1999 is back, and I’ve missed it. Ever since then, I’ve been chasing that next 50-bagger, the kind of life-changing winner that helped me come up with the down payment for my first property. But he's been elusive.
I still remember sitting on the international trading floor at Goldman Sachs at 1 New York Plaza, glued to my screen as internet names like Commerce One and Yahoo soared higher almost daily. My firm had just gone public, instantly turning the partners into decamillionaires. The energy was electric – optimism everywhere, fortunes being made, CNBC blaring nonstop.
Fast forward to today: tech stocks are leading again, crypto investors are buying Lambos, and AI is woven into everything – our phones, portfolios, and daily conversations. San Francisco, once quiet during the pandemic, is buzzing again. Startups are hiring and everyone’s talking about the next big thing.
And I’ll admit, I’m hyped. We have the potential to get extremely rich over the next five years.
After Fed Chair Alan Greenspan said there was “irrational exuberance” in December 1996, the Nasdaq rose 40% in 1998. It then accelerated to 86% in 1999 and accelerated even further to a 24% gain in just over two months to start 2000.
Then the 2000 dot-com crash vaporized trillions in wealth and taught me one of the most important lessons of my life: euphoria always feels rational until it doesn’t. Ah, cheers to irrational exuberance.
The Return Of The 1999 Atmosphere
I’m investing in public tech stocks, private growth stocks, a little bit of Bitcoin, and San Francisco real estate, which all feel poised for continued growth.
Back in 1999, I promised myself that if the mania ever returned, I’d lean in harder, but smarter. Now, with investors once again betting on infinite growth, that time has come.
So how do we balance greed with wisdom? How do we ride this wave of innovation without repeating the mistakes of the past? Let’s explore what history teaches us and how to navigate this AI-driven rocket responsibly.
Because frankly, with far more capital at stake, I don’t want to lose my shirt again. But even if I do, I’ve heard the “dad bod” is the most attractive male body type, making us feel approachable, stable, and mature.
What Makes This Time Different (and What Doesn’t)
Yes, this time is different, and that’s exactly what everyone says before every bubble bursts. But there are some key distinctions worth acknowledging.
- AI has tangible productivity effects. Unlike many dot-com ideas that never made money, AI is already saving companies billions.
- Balance sheets are stronger. Corporate debt loads are healthier than in 1999 and 2007, and many firms are flush with cash.
- Strong income and cash flow. In addition, the largest tech companies are generating enormous free cash flow.
- Consumers are also much stronger. Household leverage is lower than in 1999 and 2007 as well.
- Monetary policy is turning supportive again. Amazingly, the Fed is resuming its interest rate cuts and quantitative easing with everything at all-time highs, providing a tailwind for risk assets.
That said, the psychology of manias never changes. People overestimate short-term gains and underestimate long-term disruption. AI is real, but that doesn’t mean every AI stock is. Some companies will go to the moon; the vast majority will go to zero.
That’s why perspective and diversification matter more than ever.
How I’m Positioning for The New Mania
Here’s how I’m approaching this cycle, and some suggestions if you’re feeling swept up by the hype. As we should all remember, there are no guarantees in risk assets. Always do your due diligence and invest according to your own goals and risk tolerance.
1. Stay Invested, But Maintain Exposure Limits
I’m fully participating in this bull run but will trim individual positions once they exceed 10% of my portfolio. A concentrated portfolio works, until it doesn’t.
The 10% threshold is somewhat arbitrary. You should come up with your own comfort level. According to modern portfolio theory and supporting studies, holding around 20 to 30 positions is typically enough to achieve most of the benefits of diversification along the efficient frontier, roughly a 3% to 5% allocation per position.
It’s not enough to just monitor your investment portfolio’s composition, you also need to view it in the context of your overall net worth. Look at how much you have in cash, real estate, alternatives, bonds, and low-risk assets.
Personally, I aim to keep public equities between 25% and 35% of my total net worth. That allocation gives me the confidence to stay the course during downturns. If the average bear market declines about 35%, that would translate to roughly a 10% hit to my overall net worth, which I can comfortably stomach.
Ascertain how much of your net worth you're comfortable losing.
2. Shift More Towards Real Assets
1999 through 2009 taught me that stocks are funny money with no real utility. You can’t drink your stocks, live in your stocks, or physically enjoy them. The only way to benefit is to sell some shares from time to time to fund a better life.
The best asset I’ve found that offers both potential appreciation and real-world utility is real estate. There’s no better feeling than watching your home appreciate in value while you actually enjoy living in it. If you have children, that satisfaction multiplies. You’re not just building wealth, you’re providing stability and memories for your most precious assets.
