Lessons from the 90s Dot-Com Era

Since 2000—when I first started reading Buffett (Warren) and Graham (Ben)—I’ve been drawn to the idea of being greedy when others are fearful. That half of the maxim comes naturally to me. The harder half? Be fearful when others are greedy.[i]

Because hiding under a rock in good times isn’t much of an investment strategy. And right now, these are good times.

I lived through the dot-com bubble and its aftermath early in my career. Back then, I swore that if I ever saw a Nasdaq-level bubble again, I’d short it and profit from the implosion. I also thought, “No way does that happen twice in one career.”

Well… I guess it depends how long your career lasts.

Echoes of the 1990s

Last week, I wrote about parallels to the 1920s. Today, I’m thinking about the late 1990s. The similarities are striking:

How the ’90s bubble ended:

1. Fed Tightening into an Overheated Market
   • Rates hiked in 1999 and early 2000.
   • Just 11 days after the NASDAQ’s all-time high, the Fed raised rates to 6.00%.
2. Accounting Shock – MicroStrategy
   • Announced revenue restatements in March 2000.
   • Stock dropped 62% in one day, rattling the whole sector.
3. Margin Calls & Valuation Reckoning
   • Unprofitable companies trading on hype alone.
   • Margin selling spread losses to even the strongest names.
4. Earnings Disappointments
   • In April 2000, NASDAQ fell nearly 25% in a single week.
5. Final Blow
   • A surprise 50 bps hike in May 2000 locked in the bear market.

The Human Challenge

Today, I’m more seasoned—and more cautious. I’ve built enough wealth for my family that my instinct is to preserve rather than chase. That’s easy for me personally. Harder when making portfolio decisions for clients.

At Members’ Wealth, we design custom portfolios. That means more monitoring and more hands-on work, but it gives us the flexibility to align each portfolio with the client’s unique circumstances. Even so, we’re human, so we focus a lot on making sure our biases influence individual client portfolio decisions in a way that is beneficial to them and not counter to what they individually are trying to accomplish.

Back in 2000, I learned most lessons after the bust. Now, I feel like I see the problems forming in real time—but knowing doesn’t make timing any easier.

Do you:

• Ride the wave and hope to exit cleanly?
• Dial down risk and focus on companies with real earnings now?
• Or sell, unplug, and wait it out?

Add in the mania around crypto and the uncertainty about AI’s long-term impact (AI robots, no jobs), and the “unplug” option and ride the wave option can both sound tempting. But generally, we tend to end up back at, “do the investments we own generate real earnings?” So while we ride the wave with a life jacket on let this post be the start of a fall series (though autumn series may be a better choice of words 😉), diving into lessons from the past (See Table: Parallels: 1990s vs. 2020s) and the risks and opportunities in today’s AI and tech infrastructure cycle.

Parallels: 1990s vs. 2020s

Running Thinking and Learning

On Friday morning, I was out running with a friend who I’d consider highly experienced in the world of AI and also way, way smarter than me. He’s about ten years younger than me, so while he’s got deep expertise in technology, he wasn’t really around for the late ’90s and early 2000s market cycle—and he’s not a stock market guy.

I shared the parallels I’ve been seeing between today’s AI boom and the dot-com era, walking him through my comparison. He listened, then laid out his view of how this plays out: In summary, in the end, it will sort itself out, the strong will survive, and the weak will fail. I agreed completely—that is how markets work.

What he didn’t have a reference point for, though, was what the path from here to there can look like for those of us in wealth management and investment management. Back in 2000, that journey was far from smooth—and if history is any guide, the ride this time could be just as tumultuous.

Members’ Wealth Takeaway

We don’t believe in reacting to hype—or to fear—without context. Our role is to:

• Build and maintain disciplined, customized portfolios.
• Evaluate risk and opportunity with historical perspective.
• Make adjustments when fundamentals change, not just because headlines scream.

For now, the market still wants to go up. But as history shows, cycles turn—and when they do, the best defense is preparation, not prediction.

If you want to review your portfolio positioning in light of these risks, opportunities, and parallels, let’s talk.

[i] Buffett first popularized it in his 1986 Berkshire Hathaway Shareholder Letter, writing:

"I will tell you how to become rich. Be fearful when others are greedy and greedy when others are fearful."

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About the Author

Dane Czaplicki, CFA®

Dane Czaplicki is CEO of Members’ Wealth, a boutique wealth management firm that offers a comprehensive approach to serving individuals, families, business owners, and institutions. The firm’s goal is to preserve and grow its clients’ wealth to endure over time, while thoughtfully evolving its strategy to suit an ever-changing world. With over 20 years of wealth management experience, Dane and the Members' Wealth team thrive on bringing clarity and confidence to clients' unique situations. He believes everyone needs sound financial advice from someone whose interests are aligned with theirs, and is determined to put service before all else.

Dane received his MBA from The Wharton School of Business at the University of Pennsylvania and his bachelor’s degree from Bloomsburg University. Outside work, he enjoys spending time with his wife and kids, hiking and camping, reading, running, and playing with his dog. To learn more about Dane, connect with him on LinkedIn.

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