYONE was talking stocks and how they were making so much money. Sounded interesting to me, but it also sounded complicated (buying and selling individual stocks) so I never really thought about doing it myself.
2. Same as above.
3. Here's where it gets amusing. All my "investments" were set up via monthly allotments. All I had was dialup modem for internet and it was deadly slow, consequently about all I did was email and read the news. I was clueless, I'd punch holes in my statements when they arrived in the mail each month and put in a three ring binder. Didn't even really review them... Truly a case of ignorance being bliss. So basically from the late 90's through the 2000's (and beyond) I was buying. And increasing my allotments as I got raises. I'll be the first to admit my "investment strategy" was pure dumb luck.
4. Not really, I'm not knowledgeable enough to know one way or the other.
But I will agree with the other posters, it seemed EVERYONE was talking stocks and how they were making so much money. Sounded interesting to me, but it also sounded complicated (buying and selling individual stocks) so I never really thought about doing it myself.
Re: What was the Dot-Com bubble like?
Not exactly.ClevrChico wrote: ↑Sun Feb 14, 2021 8:47 pm It was exactly like now if you change the fund and company names.
It was much crazier. There were multiple stocks acting like GameStop did on a daily basis.
I remember Amazon when it just sold books and it going from 50 to 400 dollars and back.
There were a lot of penny stocks that went bonkers on a glimmer of hope.
Unfortunately it was my introduction to investing and I have never fully shaken it off.
K.I.S.S........so easy to say so difficult to do.
Re: What was the Dot-Com bubble like?
I remember a close friend had parted from their job and started day-trading options, seemed to be making money at it to (for about a year until he wound up with everything leveraged up on one big trade that wiped him out).
At my work the employer instituted a policy against using the computers with Internet (we only had a couple with dial-up access) for checking or trading stocks. Several people were reprimanded for doing stock trading while on the clock.
There were all kinds of ads for online discount brokers, "Stewart" from the Ameritrade commercials comes to mind.
I do remember something feeling "off" about all these IPO's coming out that didn't even seem to have a business model that could be profitable.
I remember AOL buying TIme-Warner, which seemed absolutely ridiculous, both from the perspective that AOL was considered financially "big enough" to do something like that, and out of their lane as a pseudo-telecom company to be getting involved in media.
Microsoft ruled the world, the rumor was that Microsoft was partially funding Apple computer to try and keep that company alive only for the purpose of having a pseudo competitor they could point to in anti-trust monopoly cases.
If you could spell the word "computer" you could get a high-paying job offer in the silicon valley area, future job prospects were looking golden. Passing a Microsoft or Cisco certification exam held more clout then it probably should have.
I remember feeling discouraged by the crazy prices of the stock market, but lacking other good options (who wants an I-bond paying 3%+ inflation? when the stock market "average" was twice that plus inflation, and recent times were looking like 20% gains every year were the norm)... but nervous about high prices and bogus IPO's I got involved in other trading strategies like "Dogs Of The Dow".
I remember hearing Mr. Bogle and about his book(s) on a money talk radio show, and got into reading those at the LIbrary... I wound up putting most of my 401k plan into an index fund, and as a matter of luck/timing liquidated my other trading account as a down payment for a condo at a very good time to be doing so.
At my work the employer instituted a policy against using the computers with Internet (we only had a couple with dial-up access) for checking or trading stocks. Several people were reprimanded for doing stock trading while on the clock.
There were all kinds of ads for online discount brokers, "Stewart" from the Ameritrade commercials comes to mind.
I do remember something feeling "off" about all these IPO's coming out that didn't even seem to have a business model that could be profitable.
I remember AOL buying TIme-Warner, which seemed absolutely ridiculous, both from the perspective that AOL was considered financially "big enough" to do something like that, and out of their lane as a pseudo-telecom company to be getting involved in media.
Microsoft ruled the world, the rumor was that Microsoft was partially funding Apple computer to try and keep that company alive only for the purpose of having a pseudo competitor they could point to in anti-trust monopoly cases.
If you could spell the word "computer" you could get a high-paying job offer in the silicon valley area, future job prospects were looking golden. Passing a Microsoft or Cisco certification exam held more clout then it probably should have.
I remember feeling discouraged by the crazy prices of the stock market, but lacking other good options (who wants an I-bond paying 3%+ inflation? when the stock market "average" was twice that plus inflation, and recent times were looking like 20% gains every year were the norm)... but nervous about high prices and bogus IPO's I got involved in other trading strategies like "Dogs Of The Dow".