I’m long as much San Francisco real estate as I can comfortably handle, a primary residence and three rentals. AI companies are expanding, housing demand is rebounding, and real estate remains one of the few tangible hedges against both tech volatility and inflation.
3. Increasing Private Company Exposure
I'm investing directly into AI companies through various closed and open-ended venture capital funds with up to 20% of my investable capital. All of the closed-end venture capital funds charge 2% and 20% of profits or more, and are invite only. While Fundrise Venture is open to everyone and doesn't charge any cary. It owns the names I really want to own: OpenAI, Anthropic, Databricks, and Anduril.
Back in 1999, I had ~$8,000 to invest after receiving my signing bonus ($5,000 + my existing $3,000 from part-time jobs in college). So I invested $3,000 in VCSY, a Chinese internet company that 50Xed. However, to make life-changing money requires a much larger amount of invested capital. So this time around, I'm investing seven figures while staying within my 20% exposure limit.
Below is a chart that should both scare and excite you. Every venture capital general partner thinks they’ve invested, or will invest, in the next AI winner. But as a 20-year limited partner in venture capital, I’ve seen that roughly 90% of investments either go to zero or return only modest capital.
For that reason, a general partner must either have a tremendous track record or the fund must already own companies you strongly believe in before it’s worth investing. I'm hedged by investing in both types of venture capital funds.
4. Maintain Liquidity To Buy The Dip And Survive
After the 1999–2000 and 2008–2009 downturns, I promised myself I’d always keep at least one year of living expenses in cash or cash equivalents like Treasury bills, and I still do. Liquidity buys peace of mind. It lets you both survive and buy the dip when markets crash.
Thankfully, cash and Treasury bills now pay a handsome ~4% risk-free return. That makes the so-called “cash drag” in a 1999-style bull market far less heavy.
Corrections are inevitable. If you don’t have liquidity ready, you’ll be forced to sit on your hands instead of take full advantage.
5. Do Not Buy Risk Assets On Margin
Although the temptation to leverage up in a 1999-style bull market is high, don’t do it. If we really are reliving 1999, remember what came next: the NASDAQ crashed 39% in 2000 and ultimately fell 78% from peak to trough by 2002. Even if you were only 50% on margin back then, chances are you were wiped out.
Today, plenty of investors are making the same mistake in cryptocurrencies (altcoins), leveraging 2X to 50X in pursuit of quick riches. Some have made fortunes, but many have also lost years of hard-earned gains in a single day. That most recent day was October 10, 2025, when widespread liquidations (~$20 billion) erased entire portfolios due to leverage.
If you absolutely can’t resist the urge, limit your speculative capital. Carve out no more than 10% of your investable assets for leveraged punts. And go in knowing the worst-case scenario: not only can you lose everything, you might also owe money to your broker.
In a flash crash, prices can gap down before your broker executes a stop limit sale, leaving you with a negative balance. Investing on margin long-term is a bad idea. The risk / reward to leverage up at this point of the cycle is wrong.
6. Embrace The Dumbbell Investing Strategy
During manias, investing FOMO often pushes investors to take excessive risk. You buy things you don’t fully understand simply because you can’t stand watching others get rich without you. More often than not, this type of investing leads to ruin.
One way to manage this is with a dumbbell strategy: split your portfolio or new investments between low-risk or risk-free assets and high-risk, speculative bets. This approach lets you capture upside if the mania continues, while still protecting your downside if it fizzles out.
Over the past several years, I've been regularly using the dumbbell strategy to invest in both private AI companies and in Treasury bills and bonds. This way, no matter what happens, I'm good.
7. Spend And Enjoy A Portion Of Your Profits
Every year during a bull market, I try to buy something tangible with my “funny money” profits. This ensures that if, and when, the bear market returns, at least I’ll have something to show for the gains.
For example, in 2003, I used profits from VCSY in 2000 to buy a two-bedroom condo with a park view in Pacific Heights, a property I still own today. It housed my girlfriend and me for two years and now generates semi-passive income to help fund our retirement.
You don’t have to invest your funny money in real estate. Fine art, rare books, ancient coins, or even memorable experiences like a family vacation or a cruise for your parents all count. Great experiences often appreciate in value in ways that money can’t measure, especially now that we can record them in stunning 4K.
As long as you continue taking profits to acquire meaningful experiences or material things you value, a 1999-style bull market can keep rewarding you long after it’s technically over.
