It just feels crazy how the market keeps going up up up. I was too busy watching cartoons in 2000 to be investing. For those of you around then, was this what it felt like?
I was not a trader at that time, but was working in tech and the biggest difference I can see is that we don’t have the sector like tech was then that had widespread PE multiples in the hundreds. Mania in tech helped drive mania elsewhere, but not to those kinds of valuations that weren’t backed up by revenues or profits. Amazon managed to keep up a fairly lofty PE, sure, but that’s a narrative-driven stock that’s backed up by delivering innovative, disruptive revenue streams. Nobody else is AMZN.
The closest thing to 2000 for me is the Bitcoin mania last year and 2018. I remember companies in 2000 changing their names to add a “.com” at the end and investors would flock to them. There were a lot of companies like that who had almost no business in bitcoin adding “crypto” or “bitcoin” to their name and seeing the same result. Also, like 2000, most of these companies had no profits. I don’t see that right now.
Very good points! I wonder if coins like Bitcoin or some of the other top ones will be the Amazon or Apple of the crypto craze. I know AMZN and AAPL both suffered greatly during the .com crash but have done very well since. I could see something like Bitcoin that actually has a strong network and growing use cases and user base doing similar if you were to carry the analogy forward. Though only time will tell if the crypto craze has any survivors like the .com crash did.
I was a professional trader in the late nineties and the BIG difference is that the market was driven up primarily by new tech/.com names with zero sales…get that! not zero or low earnings, just no sales period. It was a bubble driven by FOMO trades, today is not a bubble (at least not yet). The economy is doing well and companies are making money, so no I don’t see this anywhere near 2000.