Were You Around During Dotcom Bubble?

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InvestorP
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Were You Around During Dotcom Bubble?

Post by InvestorP »

Although I was definitely around, I was not involved in the stock market. But I do know about that infamous era. Did any of you guys dabbled in the stock market then and what lesson did you learn?

The recent boom in tech stocks and listening to all the analysts talk makes me think Dotcom 2.0 is on the horizon. The same way no one saw the Dotcom bubble coming I'm sure whatever comes next, no one will see it coming.

I'm just curious to know if there are any Boggleheads who survived that era and what are your thoughts now on these booming tech stocks?
123
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Re: Were You Around During Dotcom Bubble?

Post by 123 »

Bought some Webvan in a Roth account since the sky was the limit in terms of where the value could go. It went to nothing and I had to pay the broker a commission (less than $10) to buy it for nothing from me and remove it from my account (I had gotten sick of seeing it on my statement).
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Bfwolf
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Re: Were You Around During Dotcom Bubble?

Post by Bfwolf »

I was a young kid out of college, put something like $5000 in a Roth IRA and bought Cisco, thinking this was the blue chip of tech stocks. It went up, and then went down to about $2,000. Fantastic lesson for me at a reasonably affordable price.

As to applicability to current situation, I gave up trying to predict markets a long time ago. The entire US stock market seems overpriced to me, but I stick to my asset allocation.
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Kalo
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Re: Were You Around During Dotcom Bubble?

Post by Kalo »

I was. I had been investing for about 6 or 7 years by then. So I had a small but meaningful portfolio. I remember at one point my 401K had gained 50K I think. Something like that. I remember my dad telling me to sell it all in case something happened, but this was only because he was afraid of stocks, not because he knew anything about the current situation.

I was heavily into tech funds when the dot bomb hit. I got hurt pretty badly. But I mostly hung in. The only changes I made were broadening my holdings into total market funds, etc. And moved everything from Invesco to Vanguard. My 401K at the time also happened to move to Vanguard.

I learned a lot from it. I have a much more sensible and crash resistant portfolio now. 60/40 stock bond. Broad market funds, slight value tilt, 60/40 US / Int'l. Bonds roughly 50/50 nominal / inflation protected.

One difference I see in the current market is that you don't have a lot of high flying stocks that have no earnings. Back then everything with .com in their name got bought up. It really was nutty. Lots of people talked about how tech would probably crash. I'm not kidding. People speculated a lot that it couldn't continue. Of course some said it was a new paradigm. Lots of new paradigm chatter.

I do believe tech and bio tech are valued highly compared to other sectors, but of course there's more growth there too so they should be valued higher. Whether anything is overvalued is impossible for me to say. I remember the Nasdaq going from 5,000 to 1,200. I don't tilt to tech. I tilt to small and value, and a little to large value. I even have some mid-cap value.

My advice is to get your Stock/Bond allocation aligned with your risk tolerance (not the one for when stocks are going up, but the one for when stocks are going down - I believe these are two different tolerances). Secondly, I recommend allocating your equities in funds you believe in now and can continue to believe in even if they under-perform the broad market. And if you don't believe you can tolerate under-performance compared to the broad market, then buy broad market funds.

My biggest concern right now is China with my international funds. I don't want exposure to China and I'm trying to figure out how to avoid that, but, if I can't, I hope to minimize it. I hold some VWO and am planning on selling it and moving it to VSS. I think that will cut my China exposure. There's a thread on China floating around.

Since I don't have a tilt to any sectors, I'm not really worried about Tech or Bio Tech or any sector. Just trying to stay the course and figure out how to limit China and still keep my hand in international.

Hope this helps.

Kalo
"When people say they have a high risk tolerance, what they really mean is that they are willing to make a lot of money." -- Ben Stein/Phil DeMuth - The Little Book of Bullet Proof Investing.
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jason2459
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Re: Were You Around During Dotcom Bubble?

Post by jason2459 »

P/E was way higher then and everyone had some new website making 0 profits and spending millions on Superbowl ads and IPOs were hot. You made a lot on just the right penny stocks. Everyone had a geocity or angilefire page. Myspace was a thing like Facebook is now. ICQ and AOL AIM was how people chatted along with other great platforms like Usenet and IRC.

I got burnt hard on Many of my picks. Many of the companies I had stock in didn't make it to 2002. And some never really recovered back to their glory which some were well established companies like Novell, 3comm, and Compaq.

It was brutal for the tech industry as a whole and contributed to the lost decade overall.


Fyi, you can still build an angelfire site today and chat on IRC. :D
"In the short run, the stock market is a voting machine; in the long run, it is a weighing machine" ~Benjamin Graham
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tooluser
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Re: Were You Around During Dotcom Bubble?

Post by tooluser »

I bought 100 shares of Cisco Systems (CSCO) at $44 per share c.1993. By 1999 it was 1100 shares at $77 per share.
When you are handed a windfall, sell some to make sure you profit.
I did not sell any at that time.
I later sold it all at ~$13 per share. I made money but not nearly what I should have.
Better yet, invest per the Bogleheads Wiki "Start Here" page, and confidently make money over your lifetime.
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jason2459
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Re: Were You Around During Dotcom Bubble?

Post by jason2459 »

123 wrote: Fri Jul 10, 2020 11:39 pm Bought some Webvan in a Roth account since the sky was the limit in terms of where the value could go. It went to nothing and I had to pay the broker a commission (less than $10) to buy it for nothing from me and remove it from my account (I had gotten sick of seeing it on my statement).
Hope you got in on that hot pet.com stock! :oops:
"In the short run, the stock market is a voting machine; in the long run, it is a weighing machine" ~Benjamin Graham
flaccidsteele
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Re: Were You Around During Dotcom Bubble?