I remember hearing Mr. Bogle and about his book(s) on a money talk radio show, and got into reading those at the LIbrary... I wound up putting most of my 401k plan into an index fund, and as a matter of luck/timing liquidated my other trading account as a down payment for a condo at a very good time to be doing so.
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham
- nisiprius
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Re: What was the Dot-Com bubble like?
Unfortunately most people have selective memories and pick out the ones that seem to show they were right. I think these memories are accurate but possibly not representative. But in my recollection, yeah, I thought something was "off."
--I remember saying "well, people seem to think they've found the secret to wealth without work."
--When I was working in the computer lab, one day an electrician was bringing in some new 220-volt service for a new machine, on a ladder with his head and arms above the dropped ceiling. His cell phone rang. He climbed partway down the ladder and sat down for about a minute and discussed GE stock with a broker.
--I don't think I actually met anyone who identified their occupation as "day-trader," but I had friends who described friends of theirs as "day-traders." (You couldn't do that at home with normal home internet service, you had to drive in to a nearby big city where there were gambling parlors brokerages catering to those who wanted to day-trade).
--I was genuinely troubled by the seemingly-impossibly-high returns of virtually all my mutual fund and 401(k) accounts. It was like they were all getting >20% per year. I do remember Greenspan's "irrational exuberance" speech in late 1996, I think the press headline-writers had picked up on that phrase.
--I had a subscription to Wired magazine because I was interested in the technology, but it was becoming increasingly loaded with articles about the "New Economy," explanations of why it was no longer realistic to try to value companies in terms of earnings or profits, and articles about the "Wired Index"--a list of thirty or forty stocks that represented the New Economy.
--I do have one scrap of documentary evidence of how I felt. I did buy a few thousand dollars' worth of QQQ, and my diary entry says:
2019 didn't feel like 2000 to me, but 2021 does. What might be different (I hope!) is that the mania may only be affecting a small part of the market by dollar weight.
--I remember saying "well, people seem to think they've found the secret to wealth without work."
--When I was working in the computer lab, one day an electrician was bringing in some new 220-volt service for a new machine, on a ladder with his head and arms above the dropped ceiling. His cell phone rang. He climbed partway down the ladder and sat down for about a minute and discussed GE stock with a broker.
--I don't think I actually met anyone who identified their occupation as "day-trader," but I had friends who described friends of theirs as "day-traders." (You couldn't do that at home with normal home internet service, you had to drive in to a nearby big city where there were gambling parlors brokerages catering to those who wanted to day-trade).
--I was genuinely troubled by the seemingly-impossibly-high returns of virtually all my mutual fund and 401(k) accounts. It was like they were all getting >20% per year. I do remember Greenspan's "irrational exuberance" speech in late 1996, I think the press headline-writers had picked up on that phrase.
--I had a subscription to Wired magazine because I was interested in the technology, but it was becoming increasingly loaded with articles about the "New Economy," explanations of why it was no longer realistic to try to value companies in terms of earnings or profits, and articles about the "Wired Index"--a list of thirty or forty stocks that represented the New Economy.
--I do have one scrap of documentary evidence of how I felt. I did buy a few thousand dollars' worth of QQQ, and my diary entry says:
I sold on 4/13/2000 for $4,247, by the way.11/17/1999 Buy 23.0000 QQQ NASDAQ 100 SHARES UNIT SER 1 $147.75000 -$3428.20.
Rationale: Gambling money. Let’s have at least a small bet on the table for the great technology bonanza.
Future intentions: follow impulses.
2019 didn't feel like 2000 to me, but 2021 does. What might be different (I hope!) is that the mania may only be affecting a small part of the market by dollar weight.
Last edited by nisiprius on Sun Feb 14, 2021 9:26 pm, edited 2 times in total.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
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Re: What was the Dot-Com bubble like?
Back then My BIL and SIL bought a tech stock on margin and were telling us how rich they were going to be and told us we should get in on it. We declined. Not long after, my BIL and SIL were draining their savings accounts and 401ks due to margin calls. I had never heard of buying on margin etc. but now when I hear someone talking about it I think of my in-laws financial ruin. At the time their combined income was over $400,000 a year. They made more in a month than my wife and I made in a year and yet they wanted to get rich by borrowing money to buy some stock that a friend was buying. That was a crazy time.