7. Mentally Prepare For Financial Pain & Mental Anguish
A 1999-style bull market will eventually end badly. We could even face another lost decade, where risk assets provide little to no real returns. It could certainly happen again, especially with the S&P 500 trading at 23X forward earnings.
However, once you study history and understand how severe losses can get, the pain isn’t as shocking when they arrive. Here are some key statistics:
- 5% corrections: happen 3–4 times per year on average.
- 10% corrections: happen about once per year.
- Bear markets (-20%+ declines): from 1928–2025, there have been ~16, averaging one roughly every 5–6 years.
- Average bear market drawdown: ~35%.
- Median post-1946 bear market duration: 11 months, with an average decline of 33–35%.
- Median recovery time to all-time highs: 23 months.
In other words, mentally take your equity exposure and lop off 35% of its value immediately. Ask yourself: can you handle losing that much and waiting roughly two years to get back to even? If yes, you’re good to go. If not, you need to make adjustments.
You can even use my FS-SEER formula to quantify your risk tolerance in terms of time, helping you plan your allocations more confidently.
7. Revisit your income streams.
Your income streams are crucial for staying afloat during a bear market, yet they often get overlooked in a bull market. That’s why it’s important to list out your various sources of income and rank them by reliability. When the bear market hits, how secure will they be?
If you know you’ll always earn enough to cover your family’s living expenses, you can afford to take more risk. But if many of your income streams are likely to collapse in a downturn, you need to adjust your exposure accordingly. Make a realistic estimation of how far they may decline.
The key is to build diverse sources of income before you actually need them. By the time you do, it may already be too late.
8. Focus On Health And Lifestyle
Bull markets can make you forget what really matters: health, friends, and family.
Back in 2009, my stress levels were through the roof as I watched roughly 40% of my net worth vanish in six months that took a decade to build. My back pain made it almost impossible to drive or sit, and I was grinding my teeth relentlessly. My TMJ was so bad I couldn’t talk comfortably for more than five minutes at a time. I had to find a way out of dedicating my life to finance.
Today, I strive for balance, a goal made far easier without a 60-hour-a-week job. I start the day with 1-2 hours of writing, then often play tennis, coach my kids, and remind myself that wealth is meaningless if you don’t have the energy to enjoy it.
In your pursuit of riches, please do not neglect your health! It will come to bite you in the arse eventually.
Don’t Confuse Brains With a Bull Market
It’s intoxicating to feel smart in a rising market. Gains reinforce confidence, and confidence feeds risk-taking. But the truth is, in bull markets everyone looks brilliant, until the rocket blows up.
When the 2000 crash hit, I I watched multimillionaire colleagues lose everything they’d built due to excessive leverage. The barber at the basement of 1 New York Plaza no longer bragged to me about his wins while he cut my hair. In fact, he said he had to sell his two Mercedes after the crash. Markets giveth, and markets taketh away.
Don’t let a bull market convince you that you’re invincible. Let it remind you that discipline is what keeps you rich once you get there.
The Happiness Hedge
It might sound counterintuitive, but one of the best hedges against financial loss is emotional contentment.
During boom times, it’s easy to keep raising the bar – more money, more property, more cars, more partying, more everything. But if you’re already at a 7 or 8 out of 10 on the happiness scale, chasing a 10 might actually send you backward.
Happiness comes from balance: meaningful work, good health, family time, friends, and enough money to control your schedule. Everything beyond that is gravy over your ego.
So yes, I’m leaning into this AI-driven bull market. But I’m also reminding myself that financial freedom is only worth it if you’re actually free. We can prevent ourselves from being slaves to money by having a properly structured portfolio and a financial plan under any scenario.
Ride the Wave, But Know A Jagged Shore May Await
The energy today feels electric, just like 1999. And I love it. I want to see people make great fortunes so they can have the freedom to do what they want. Imagine telling your micromanaging boss to screw off one day. Amazing!
Investors could experience an epic blow off like we 26 years ago. Just know how quickly the music can stop. Diversify, stay humble, and take some chips off the table when you can.
Bull markets make you rich. Bear markets make you wise. Together, they make you complete.
So let’s enjoy the ride, but with our eyes open!
For those who’ve been investing since 1999 or earlier, how does today’s market feel compared to back then? What similarities and differences stand out to you? Does the current AI-driven frenzy remind you of the dot-com boom, or does it feel like something entirely new? Are you positioning yourself for another potential blow-off top that could make us all a lot wealthier or are you bracing for the inevitable hangover? And for younger investors who didn’t live through 1999, how are you managing your FOMO as everyone around you seems to be getting rich again?
