1999 is again, and I’ve missed it. Ever since then, I’ve been chasing that next 50-bagger, the form of life-changing winner that helped me give you the down cost for my first property. However he is been elusive.
I nonetheless keep in mind sitting on the worldwide buying and selling flooring at Goldman Sachs at 1 New York Plaza, glued to my display screen as web names like Commerce One and Yahoo soared larger nearly every day. My agency had simply gone public, immediately turning the companions into decamillionaires. The vitality was electrical – optimism all over the place, fortunes being made, CNBC blaring nonstop.
Quick ahead to right this moment: tech shares are main once more, crypto buyers are shopping for Lambos, and AI is woven into every part – our telephones, portfolios, and every day conversations. San Francisco, as soon as quiet through the pandemic, is buzzing once more. Startups are hiring and everybody’s speaking concerning the subsequent massive factor.
And I’ll admit, I’m hyped. We’ve the potential to get extraordinarily wealthy over the following 5 years.
Then the 2000 dot-com crash vaporized trillions in wealth and taught me one of the essential classes of my life: euphoria at all times feels rational till it doesn’t. Ah, cheers to irrational exuberance.
The Return Of The 1999 Ambiance
I’m investing in public tech shares, non-public development shares, somewhat little bit of Bitcoin, and San Francisco actual property, which all really feel poised for continued development.
Again in 1999, I promised myself that if the mania ever returned, I’d lean in tougher, however smarter. Now, with buyers as soon as once more betting on infinite development, that point has come.
So how will we stability greed with knowledge? How will we experience this wave of innovation with out repeating the errors of the previous? Let’s discover what historical past teaches us and learn how to navigate this AI-driven rocket responsibly.
As a result of frankly, with way more capital at stake, I don’t need to lose my shirt once more. However even when I do, I’ve heard the “dad bod” is essentially the most engaging male physique kind, making us really feel approachable, steady, and mature.
What Makes This Time Totally different (and What Doesn’t)
Sure, this time is totally different, and that’s precisely what everybody says earlier than each bubble bursts. However there are some key distinctions price acknowledging.
- AI has tangible productiveness results. In contrast to many dot-com concepts that by no means made cash, AI is already saving corporations billions.
- Stability sheets are stronger. Company debt masses are more healthy than in 1999 and 2007, and lots of corporations are flush with money.
- Robust earnings and money circulation. As well as, the biggest tech corporations are producing monumental free money circulation.
- Shoppers are additionally a lot stronger. Family leverage is decrease than in 1999 and 2007 as effectively.
- Financial coverage is popping supportive once more. Amazingly, the Fed is resuming its rate of interest cuts with every part at all-time highs, offering a tailwind for danger belongings.
That stated, the psychology of manias by no means adjustments. Folks overestimate short-term features and underestimate long-term disruption. AI is actual, however that doesn’t imply each AI inventory is. Some corporations will go to the moon; the overwhelming majority will go to zero.
That’s why perspective and diversification matter greater than ever.
How I’m Positioning for The New Mania
Right here’s how I’m approaching this cycle, and a few ideas in the event you’re feeling swept up by the hype. As we must always all keep in mind, there aren’t any ensures in danger belongings. At all times do your due diligence and make investments based on your personal objectives and danger tolerance.
1. Keep Invested, However Keep Publicity Limits
I’m absolutely taking part on this bull run however will trim particular person positions as soon as they exceed 10% of my portfolio. A concentrated portfolio works, till it doesn’t.
The ten% threshold is considerably arbitrary. It’s best to give you your personal consolation degree. Based on modern portfolio theory and supporting research, holding round 20 to 30 positions is usually sufficient to realize many of the advantages of diversification alongside the environment friendly frontier, roughly a 3% to five% allocation per place.
It’s not sufficient to simply monitor your funding portfolio’s composition, you additionally must view it within the context of your overall net worth. Take a look at how a lot you have got in money, actual property, options, bonds, and low-risk belongings.
Personally, I goal to maintain public equities between 25% and 35% of my complete web price. That allocation offers me the boldness to remain the course throughout downturns. If the typical bear market declines about 35%, that may translate to roughly a ten% hit to my general web price, which I can comfortably abdomen.
