Remember the March 2000 market top?
I’ll guess a majority of current participants weren’t trading back then, but even those that were likely have a fuzzy memory of what the environment was like – and what was being said right at THE top.
Over the past few months, from time to time I’ve noticed things that have cropped up that remind me of what things were like back in the dot com days, so I decided to go back and do a little research on “the prevailing sentiment” and what the financial media was saying near the peak.
For context, here’s a chart of the Q’s that shows just how dramatic the run-up and subsequent drop was. I included a few select items from a “market recap” article on the chart.
Here’s a link to the article at CNN that provides a take on the conventional wisdom at the time. Dow soars into history – March 16, 2000
They say history often rhymes and while I was doing research into the March 2000 top I ran across this item that sounds almost like it could be from an article written today.
There’s not as much archived news available as I thought there would be doing searches for “stock market March 2000” as I had hoped but CNN still has a few standard “daily market recaps” up. I found this one particularly interesting, given the fact that the Fed had embarked on a series of rate hikes.
“The theory is that with rate increases, it doesn’t effect the ‘new economy’ stocks,” said Ken Sheinberg, head of listed trading SG Cowen. – (famous last words)
This next article is probably my favorite – there are some really choice quotes.
Here’s another chart for context.
Here’s a link to the article. Nasdaq sets record (again) – March 10, 2000
“Rising rates won’t hurt the new techies, but they might impact the ‘old economy’ customers,” Larry Wachtel, market analyst at Prudential Securities, wrote in a note to clients Friday.
Besides the obvious similarities between the current environment and the dot com era (I notice on almost a daily basis) the thing that finally inspired me to go back and see what “they” were saying in March 2000 came from a link in an email. It was titled “Your Last Bull Market”.
The author (who I’ve met personally) proclaims “DOW 50,000 is coming to America” and proceeds to lay out a (somewhat plausible) case for a melt-up, comparing today’s environment to all the prior “manias and bubbles” and reaching the conclusion that this one is just getting started. He makes a good case for the idea that Bull markets don’t end until they’ve reached the mania stage and that we’re not even close yet.
I’m not going to post the link because it’s one of those marketing pieces with the tedious video landing page that you have to click to close the browser window to be able to read the transcript and I can’t find a way to link to the transcript.
Like the old saying goes, “history doesn’t always repeat but it often rhymes”.
On a day to day basis I see a lot of things that remind me of the late 90’s market environment but it’s impossible to know where we are in the cycle.
The SNAP IPO seems like a small clue and other things – like the comment I heard on CNBC from one analyst during a segment about TSLA. He proclaimed “This is a stock that defies all conventional valuation metrics“. Write that one down because it’s a classic.
During my research into the March 2000 market peak I stumbled across a book review that really caught my attention. This is right up my alley.
Take a few minutes to read that and you’ll get an idea of how things haven’t changed a bit over the last couple decades.
This is my favorite section.
It’s funny how all this rings a bell.
But like the title of this post, I doubt they will ring a bell at the top – or will they?
I could go on and on, but the real point of this post was to archive the articles I linked above for future reference – so if you didn’t click-through yet go back and read them.