If You Want To Invest In The AI Boom
If you believe in the future of AI, take a look at Fundrise Venture. It has exposure to leading private AI companies like OpenAI, Anthropic, Databricks, Anduril, and more. With a minimum investment of just $10 and no performance carry, it’s one of the easiest and most responsible ways to gain access to AI and other high-growth private companies.
I’ve personally invested around $500,000 across three accounts in Fundrise Venture – one of which I’ve earmarked for my two young children as a hedge against an uncertain job market future. Fundrise has been a long-time sponsor of Financial Samurai, and I’m proud to work with them because our investment philosophies align closely.
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Databricks is likely to be the iphone for B2B where openai is the iphone for the consumer when it comes to data.
Databricks’ revenue growth to date is self service analytics and the way it makes money is for data to flow from 3rd party apps and databases into the platform from on-prem legacy databases adn applications (Salesforce, Workday, etc).
Once the data is in the platform customers can build models (think anything in excel) and machine learning algorithms to automate tasks with structured or unstructured data (think know your customer for Wealth Management – ingest drivers licenses and do background checks without humans). The data is then governed (access control, logging, lineage) which is a huge differentiator.
It’s infra agnostic (on AWS, Azure, GCP), format agnostic (Delta, Iceberg), and frontier model agnostic (serves chatgpt, claude, llama, gemini natively).
Where this really gets exciting is with Lakebase the transactional/app layer will slowly fold into the platform and Databricks will take a toll on built-on apps (just like Apple takes 30% of the apps built on the app store).
Think it has a chance to be a trillion dollar company – would invest in as much as you can as you think about your AI investing strategy.
I hope so! Databricks is based in San Francisco and makes up about 25% of the Fundrise Innovation Fund, which I’m an investor. I’m going to steadily invest in private AI companies with my cash flow.
These are the times when I wish I had a job so I could ploy most of my income into investments.
Hi Sam! Thanks for the article. Do you have any guideline you follow for when to take profits for your individual stocks, or do you just use your “gut” mostly. I know you have, like me, some of these big tech stocks for many years, and have probably triple digit $ gains. It would stink to see 50% of it evaporate in a crash.
But it is hard to pay the tax man, esp when you don’t need that money per se. Still working so in the 30+% tax bracket. I don’t have retirement accounts that allow individual stocks so can’t hide it there.
I know some people automatically take some profits at certain gains, like when a stock is up 20% or 50% or 100% – they just will sell half or something. Do you have any formula you follow or recommend?
It really is a constant mental tug-of-war between letting winners run and not giving back massive gains in a downturn. I’ve held some of these big tech names for over a decade too, so yes, I’m sitting on some significant unrealized gains. Like you, I’m not eager to give up 30%+ to taxes, especially when I don’t need the funds right now.
I don’t have a hard and fast rule, but I do follow a few principles:
Trimming around the edges – If a stock becomes an outsized portion of my portfolio (say, over 10-15%), I’ll usually trim it down to reduce concentration risk. It’s more about maintaining balance than locking in gains per se.
Rebalancing with purpose – I’ll take some profits when I see better opportunities elsewhere, whether in other equities, real estate, or bonds (especially when yields are attractive). I like the idea of taking profits to buy income-generating assets.
Mental anchoring – Sometimes I’ll sell enough to cover my initial investment, and let the rest run “house money.” That helps reduce regret in either direction.
Macro views – Occasionally, if valuations seem extreme and sentiment is euphoric (like parts of 1999 or late 2021), I’ll take more profits even if I don’t have a pressing need for cash. Better to sell a little early than too late.
Taking profits in my tax-advantaged accounts – No tax consequences buying and selling in the IRA and 401(k).
I haven’t adopted a strict formula like selling half at 100% gain, but I can see the merit, especially for folks who want to remove emotion from the process.
I currently have 80% of my portfolio in equities, but I am most likely going to re-allocate my portfolio by the end of the year. I’ve tried to predict the market before, only to be shocked in 2023 when tech started one of the greatest bull runs. My individual stocks still had great returns of 10%+, but I still had FOMO over missing out on those gains, especially as a younger person.
My new strategy is to incorporate your dumbbell strategy into my new investments. Buying strong, defensive companies such as Waste Management or American Water Works that in 10 years I know will perform at least 7% nominal returns while also waiting for the right time to buy into more volatile stocks of companies that I like.
I bought on April 7th of this year, the day before the continuation of the bull market. Using this dumbbell strategy really helped me keep a peace of mind. Buy defensive growth companies during the good times and buy top tier companies during downturns like we saw in 2022 with the finance and tech industries and just recently in April 2025. This way I can choose my sector allocation in a way that ensures average, less volatile returns while also taking advantage of market downturns. Great post!