Verify how a lot of your web price you are comfy shedding.
2. Shift Extra In the direction of Actual Belongings
1999 by 2009 taught me that stocks are funny money with no actual utility. You may’t drink your shares, reside in your shares, or bodily take pleasure in them. The one approach to profit is to promote some shares on occasion to fund a greater life.
The very best asset I’ve discovered that provides each potential appreciation and real-world utility is real estate. There’s no higher feeling than watching your property admire in worth whilst you truly take pleasure in residing in it. If in case you have kids, that satisfaction multiplies. You’re not simply constructing wealth, you’re offering stability and recollections on your most valuable belongings.
I’m lengthy as a lot San Francisco actual property as I can comfortably deal with, a main residence and three leases. AI companies are expanding, housing demand is rebounding, and actual property stays one of many few tangible hedges in opposition to each tech volatility and inflation.
3. Growing Non-public Firm Publicity
I am investing straight into AI corporations by varied closed and open-ended venture capital funds with as much as 20% of my investable capital. All the closed-end enterprise capital funds cost 2% and 20% of earnings or extra, and are invite solely. Whereas Fundrise Venture is open to everybody and does not cost any cary.
Again in 1999, I had ~$8,000 to take a position after receiving my signing bonus ($5,000 + my present $3,000 from part-time jobs in school). So I invested $3,000 in VCSY, a Chinese language web firm that 50Xed. Nevertheless, to make life-changing cash requires a a lot larger amount of invested capital. So this time round, I am investing seven figures whereas staying inside my 20% publicity restrict.
Beneath is a chart that ought to each scare and excite you. Each enterprise capital basic associate thinks they’ve invested, or will make investments, within the subsequent AI winner. However as a 20-year restricted associate in enterprise capital, I’ve seen that roughly 90% of investments both go to zero or return solely modest capital.
For that purpose, a basic associate should both have a large observe report or the fund should already personal corporations you strongly consider in earlier than it’s price investing. I am hedged by investing in each kinds of enterprise capital funds.
4. Keep Liquidity To Purchase The Dip And Survive
After the 1999–2000 and 2008–2009 downturns, I promised myself I’d at all times maintain at the least one 12 months of residing bills in money or money equivalents like Treasury payments, and I nonetheless do. Liquidity buys peace of thoughts. It helps you to each survive and buy the dip when markets crash.
Fortunately, money and Treasury payments now pay a good-looking ~4% risk-free return. That makes the so-called “money drag” in a 1999-style bull market far much less heavy.
Corrections are inevitable. If you happen to don’t have liquidity prepared, you’ll be compelled to take a seat in your fingers as a substitute of take full benefit.
5. Do Not Purchase Threat Belongings On Margin
Though the temptation to leverage up in a 1999-style bull market is excessive, don’t do it. If we actually are reliving 1999, keep in mind what got here subsequent: the NASDAQ crashed 39% in 2000 and finally fell 78% from peak to trough by 2002. Even in the event you have been solely 50% on margin again then, likelihood is you have been worn out.
Right now, loads of buyers are making the identical mistake in cryptocurrencies (altcoins), leveraging 2X to 50X in pursuit of fast riches. Some have made fortunes, however many have additionally misplaced years of hard-earned features in a single day. That the majority latest day was October 10, 2025, when widespread liquidations (~$20 billion) erased whole portfolios as a result of leverage.
If you happen to completely can’t resist the urge, restrict your speculative capital. Carve out not more than 10% of your investable belongings for leveraged punts. And go in figuring out the worst-case state of affairs: not solely are you able to lose every part, you may additionally owe cash to your dealer.
In a flash crash, costs can hole down earlier than your dealer executes a cease restrict sale, leaving you with a damaging stability. Investing on margin long-term is a bad idea. Resist the temptation.
6. Embrace The Dumbbell Investing Technique
Throughout manias, investing FOMO typically pushes buyers to take extreme danger. You purchase stuff you don’t absolutely perceive just because you’ll be able to’t stand watching others get wealthy with out you. As a rule, any such investing results in break.