Post by flaccidsteele »

InvestorP wrote: Fri Jul 10, 2020 11:16 pm Although I was definitely around, I was not involved in the stock market. But I do know about that infamous era. Did any of you guys dabbled in the stock market then and what lesson did you learn?
Buy during bear markets. US market always recovers. Always.
InvestorP wrote: Fri Jul 10, 2020 11:16 pmI'm just curious to know if there are any Boggleheads who survived that era and what are your thoughts now on these booming tech stocks?
I started investing in the 1990s. I also worked in tech as a developer. Listened to Buffett’s and didn’t buy any tech stocks. Bought Berkshire Hathaway class B right down to $1400/sh (before the 30-1 reverse split)

I wanted to invest during Black Monday Oct 1987 but I had no money

I’ve invested in stocks during the dot com bust, credit crisis, and virus crisis. I bought rentals during the housing crash. Bear markets helped me retire in my 40s. I absolutely love them. 👍
Last edited by flaccidsteele on Sat Jul 11, 2020 12:20 am, edited 1 time in total.
The US market always recovers. It’s never different this time. Retired in my 40s. Investing is a simple game of rinse and repeat
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market timer
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Re: Were You Around During Dotcom Bubble?

Post by market timer »

There are similarities between now and then. Unprofitable companies like Shopify and Tesla are trading at extremely high market caps, analogous to the high-flying IPOs of the late 90s. We knew back then that the internet was going to be a big deal, and that fueled much of the optimism of the time.

In my view, the major difference between then and today is that the Nasdaq bubble of 20 years ago was driven by hope and optimism, while today it is driven by TINA (there is no alternative). Pessimism about our economic growth potential has driven 30-year US government bonds down from a 6.5% yield back then, to a yield of 1.3% today. Gold was under $300/oz back then, while today it is above $1800. We are witnessing a collapse in the value of the dollar relative to other stores of value.

Markets are pointing to a rather dystopian future, where our attention is bought and sold by organizations operating behind the scenes of dominant tech platforms. The value of neighborhoods and physical proximity of Main Street are being replaced by the convenience of an online world that is winner-take-all. Banks are suffering from rising loan provisions to Main Street, REITs are suffering from the shift from a physical to a virtual world, while the beneficiaries are the firms building the Matrix cloud and how we will interact with it. It's a good time to be a machine learning engineer in Silicon Valley, but what about the rest of society? I don't recall feeling this sense of hopelessness about the future of middle America back in 2000.
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Re: Were You Around During Dotcom Bubble?

Post by anoop »

InvestorP wrote: Fri Jul 10, 2020 11:16 pm Although I was definitely around, I was not involved in the stock market. But I do know about that infamous era. Did any of you guys dabbled in the stock market then and what lesson did you learn?

The recent boom in tech stocks and listening to all the analysts talk makes me think Dotcom 2.0 is on the horizon. The same way no one saw the Dotcom bubble coming I'm sure whatever comes next, no one will see it coming.

I'm just curious to know if there are any Boggleheads who survived that era and what are your thoughts now on these booming tech stocks?
I was just getting started in my career. Everyone else was dabbling in stocks, so I did too. I opened an account with TD Waterhouse that had about $50K at its peak (~$40K cost basis). I held names like DELL and MSFT that lost some money, and some names like HSAC (high speed access) and BGEN (biogen) that lost a lot of money. Over the years I liquidated all my holdings and it took me about 8 or 9 years of $3K capital loss deductions. I never invested in individual stocks again until 2015 when I bought some INTC (and that has been my only holding).

I also took a huge hit with my career. I lost my job in 2003, was forced to relocate and made a salary that was about 30% lower. It took me 3 years and a job change (to a company where a VP knew me from the dot com era) to get back to the same level. At the same time, the working conditions deteriorated because of the subsequent globalization (early morning and late night calls, long hours in general became the norm instead of a project-end crunch time thing, chaotic working environment, smaller and smaller cubicles, travel for work is painful), and yet growth was nowhere found (near zero salary raises unless you change jobs and negotiate hard). In tech, large companies more or less stopped doing innovation and instead depended on acquistions for new technology.

It was a humbling experience, and I never really recovered from it. The PTSD of that experience made has me super conservative. I refused to entertain working at a startup after that. Probably because of that experience my 401k has been in cash since early 2008 because I was always trying to spot the next bubble before it happened and saw the real estate one. I missed the subsequent recovery largely because it was not organic but fed sponsored and I'm missing this next "recovery" as well.

We are currently in a financial era that is without precedent. A loss making company can now survive forever by selling stocks and bonds. When that party ends is hard to say. The dot com bubble was sponsored by the fed (something I did not understand back then), but also pricked by them. This time around they are talking about doubling down with every down day in the market.
Last edited by anoop on Sat Jul 11, 2020 12:36 am, edited 2 times in total.
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nedsaid
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Re: Were You Around During Dotcom Bubble?

Post by nedsaid »

InvestorP wrote: Fri Jul 10, 2020 11:16 pm Although I was definitely around, I was not involved in the stock market. But I do know about that infamous era. Did any of you guys dabbled in the stock market then and what lesson did you learn?

The recent boom in tech stocks and listening to all the analysts talk makes me think Dotcom 2.0 is on the horizon. The same way no one saw the Dotcom bubble coming I'm sure whatever comes next, no one will see it coming.

