Author Topic: 1999 again?  (Read 25811 times)

RuleNumberOne

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1999 again?
« on: June 20, 2019, 09:26:31 AM »
In 1998-1999:
- Inflation was less than 2%
- Fed rates were 4.5%
- Unemployment was higher
- And yet we had a great bubble.

In 2019:
- the Fed looks weaker.
- Unemployment is at 50-year lows.
- Rates are at 2.5% and headed lower because "inflation is less than 2%".

If we are going to have another 1999-sized bubble soon, what would you buy or sell?


rkbabang

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Re: 1999 again?
« Reply #1 on: June 20, 2019, 09:55:18 AM »
Buy tech stocks, sell BRK.

I'm waiting for the publication of the book "DOW 96,000" as a signal to put my plan into action.



Gregmal

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Re: 1999 again?
« Reply #2 on: June 20, 2019, 10:13:58 AM »
I would just ignore the noise and buy quality companies while looking for the occasion speculation trade.

SHDL

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Re: 1999 again?
« Reply #3 on: June 20, 2019, 10:29:31 AM »
I bought some hedges and trimmed/sold some of my longs. 

The macro setup now rhymes with 1999 for sure, but it’s not only that, there’s also a lot of financial leverage out there like there was pre-GFC (this time via corporate debt), and on top of that we have potentially large supply-side shocks coming our way like we did in the 1970s (this time via tariffs and possibly Iran).  In a sense we have a little bit of everything from the worst recessions and bear markets in recent memory. 

CorpRaider

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Re: 1999 again?
« Reply #4 on: June 20, 2019, 11:05:00 AM »
Important x unknowable = zero value input. 

I personally use some trend following for a bit of $$$ to scratch this kind of itch, or really to replace the "bear shitting" by acting systematically.

Gamecock-YT

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Re: 1999 again?
« Reply #5 on: June 20, 2019, 12:07:39 PM »
As a great philosopher once said:

Say say two thousand zero zero party over, oops, out of time

fareastwarriors

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Re: 1999 again?
« Reply #6 on: June 20, 2019, 12:43:06 PM »
It doesn't feel like exuberance of the late 1990s or mid 2000s. It seems like to me  people are cautious high valuations, crazy IPOs, trade, and governments.

rkbabang

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Re: 1999 again?
« Reply #7 on: June 20, 2019, 12:58:42 PM »
 >
As a great philosopher once said:

Say say two thousand zero zero party over, oops, out of time

Thanks, I've got that stuck in my head now.  And I don't even like that song.    >:(

John Hjorth

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Re: 1999 again?
« Reply #8 on: June 20, 2019, 12:59:38 PM »
I will here suggest reading the posts recently, with links and attachments, by ajc, here on CoBF.
”In the race of excellence … there is no finish line.”
-HH Sheikh Mohammed Bin Rashid Al Maktoum, Vice President and Prime Minister of the United Arab Emirates and Ruler of Dubai

ajc

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Re: 1999 again?
« Reply #9 on: June 20, 2019, 02:14:05 PM »


I will here suggest reading the posts recently, with links and attachments, by ajc, here on CoBF.



Appreciate the shout-out. One post of mine John was perhaps referring to, was this one: https://twitter.com/tonyjclayton/status/1118205158721249280.
Since I wrote that two months ago, things have become even more bubbly.
Beyond Meat's crazy run-up, the Zoom IPO, as well as the massive first day pops of Jumia, Crowdstrike, and Fiverrr, all came after. Now the We Company aka WeWork, is also going public. A recent NY Mag article on them (http://nymag.com/intelligencer/2019/06/wework-adam-neumann.html) shows just how detached from reality some founders have become.

I agree with fareastwarriors though that this current moment, as overvalued as it looks, doesn't feel like the utter craziness of the Dotcom era in terms of its all-encompassing giddiness.
That said, I'd urge extreme caution now and over the next 12 months. If you're not very concerned about tech stock multiples and risk already, then you need to be far more paranoid about the possible downside. After all, there's no guarantee that this boom lasts as long or goes as wild as the 1999 one. It is absolutely possible that we are already at or near the top with the Uber IPO, and there's a shaky few weeks or months from here after which things fall off a cliff.

The alternative I think is that we're in a mid or late 1998 situation where tech IPOs are popping and running up all over the place, but because rates are way lower now it could lead to an even bigger bubble this time. In that case, over the next year or so we could see Bytedance, Didi, Airbnb, and perhaps Ant Financial, go public at valuations substantially above Uber, and that may result in an insane blow-off top for the entire tech IPO market followed by a rapid deflation.

To my mind, those are basically the two potential ends of the spectrum that I'm looking at for the tech IPO market currently. Either we're already just past the top and we're still Wile E Coyote but not having looked down yet, or we're just starting the final parabolic phase where the exuberance will truly start gushing and after 6 or 12 months, we fall off a ridiculously steep ledge.
That's my 2 cents as best as I can make out, because I don't see any force right now (The Fed, POTUS, etc) that is at all trying to moderate things and suck some air out of this tech IPO boom in order to stop it going from a very bubbly place to somewhere extreme and Icarus-like.
Either way, my view is investors should be highly vigilant and fearful going forward.