One approach to handle that is with a dumbbell strategy: cut up your portfolio or new investments between low-risk or risk-free belongings and high-risk, speculative bets. This method helps you to seize upside if the mania continues, whereas nonetheless defending your draw back if it fizzles out.
Over the previous a number of years, I have been commonly utilizing the dumbbell technique to put money into each private AI companies and in Treasury payments and bonds. This manner, it doesn’t matter what occurs, I am hedged.
7. Spend And Get pleasure from A Portion Of Your Income
Yearly throughout a bull market, I attempt to purchase one thing tangible with my “humorous cash” earnings. This ensures that if, and when, the bear market returns, at the least I’ll have one thing to indicate for the features.
For instance, in 2003, I used earnings from VCSY in 2000 to purchase a two-bedroom apartment with a park view in Pacific Heights, a property I nonetheless personal right this moment. It housed my girlfriend and me for 2 years and now generates semi-passive income to assist fund our retirement.
You don’t have to take a position your humorous cash in actual property. Superb artwork, rare books, historical cash, and even memorable experiences like a household trip or a cruise on your mother and father all depend. Nice experiences typically admire in worth in ways in which cash can’t measure, particularly now that we are able to report them in beautiful 4K.
So long as you proceed taking earnings to amass significant experiences or materials stuff you worth, a 1999-style bull market can maintain rewarding you lengthy after it’s technically over.
7. Mentally Put together For Monetary Ache & Psychological Anguish
A 1999-style bull market will finally finish badly. We might even face one other misplaced decade, the place danger belongings present little to no actual returns. It might definitely occur once more, particularly with the S&P 500 buying and selling at 23X ahead earnings.
Nevertheless, when you research historical past and perceive how extreme losses can get, the ache isn’t as stunning after they arrive. Listed below are some key statistics:
- 5% corrections: occur 3–4 instances per 12 months on common.
- 10% corrections: occur about as soon as per 12 months.
- Bear markets (-20%+ declines): from 1928–2025, there have been ~16, averaging one roughly each 5–6 years.
- Common bear market drawdown: ~35%.
- Median post-1946 bear market period: 11 months, with a mean decline of 33–35%.
- Median restoration time to all-time highs: 23 months.
In different phrases, mentally take your fairness publicity and lop off 35% of its worth instantly. Ask your self: are you able to deal with shedding that a lot and ready roughly two years to get again to even? If sure, you’re good to go. If not, that you must make changes.
You may even use my FS-SEER formula to quantify your danger tolerance by way of time, serving to you intend your allocations extra confidently.
7. Revisit your earnings streams.
Your earnings streams are essential for staying afloat during a bear market, but they typically get missed in a bull market. That’s why it’s essential to checklist out your varied sources of earnings and rank them by reliability. When the bear market hits, how safe will they be?
If you recognize you’ll at all times earn sufficient to cowl your loved ones’s residing bills, you’ll be able to afford to take extra danger. But when a lot of your earnings streams are more likely to collapse in a downturn, that you must alter your publicity accordingly. Make a practical estimation of how far they might decline.
The secret’s to construct various sources of earnings earlier than you really need them. By the point you do, it might already be too late.
8. Focus On Well being And Life-style
Bull markets could make you neglect what actually issues: well being, buddies, and household.
Again in 2009, my stress ranges have been by the roof as I watched roughly 40% of my web price vanish in six months that took a decade to construct. My again ache made it nearly not possible to drive or sit, and I used to be grinding my tooth relentlessly. My TMJ was so dangerous I couldn’t discuss comfortably for greater than 5 minutes at a time. I needed to discover a means out of dedicating my life to finance.
Right now, I try for stability, a objective made far simpler with out a 60-hour-a-week job. I begin the day with 1-2 hours of writing, then typically play tennis, coach my children, and remind myself that wealth is meaningless in the event you don’t have the vitality to take pleasure in it.
In your pursuit of riches, please don’t neglect your well being! It is going to come to chunk you within the arse finally.