I'm just curious to know if there are any Boggleheads who survived that era and what are your thoughts now on these booming tech stocks?
The difference between 1999 and 2020 is that 1999 was a true mania, 2020 is not. Certainly there is a lot of enthusiasm for Tech in 2020 but we aren't seeing the crazy valuations as we saw in 1999 in the US Stock Market in general and specifically in the High Tech/internet Sector. P/E ratios based upon earnings estimates for the market are probably in the high teens or low twenties right now compared to the mid forties in 1999. In 2020, we are also recovering from a bear market. It just doesn't have the feel of 1999.
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market timer
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Re: Were You Around During Dotcom Bubble?

Post by market timer »

jason2459 wrote: Fri Jul 10, 2020 11:57 pmeveryone had some new website making 0 profits and spending millions on Superbowl ads
Today, a money-losing startup could spend tens or even hundreds of millions of dollars per year on Facebook and Google.
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Re: Were You Around During Dotcom Bubble?

Post by FrugalInvestor »

InvestorP wrote: Fri Jul 10, 2020 11:16 pm Although I was definitely around, I was not involved in the stock market. But I do know about that infamous era. Did any of you guys dabbled in the stock market then and what lesson did you learn?

The recent boom in tech stocks and listening to all the analysts talk makes me think Dotcom 2.0 is on the horizon. The same way no one saw the Dotcom bubble coming I'm sure whatever comes next, no one will see it coming.

I'm just curious to know if there are any Boggleheads who survived that era and what are your thoughts now on these booming tech stocks?
I put some "play" money in QQQ....right about at the top of course. I learned that losing "play" money doesn't feel any better than losing "real" money and it cured my desire to speculate. Fortunately I was working, making a good salary and living far below my means so the damage was minimal but the lesson still invaluable. I never went looking for the needle again.

I have no idea what will happen to the booming tech stocks. I now just own the haystack, don't worry about the details and sleep very well.
Have a plan, stay the course and simplify, but most importantly....Ignore the Noise!
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Re: Were You Around During Dotcom Bubble?

Post by Hatch Batten »

Yes, went into Paine Webber asking about CDs, hoping to start a college fund. Somehow walked out with a mix of dot-com high flyers and a somewhat more conservative utility stock. The dot-com stock, Go2Net, did well for a while, then was purchased by InfoSpace which eventually crashed to about 1% of its original value. I did get a small class action settlement as a result. The utility stock bumped along more or less sideways, paying a nice dividend along the way.

Also bought some company stock, Infoseek, through a stock purchase plan. Infoseek was folded into Disney spin-off Go.com, and that also crashed, dropping about 90% if I recall correctly. I ended up with a handful of Disney shares but overall it was a wild ride working for Infoseek and Disney on their web search projects and I made much more in salary and bonuses than I lost in their stocks.

Had some stock options in the startup I began with originally, a little web search shop called Quando. Those converted to Infoseek options that didn't quite vest. I was about 6 months from retiring very early (about 34 years old) but the bubble didn't stretch that far.

Overall, I'd say it was a wealth of experience and I made some good friends along the way. Also perhaps the best years of my life from a material standpoint even if I wasn't always catching the upside of everything that flew by.
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Re: Were You Around During Dotcom Bubble?

Post by flaccidsteele »

As an engineer working in tech in the 1990s and not buying tech stocks, I was definitely the black sheep. “You bought Berkshire Hatha-what is that? That’s boring. That old guy should get with the times. It’s a new era!”
The US market always recovers. It’s never different this time. Retired in my 40s. Investing is a simple game of rinse and repeat
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Re: Were You Around During Dotcom Bubble?

Post by whodidntante »

jason2459 wrote: Fri Jul 10, 2020 11:57 pm P/E was way higher then and everyone had some new website making 0 profits and spending millions on Superbowl ads and IPOs were hot. You made a lot on just the right penny stocks. Everyone had a geocity or angilefire page. Myspace was a thing like Facebook is now. ICQ and AOL AIM was how people chatted along with other great platforms like Usenet and IRC.

I got burnt hard on Many of my picks. Many of the companies I had stock in didn't make it to 2002. And some never really recovered back to their glory which some were well established companies like Novell, 3comm, and Compaq.

It was brutal for the tech industry as a whole and contributed to the lost decade overall.


Fyi, you can still build an angelfire site today and chat on IRC. :D
Geez. A little notice before you take the Delorean to 88, OK? :happy

Even Usenet still exists. But good luck explaining it to a modern human. I do miss the kill file though. That was a great invention.

There was a time when the US stock market was so bubblicious that I could not walk through the office without seeing a stock chart on someone's computer screen.

We had it figured out. We were all going to get rich selling our stocks to each other. Speaking of which, would you like to buy some stocks for more than I paid for them? They're really nice. There is this crazy visionary from South Africa who is going to put boots on Mars. And get this, he also makes cars that don't need gas! No? What about a company that raises massive amounts of money in the capital markets, spends it on licenses and content, and sells a subscription to it? No? Well, I'm sure I have something you'll like.
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whodidntante
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Re: Were You Around During Dotcom Bubble?

Post by whodidntante »

market timer wrote: Sat Jul 11, 2020 12:20 am There are similarities between now and then. Unprofitable companies like Shopify and Tesla are trading at extremely high market caps, analogous to the high-flying IPOs of the late 90s. We knew back then that the internet was going to be a big deal, and that fueled much of the optimism of the time.

In my view, the major difference between then and today is that the Nasdaq bubble of 20 years ago was driven by hope and optimism, while today it is driven by TINA (there is no alternative). Pessimism about our economic growth potential has driven 30-year US government bonds down from a 6.5% yield back then, to a yield of 1.3% today. Gold was under $300/oz back then, while today it is above $1800. We are witnessing a collapse in the value of the dollar relative to other stores of value.