Sounds like a sounds strategy fellow Sam! 80% in equities has been a great position in this bull run.
It’s also really hard to sell in our taxable accounts due to taxes. But easy to do in our tax-advantaged accounts.
I’m really hoping for a blow off the top run, like we saw in 1999. Here’s to the return of mania without losing a boatload!
I’m pretty young (college student) and I have long term capital gains in the 0% tax bracket since I’m not working full-time!
Cool. Enjoy your youth! And take more risks while you are young. You have plenty of time to make back any losses, and you have a lot more energy as well. As you get older and wealthier, that energy and risktaking will naturally fade.
Thoughts on a second property? I’m thinking about a city condo worth about 10% of my current NW. Problem is the HOA fees. Seems like so much to just have it.
Well timed article for me. My cousin and I (34yr old) have been discussing whether it’s 1996 or 1999. He thinks we still have a few more years of growth, but I’ve started derisking my tech heavy public market portfolio. I already have rental properties and other alternative investments, so my dilemma right now is whether to diversify my tech stocks into bonds, gold, cash, international stocks or bitcoin. I’ve been doing a mix of all of these, but I am curious what you suggest?
I wish it felt as simple as just increasing my bond position significantly as the old finance books suggest, but I’m concerned about inflation and the continued devaluation of the dollar from our ballooning federal debt.
10+ year reader. Thanks for consistent and quality articles!
Hi Chris, it’s hard to know about knowing your net worth, financial goals, and how long more you want to or can grind.
Although it feels like 1999, we saw a huge blow off the top for one year before things came crashing down. We have an experience that blow off yet, which is what I’m waiting for.
when did you started getting into bitcoin Sam and is it only bitcoin or other crypto? and what would you say a rough % of your networth is allocated to crypto because I am thinking about getting into it too but I am curious about people’s allocation %
Hi Molly, about 7 years ago. It’s done well, but it’s a tiny portion of my net worth. Please tell me something about yourself and where you are on your financial independence journey.
Your timing is always so pertinent to me, thank you! I recently had a free consult with an Empower advisor after rereading one of your investment articles. And he said I’m way over allocated to tech stocks. I knew that going in but wasn’t quite aware of by how much. So I really need to diversify my holdings into more alternatives and international investments. Thanks for the reminder and helpful advice!
That’s cool you got your free consultation. Tech stocks have performed so well in recent years that it is easy for them to dominate one’s portfolio. And given the top seven tech docs already account for about 30% of the S&P 500 market cap, there is probably a greater weighting in tech than people realize.
With so much concentration in tech, the volatility is surely all going to increase. So I hope people are prepared for what’s to come.
Hi Sam, thanks for posting this! You mentioned above that you keep at least one year cash. Are you at one year exactly or do you suggest holding onto more? I’ve read the articles on allocation by age and stuff. But now I’m be curious if you are holding onto more than than usual or your sticking with your usual approach.
I always have cash because I always have a target, asset, allocation and treasury bonds and money market funds. So I’ve always got liquid today to buy risk assets if I want. And given that they pay 4% it feels good to hold cash and liquid securities now.
This was an excellent article Sam.
I’m seeing similarities to 99 but just on the margin. Valuations are historically high but nowhere near 99 levels. Alt coins, rare earth and precious metals, utilities, some IPO” S and the 3rd or 4th derivatives of AI feel bubblish to me. However, semi”s and the mega caps, “ although slightly overvalued “ I can look out 2 or 3 years and still make a case today’s prices could be a bargain.
Whatever investors see, Friday was a great reminder that you can lose money far faster than you can gain it. Take some profits along the way, control your greed, and hopefully ride this wave for another year or two.
The last chart in this article was the most bullish for me. It showed that we can have a huge blow off top to come, making investors and extra extraordinary amount of money and maybe a one or two year period. So I’m hoping for that to happen again, but this time, to sell into the blow off instead of just write it back down.
What a great time to be an investor!
Great overview and great advice.
Thank you, Sam.
You’re welcome Jean. Thanks for reading and sharing my work. Don’t forget to subscribe to my free weekly newsletter.
Sam
You’ve had all kinds of topics since I offered our bet that gold without outperform the S&P 500 earlier this year. You declined our bet the $15,000 for charity? Gold has handedly outperformed the S&P and gold stocks are up over 100% this year ! Why don’t you write a story about the significance of $4000 gold? What is saying about fiat currency collapse that’s happening in slow motion in front of our eyes?