Don’t Confuse Brains With a Bull Market
It’s intoxicating to really feel good in a rising market. Good points reinforce confidence, and confidence feeds risk-taking. However the fact is, in bull markets everybody seems to be sensible, till the rocket blows up.
When the 2000 crash hit, I I watched multimillionaire colleagues lose every part they’d constructed as a result of extreme leverage. The barber on the basement of 1 New York Plaza now not bragged to me about his wins whereas he lower my hair. In reality, he stated he needed to promote his two Mercedes after the crash. Markets giveth, and markets taketh away.
Don’t let a bull market persuade you that you just’re invincible. Let it remind you that self-discipline is what retains you wealthy when you get there.
The Happiness Hedge
It would sound counterintuitive, however among the finest hedges in opposition to monetary loss is emotional contentment.
Throughout growth instances, it’s straightforward to maintain elevating the bar – extra money, extra property, extra vehicles, extra partying, extra every part. However in the event you’re already at a 7 or 8 out of 10 on the happiness scale, chasing a ten may truly ship you backward.
Happiness comes from stability: significant work, good well being, household time, buddies, and sufficient cash to manage your schedule. All the things past that’s gravy over your ego.
So sure, I’m leaning into this AI-driven bull market. However I’m additionally reminding myself that monetary freedom is just price it in the event you’re truly free. We are able to forestall ourselves from being slaves to cash by having a correctly structured portfolio and a monetary plan beneath any state of affairs.
Journey the Wave, However Know A Jagged Shore Could Await
The vitality right this moment feels electrical, identical to 1999. And I find it irresistible. I need to see folks make nice fortunes to allow them to have the liberty to do what they need. Think about telling your micromanaging boss to screw off someday. Wonderful!
Traders might expertise an epic blow off like we 26 years in the past. Simply know the way rapidly the music can cease. Diversify, keep humble, and take some chips off the desk when you’ll be able to.
Bull markets make you wealthy. Bear markets make you clever. Collectively, they make you full.
So let’s benefit from the experience, however with our eyes open!
For many who’ve been investing since 1999 or earlier, how does right this moment’s market really feel in comparison with again then? What similarities and variations stand out to you? Does the present AI-driven frenzy remind you of the dot-com growth, or does it really feel like one thing solely new? Are you positioning your self for an additional potential blow-off prime that would make us all so much wealthier or are you bracing for the inevitable hangover? And for youthful buyers who didn’t reside by 1999, how are you managing your FOMO as everybody round you appears to be getting wealthy once more?
Get A Free Monetary Evaluation Supply From Empower
If in case you have over $100,000 in investable belongings—whether or not in financial savings, taxable accounts, 401(ok)s, or IRAs—you will get a free monetary check-up from an Empower monetary skilled by signing up here. It’s a no-obligation approach to have a seasoned knowledgeable, who builds and analyzes portfolios for a residing, evaluation your funds.
A recent set of eyes can uncover hidden charges, inefficient allocations, or missed alternatives to optimize. A 1999-style bull market has a means of constructing even essentially the most disciplined investor somewhat delusional. That’s when correct danger administration tends to vanish.
The assertion is offered to you by Monetary Samurai (“Promoter”) who has entered right into a written referral settlement with Empower Advisory Group, LLC (“EAG”). Click on right here to be taught extra.
Subscribe To Monetary Samurai
Choose up a replica of my USA TODAY nationwide bestseller, Millionaire Milestones: Simple Steps to Seven Figures. I’ve distilled over 30 years of economic expertise that can assist you construct extra wealth than 94% of the inhabitants—and break away sooner.
Pay attention and subscribe to The Monetary Samurai podcast on Apple or Spotify. I interview consultants of their respective fields and talk about a number of the most fascinating matters on this website. Your shares, scores, and evaluations are appreciated.
If you wish to keep forward of the markets, be part of over 60,000 readers and subscribe to my free Financial Samurai newsletter. It’s also possible to get my posts in your e-mail inbox as quickly as they arrive out by signing up here. My objective is straightforward: assist you to obtain monetary freedom sooner so you’ll be able to reside life by yourself phrases.