Markets are pointing to a rather dystopian future, where our attention is bought and sold by organizations operating behind the scenes of dominant tech platforms. The value of neighborhoods and physical proximity of Main Street are being replaced by the convenience of an online world that is winner-take-all. Banks are suffering from rising loan provisions to Main Street, REITs are suffering from the shift from a physical to a virtual world, while the beneficiaries are the firms building the Matrix cloud and how we will interact with it. It's a good time to be a machine learning engineer in Silicon Valley, but what about the rest of society? I don't recall feeling this sense of hopelessness about the future of middle America back in 2000.
Biotech and AI are probably going to change things in a way that will seem obvious in hindsight, but good luck deploying capital to ride that wave.

Winner take all is definitely the trend, but there are limits. My dubious understanding of history is that humans find a way to create instability. My guess is we'll pave our roads with the bones of our current megacap masters at some point, at least some of them.
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Re: Were You Around During Dotcom Bubble?

Post by marcopolo »

market timer wrote: Sat Jul 11, 2020 12:20 am There are similarities between now and then. Unprofitable companies like Shopify and Tesla are trading at extremely high market caps, analogous to the high-flying IPOs of the late 90s. We knew back then that the internet was going to be a big deal, and that fueled much of the optimism of the time.

In my view, the major difference between then and today is that the Nasdaq bubble of 20 years ago was driven by hope and optimism, while today it is driven by TINA (there is no alternative). Pessimism about our economic growth potential has driven 30-year US government bonds down from a 6.5% yield back then, to a yield of 1.3% today. Gold was under $300/oz back then, while today it is above $1800. We are witnessing a collapse in the value of the dollar relative to other stores of value.

Markets are pointing to a rather dystopian future, where our attention is bought and sold by organizations operating behind the scenes of dominant tech platforms. The value of neighborhoods and physical proximity of Main Street are being replaced by the convenience of an online world that is winner-take-all. Banks are suffering from rising loan provisions to Main Street, REITs are suffering from the shift from a physical to a virtual world, while the beneficiaries are the firms building the Matrix cloud and how we will interact with it. It's a good time to be a machine learning engineer in Silicon Valley, but what about the rest of society? I don't recall feeling this sense of hopelessness about the future of middle America back in 2000.
I am pretty sure this how every generation feels about the disruption and changes occurring around them.
Once in a while you get shown the light, in the strangest of places if you look at it right.
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Re: Were You Around During Dotcom Bubble?

Post by zwermp »

market timer wrote: Sat Jul 11, 2020 12:20 am There are similarities between now and then. Unprofitable companies like Shopify and Tesla are trading at extremely high market caps, analogous to the high-flying IPOs of the late 90s. We knew back then that the internet was going to be a big deal, and that fueled much of the optimism of the time.

In my view, the major difference between then and today is that the Nasdaq bubble of 20 years ago was driven by hope and optimism, while today it is driven by TINA (there is no alternative). Pessimism about our economic growth potential has driven 30-year US government bonds down from a 6.5% yield back then, to a yield of 1.3% today. Gold was under $300/oz back then, while today it is above $1800. We are witnessing a collapse in the value of the dollar relative to other stores of value.

Markets are pointing to a rather dystopian future, where our attention is bought and sold by organizations operating behind the scenes of dominant tech platforms. The value of neighborhoods and physical proximity of Main Street are being replaced by the convenience of an online world that is winner-take-all. Banks are suffering from rising loan provisions to Main Street, REITs are suffering from the shift from a physical to a virtual world, while the beneficiaries are the firms building the Matrix cloud and how we will interact with it. It's a good time to be a machine learning engineer in Silicon Valley, but what about the rest of society? I don't recall feeling this sense of hopelessness about the future of middle America back in 2000.
i think a big difference here is that shopify and tesla have a road to profs. back then... it was a road to eyeballs. then something. then profs.

big FANNGMMSAM stocks right now are the new norm. they rule the roost.
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jimgour
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Re: Were You Around During Dotcom Bubble?

Post by jimgour »

I was around, and obviously still am. In the 1980s and 1990s I was buying "the hot" mutual funds. I owned 15 or 20 of them, jumping in and out and doing everything the Bogleheads say is wrong. But I found the Diehards (pre-Boglehead era), and began reading and learning. I learned a lot, asked questions, and learned more. During the 1990s I was slowly converting all my "hot mutual funds" to Vanguard index funds. By the late 1990s I knew I needed to get out of the crazy tech mutual funds, but I had made such great gains, I was reluctant to do so. Finally I told my wife I was going to sell all the funds that we had done so well with and move to 100% index funds. She listened to the logic I had gotten from the Boglehead community and said "Whatever you think is best." Finally I only had one (small value) tech mutual fund left, Janus Mercury. We had started it with $2,000 and it was then worth about $12,000. Not bad for a few years of ownership. But still I was reluctant to just dump it, so I told my wife I was going to sell $1,000 per month for the next 12 months and be done with it. I did just that and after the twelve months selling $1,000 every month, what was left in the account was still about $20,000. I finally just bit the bullet and sold it all, moving it to Vanguard's total stock market index fund. Within a few months the tech bubble burst and although the market went down, I certainly didn't lose as much as I would have if I'd been as heavily invested in the tech companies as I was the year before.

This was an example of market timing that worked out very well for us, although I positively know it was due only to my conviction that owning low cost index funds was the way to go and that the timing was totally due to "luck". So I take no credit for the timing and only thank the Bogleheads for showing me the light. We have been 50% VTSAX, 25% VTIAX and 25% VBTLX since about 2001 (the year we retired), have never sold during any of the market blips since that time, and the only adjustments we have made over the years were the result of rebalancing.

We can't thank the many Bogleheads who helped us enough, especially Taylor who responded to my questions more than once. I encourage everybody to listen carefully to the advice and guidance available on this site. Establish your plan and stick to it no matter what happens, like we did!

Jim
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Re: Were You Around During Dotcom Bubble?

Post by zwermp »

1999 tech stocks are really more akin to blockchain companies right now.

maybe even still a tad early for that. blockchain is like 1996...HEY we have this new tech, what do we build, and how? on what protocols?

moves super fast. definitely check out the defi space, you can earn 10% daily compounded on the equiv of USD through nexo/blockfi/etc.

defi for non crypto folk is moving from that weird thing to that thing you should prob start paying attention to.
CycloRista
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Re: Were You Around During Dotcom Bubble?

Post by CycloRista »

I was invested in the stock market back then (with a diversified portfolio) and changed nothing in my investment strategy leading up to the around October 2002. I was extremely busy at the dotcom where I worked (with M&A activities/building out international technology services) and was well compensated so I did not add too many individual tech stocks to the mix at that time. (note: it took me 5+ years or so to exceed my compensation level from ~2003 and the came the 2007-2008 financial crisis LOL)

From the dotcom debacle I learned firsthand: when it is "too good to be true" it is time to take action

Much to the dismay of my dotcom colleagues and a couple of stock brokers, I exercised and sold all of the stock options in my possession (at >500% gain!). Very few did the same- either due to a false/greedy sense that the trend upward would continue or fear of paying hefty capital gains taxes. In the aftermath, half of the employees were laid off, many who could have been set for life or banked a substantial nest egg did not- even along the downward spiral that ended in the stock being delisted.

From the 1987 crash, I learned to keep on investing consistently no matter what- (sometimes monthly contributions "evaporated" as prices plummeted and others they were supercharged on the way back up). I also learned back then that speculating on individual stocks (in small blocks using a ladder approach; not betting the proverbial farm in one large transaction) during the recovery could definitely pay off. Back then, I traded on E*Trade via a CompuServe dial-up account (that was the first way for individuals to trade online as I recall).
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Re: Were You Around During Dotcom Bubble?

Post by CardioMD »

jason2459 wrote: Fri Jul 10, 2020 11:57 pm Everyone had a geocity or angilefire page. Myspace was a thing like Facebook is now. ICQ and AOL AIM was how people chatted along with other great platforms like Usenet and IRC.
Ahh, the good old days.
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Re: Were You Around During Dotcom Bubble?

Post by mrc »

I was around then, much more concerned with getting laid off from my job with a financial services firm than what was happening with my 403b/401k at the time. DW and I were both 100% equities except for whatever we had in TIAA traditional. I didn't change a thing, didn't look at statements. Recovered nicely then, and again in 2008-2009. Retired at age 57, so it works out if you buy-and-hold, stay the course, and have a plan.
By the time you know enough to choose a good financial adviser, you don't need one. | bogleheads.org is my advisor: The ER is 0.0% and the advice always solid.
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Re: Were You Around During Dotcom Bubble?

Post by Dottie57 »

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dukeblue219
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Re: Were You Around During Dotcom Bubble?

Post by dukeblue219 »

jason2459 wrote: Fri Jul 10, 2020 11:57 pmMyspace was a thing like Facebook is now.
MySpace launched in 2003, believe it or not only 7 months before Facebook. It peaked in the 2005/6 range when FB was still mostly a college thing. Man, those were the days.
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Re: Were You Around During Dotcom Bubble?

Post by aqan »

123 wrote: Fri Jul 10, 2020 11:39 pm Bought some Webvan in a Roth account since the sky was the limit in terms of where the value could go. It went to nothing and I had to pay the broker a commission (less than $10) to buy it for nothing from me and remove it from my account (I had gotten sick of seeing it on my statement).
My buddy used to work for webvan. They gave him an office chair and a dell server as a severance package. Good’ol days!!
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Re: Were You Around During Dotcom Bubble?

Post by McDougal »

Bfwolf wrote: Fri Jul 10, 2020 11:46 pm I was a young kid out of college, put something like $5000 in a Roth IRA and bought Cisco, thinking this was the blue chip of tech stocks. It went up, and then went down to about $2,000. Fantastic lesson for me at a reasonably affordable price.

As to applicability to current situation, I gave up trying to predict markets a long time ago. The entire US stock market seems overpriced to me, but I stick to my asset allocation.
I had a very similar situation with CMGI. Only I lost a bit more money (ouch!), but learned the same valuable lesson.
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Re: Were You Around During Dotcom Bubble?

Post by Cousin Eddie »

Yes, the dot com bubble was a hard lesson for me.

I bought Cisco, Nvidia, and Microsoft about a year or so after the peak of the madness. All three still didn't do well, and a couple years later I sold out, tax lost harvested, and for the next 10 years or so the only equities I bought were index funds in my 401k.

It wasn't until 2015 that I started investing again in taxable, this time all in index funds. During the 2000s and early 2010s I had paid off my mortgage and my bank account had skyrocketed, but I saw how much my 401k had increased through index funds, and so I began researching and came across the Bogleheads forum. I liked the idea of a simple investing plan with a defined AA, and that I should only expect to receive what the market gives. No more, no less.

Also, the concrete idea of a 4% guidepost to gauge how well your portfolio is progressing towards financial independence was a huge light bulb going off in my head. This place is the single most important reservoir of information I have used on my path to financial independence.

Almost needless to say this, but I would never invest in a single stock equity again, too risky and I don't have the knowledge to make an intelligent decision.
anoop wrote: Sat Jul 11, 2020 12:25 am It was a humbling experience, and I never really recovered from it. The PTSD of that experience made has me super conservative. I refused to entertain working at a startup after that. Probably because of that experience my 401k has been in cash since early 2008 because I was always trying to spot the next bubble before it happened and saw the real estate one. I missed the subsequent recovery largely because it was not organic but fed sponsored and I'm missing this next "recovery" as well.
I completely understand, but are you saying you aren't invested in equities at all? To quote Mr. Bogle, 'Invest you must!' I am too worried about inflation to not be invested in equities.
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Re: Were You Around During Dotcom Bubble?

Post by nisiprius »

Since I was working then and retired now, it's hard to compare mood, water cooler talk, what colleagues were saying, etc. My granddaughter's boyfriend mentioned casually that he is using Robinhood and I expressed brief horror and then moved on in the conversation.

Some observations that perhaps seem different. It wasn't just a dotcom mania, it was a stock market mania. The thing that crystallized it for me was, at work, seeing an electrician, head and shoulders up in the area above a drop ceiling, have his cell phone ring and come partway down the ladder to sit on a step for a few seconds and talk to his broker about some GE stock.

1) Day-trading at that time couldn't be at home with a web browser over the Internet. You needed to go physically to an office at firms set up to provide such services, where they gave you access to a terminal and an account with a "T1 line." My gosh... how fast was a T1 line? 1.544 Mbps. In those days you said "T1 line" with a tone of awe in your voice, hard to realize my low-end home internet connection is sixty times as fast. Anyway, the point is that people talked about day-trading as if it were a job. It was widely believed, everybody "knew someone" who "was a day-trader," the implication being that anyone with a little guts could quit their jobs and "become" a day trader, earn their living by day-trading instead of a traditional job.

Now, my granddaughter's boyfriend may use Robinhood, but he doesn't expect to quit his job.

2) The stunning difference was the "new economy" talk. WIRED magazine was one of the vectors of the infection. People were arguing, dead seriously, that measures like earnings were no longer relevant.

I think one of lesson from the time was the degree of corruption in the "analysts," writing in the financial press and talking on TV... people like Henry Blodgett. Very simply, they were on the take, they told lies, and in a perfectly conscious way--they believed X was true and said Y. Fast-forwarding, I wonder--when, let's say, Jim Cramer yelled like a pro wrestler, "Don't be silly on Bear Stearns! Bear Stearns is ALL RIGHT!" did he sincerely believe that, or could he have been on the take? I don't expect ever to know, but the lesson from the dot-com era is not to assume it is impossible.

3) Some companies actually made the dot-com--the period and three letters--part of their official, legal corporate name, and if you drove through any big city you would notice that many corporate offices included the dot-com on their signage. Now, that is a really hard thing to search for and I can't seem to find an image, but I think Janus might have been one of them--the exterior building signage didn't say Janus, it said Janus.com.
Last edited by nisiprius on Sat Jul 11, 2020 6:49 am, edited 2 times in total.
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Re: Were You Around During Dotcom Bubble?

Post by market timer »

dukeblue219 wrote: Sat Jul 11, 2020 5:47 am
jason2459 wrote: Fri Jul 10, 2020 11:57 pmMyspace was a thing like Facebook is now.
MySpace launched in 2003, believe it or not only 7 months before Facebook. It peaked in the 2005/6 range when FB was still mostly a college thing. Man, those were the days.
There was also classmates.com, launched in 1995. Conceptually, it was almost identical to Facebook, just without the initial exclusivity.
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Re: Were You Around During Dotcom Bubble?

Post by nisiprius »

"Facebook" originally referred to some small-scale websites, set up at a number of universities, that were not unlike yearbooks. Their chief purpose was to show a few hundred names and little pictures of everyone who lived in the same dorm, so that you might be able to recognize them when you met them in a hallway.

When Facebook As We Know It began, it puzzled the heck out of me because it wasn't a "facebook" at all, and even after watching "The Social Network" I still truly don't understand why Facebook As We Know It got that name when it wasn't a facebook in any sense of the word.

It also took me a while to accept a completely new meaning for the phrase "social network," which originally meant diagrams studied by psychologists and sociologists showing simply who was connected to whom. That is, "network" had nothing to do with "computer network."
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Re: Were You Around During Dotcom Bubble?

Post by Watty »

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.
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Re: Were You Around During Dotcom Bubble?

Post by Chicken Little »

InvestorP wrote: Fri Jul 10, 2020 11:16 pmThe recent boom in tech stocks and listening to all the analysts talk makes me think Dotcom 2.0 is on the horizon. The same way no one saw the Dotcom bubble coming I'm sure whatever comes next, no one will see it coming.
We were early investors during the tech boom. Lost money with some standard names like Cisco, but mostly got hurt by tech funds, one of which held something like 70% of Microstrategies (MSTR). I still like to look at that chart once in a while.

Made money on Xybernaut, because the risk was apparent to anyone, so sold on way up. It was an entirely different feel back then. At the worst of it, I'd walk into work and all the administrative assistants would have stock charts on their PCs, then I'd just sit there and refresh the Xybernaut chart and watch my wealth accumulate instead of doing my job.

That entire experience propelled us into index funds with largely buy-and-hold strategy (some tactical rebalancing on my part).

Sometime in the aftermath of the tech crash we went to Las Vegas. My recollection is that virtually every cab driver was and ex-software engineer.

I hold these tech companies in my index funds. I'm not particularly worried about the valuations. The main driver for valuations right now is the macro environment. The fact that it's difficult to find good yield on fixed income has definitely changed the landscape. Where is the money supposed to go if it's not in equity?

Please remove paragraph if warranted: Now that the dust has settled, the conversation about how states and municipalities will balance their budgets has started. On top of that is obviously the federal situation. I read some Nathan Tankus after the Bloomberg piece - I don't really get the enthusiasm - but as far as understand it I agree with him that there's really only one balance sheet, and that is for "the government". Dividing fed from treasury, for example, is just a distraction.

In summary;

1. tech boom was different, it was sector-stock-tulip mania
2. tech boom more resembles housing boom to me than now, planting house-tulips to ripen and flip
3. on some level, if you really want to talk about justified valuations today, you have to consider all of the things that can't be considered on here, namely cumulative debt from this that was piled on top of that (2008/09)
4. The greatest danger to investors, in my mind, is V-shaped-itis. These last two financial crises have had, at least currently, more-or-less V-shaped recoveries in equity prices. I think savvy investors say that there's a possibility that, if this crisis was hypothetically over, there is no guarantee of a V-shaped price recovery after the next financial crisis. I no longer believe those savvy investors really believe that, even though they maintain they do.
Last edited by Chicken Little on Sat Jul 11, 2020 7:13 am, edited 1 time in total.
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Re: Were You Around During Dotcom Bubble?

Post by Watty »

InvestorP wrote: Fri Jul 10, 2020 11:16 pm The recent boom in tech stocks and listening to all the analysts talk makes me think Dotcom 2.0 is on the horizon. The same way no one saw the Dotcom bubble coming I'm sure whatever comes next, no one will see it coming.
Actually most people saw the dot com bubble for what it was long before the market hit its top but the market kept going up anyway.

The famous "Irrational exuberance" quote was about it, but it was about five years before the top of the bubble.

https://en.wikipedia.org/wiki/Irrational_exuberance

Trying to time a bubble is very hard because they can go on a lot longer than any rational person would think possible.
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Re: Were You Around During Dotcom Bubble?

Post by Chicken Little »

Watty wrote: Sat Jul 11, 2020 6:54 amThe 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.
Wish my post landed right before yours. I don't work in computer tech, but the devastation was easy to see.
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Re: Were You Around During Dotcom Bubble?

Post by columbia »

I owned the Vanguard Star fund and it and the Balanced Index performed as you would expect.

I do flinch at insinuations that this past decade’s “tech run up” is anything like what happened in the dot com bubble.
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Re: Were You Around During Dotcom Bubble?

Post by Mr.BB »

I was sitting in my car outside of work having a snack and there was a stock picker radio show on at the time (another sign of a bubble/ everyone's an expert), what I do remember is hearing Kmart or some other retail company up $50 a share today and other similar stories. I didn't understand basics of finances the way I do now, but I do remember thinking "this is not right".
Last edited by Mr.BB on Sat Jul 11, 2020 2:34 pm, edited 1 time in total.
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Re: Were You Around During Dotcom Bubble?

Post by galeno »

Yes! That was MEGA crazy. It converted us into Bogleheads.

Thank goodness I have sky high risk tolerance and hands of steel. It was NAUSEATING.

Rebalancing into a HUNGRY 3 year BEAR while holding an 80/20 port with 12-16 stocks was SCARY. I didn't panic and just kept rebalancing. It worked.

From 1994-2005 our 80/20 port's CAGR beat 100% SPY by 5%. In 2006 we went 60/40 Boglehead. Our port had recuperated.

The 2008 and 2020 bears were a yawn in comparison. We over rebalanced into both of them.
Last edited by galeno on Sat Jul 11, 2020 7:36 am, edited 1 time in total.
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Re: Were You Around During Dotcom Bubble?

Post by Flashes1 »

I was in my late 20's and didn't have a lot ton in the market, but it was all I had:

* What I remember the most was the stock market seemingly doubling every year...."everyone was getting rich."
* I largely stayed out of the tech stocks until the bitter end.
* I was a big T Rowe Price guy at the time and I remember them saying they wanted to invest in the "backbone" of the internet growth, ie: wiring, etc. that transmits data over the internet. They said it was less risky than the websites.
* I started buying individual stocks like <bad memories coming back to me> PMC-Sierra, Cienna, and CSCO.....and I few others that I can't remember.
* Needless to say, they took a massive hit....and I rode it all the way down...…...it gave me some nice capital losses that I think I might still be taking on my taxes!
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Re: Were You Around During Dotcom Bubble?

Post by Cousin Eddie »

nisiprius wrote: Sat Jul 11, 2020 6:38 am
1) Day-trading at that time couldn't be at home with a web browser over the Internet. You needed to go physically to an office at firms set up to provide such services, where they gave you access to a terminal and an account with a "T1 line." My gosh... how fast was a T1 line? 1.544 Mbps. In those days you said "T1 line" with a tone of awe in your voice, hard to realize my low-end home internet connection is sixty times as fast. Anyway, the point is that people talked about day-trading as if it were a job. It was widely believed, everybody "knew someone" who "was a day-trader," the implication being that anyone with a little guts could quit their jobs and "become" a day trader, earn their living by day-trading instead of a traditional job.
Speaking of day trading, there is a two hour long day-trading infomercial that has been playing recently on one of my local radio stations. The pitch is how their mentor and his proprietary software application will enable even a complete novice to begin day trading their way to economic freedom, all the listener has to do is call and enroll in a seminar where their mentor will train them in real time on how to make profitable trades. The mentor's name was never revealed.

I thought get-rich day trading marketeers had gone on to other things, but it looks like they're back.
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Re: Were You Around During Dotcom Bubble?

Post by tadamsmar »

I was 49 and using a broker. In early 2000, I because a Boglehead. I put my money in the AA from Malkiel's lifecyle AA schedule. Of course the market seemed to be in a bubble. I could not sleep so I moved my AA to the next age range of the lifecycle plan with about 45% in stocks. Been there ever since.

In the late 1990's Shiller made his "irrational exuberance" pitch to Greenspan and Greenspan famously used the phrase. Subsequently, Greenspan put the best minds in finance to the task of predicting bubbles. Later, he was less famously heard saying that they were able to predict 11 of the last 6 bubbles (or something like that). Shiller was actually a broken clock, he had been saying the market was too high for a decade or two.
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Re: Were You Around During Dotcom Bubble?

Post by galeno »

I vividly remember our port's 1999 return. 62%. Then the floor fell out from under us. And kept falling. For 3 years.
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Re: Were You Around During Dotcom Bubble?

Post by mtmingus »

A former coworker was very successful in his early IT career and investment life. He had a 7 figure investment account during the peak time in his 30's.
But after the burst, he told me he practically got divorced three times from 2000~2002. I didn't have much money to play with at that time after the down payment for the house but learned a lot from his experience: good, bad and ugly.
Last edited by mtmingus on Sat Jul 11, 2020 8:02 am, edited 1 time in total.
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Re: Were You Around During Dotcom Bubble?

Post by tim1999 »

I worked at a private golf course. All of the members were constantly bragging about their dotcom/tech stocks. In late 1999/early 2000 I could not believe how many of them were sudden rolling up to the clubhouse in new Mercedes S500's. A bunch of them talked a lot about Qualcomm stock because it apparently was shooting up and not as "risky" as some of the internet stocks.

Personally I had a TD Waterhouse account and dabbled in various individual stocks. I had just read one of those books that said "invest in what you know" (Peter Lynch?) so I had dabbled in some stocks in the industry that my parents worked in. There were some winners and losers but no major peaks or valleys. None of them were dotcom stocks because I had no understanding of how or why the companies could make money or be worth so much so fast.
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Re: Were You Around During Dotcom Bubble?

Post by NightFall »

I worked in the dotcom world. It was great. We had a room full of free food, massages on fridays, catered really good food,... it was awesome. The problem was, I couldn’t see how our business was supposed to make money. I had a friend graduate college early and take a job with options worth $250k. They tripled after 2 months. Of course only 1/3 would best after a year. Unfortunately, three months later the bottom fell out and the stock was trading at 1/400 of its peak. Clearly I moved on.

The market was on fire though. Crazy valuations for companies that made no money, and lots of them. I watched intc go up and up for 3 years. Finally I bought in with some meager savings. It went up 10% before crashing. To this day, intc has not reached that high again... 20 years later. An important lesson about trading. While I think there is enthusiasm in the tech space right now, it’s not nearly as crazy as the dotcom world. Hardly anyone was making money, and some of the business ideas were so... stupid. Imagine nearly the entire tech sector bleeding money like crazy with no plan on getting to profitability. There were established companies just adding .com to their names because money would just flow in. Maybe blockchain briefly got there, but it died out pretty quickly too.
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Re: Were You Around During Dotcom Bubble?

Post by nisiprius »

Watty wrote: Sat Jul 11, 2020 7:10 am
InvestorP wrote: Fri Jul 10, 2020 11:16 pm The recent boom in tech stocks and listening to all the analysts talk makes me think Dotcom 2.0 is on the horizon. The same way no one saw the Dotcom bubble coming I'm sure whatever comes next, no one will see it coming.
Actually most people saw the dot com bubble for what it was long before the market hit its top but the market kept going up anyway.

The famous "Irrational exuberance" quote was about it, but it was about five years before the top of the bubble.

https://en.wikipedia.org/wiki/Irrational_exuberance

Trying to time a bubble is very hard because they can go on a lot longer than any rational person would think possible.
Exactly, and I think this is very important. It's typical of any bubble, though.

They go on longer than skeptics believe possible ("the market can stay irrational longer than you can stay solvent," often attributed to Keynes). During the tech bubble, I didn't take a headcount, but many people said "this is crazy and it won't end well," and many people said "it's not crazy at all because of x, y, z." Quite a few people really said something very close to "this time it's different." That's what the "new economy" talk was all about. Many people really thought that someone had discovered the secret to wealth without work (just as many people honestly believed Charles Ponzi had discovered something legitimately new and miraculous).

There is great danger for skeptics when they get tired of seeing their friends getting rich effortlessly (or saying that they are), and, after holding out for years, change their minds and finally jump in.
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: Were You Around During Dotcom Bubble?

Post by Flashes1 »

The dot.com era ruined me for life, and the only real negative for me is that it kept me out of the next wave of internet stocks like GOOG, FB, AMZN, etc. I'll NEVER forget the run-up to GOOG going public - everyone knew it was a big hit; however, I remember one guy on CNBC who said it would burst like an internet bubble stock and the big controversy at the time is the founders were selling shares to the public that would have very little control of the company----and that on principle, we shouldn't go along.

Who knows if I would have bought shares of GOOG, but because of my prior experience with the dot.com bubble, I'll never know. :confused
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Re: Were You Around During Dotcom Bubble?

Post by Robot Monster »

nisiprius wrote: Sat Jul 11, 2020 8:47 am There is great danger for skeptics when they get tired of seeing their friends getting rich effortlessly (or saying that they are), and, after holding out for years, change their minds and finally jump in.
Is this where the CAPE ratio comes in handy at helping us to determine the danger?
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Re: Were You Around During Dotcom Bubble?

Post by WWJBDo »

Ah, yes. What a wonderful time. Stocks had gone down so much that I put my son's entire college fund into WorldCom in order to 'catch up' with his brother's account. I mean it was a huge company, and the internet was just beginning to explode...

So, I lost everything. We started over again. Lesson learned; here I am. Son graduated President of the engineering honor society. He's working in a field completely unrelated to his degree and happy as a clam.
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