>>20671044I'm not one of the people saying AI is the current dotcom bubble, but the funny thing about the dotcom bubble is that their actual thesis was right.
Everything moved more and more online faster and faster.
The problems were:
1)Short term valuations. 2000 was actually less tech heavy than we are now, but tech was very bloated in terms of PE and short term growth. Microsoft went from under 40 billion market cap in 1997 to 600 billion in 2000. You also had crazy scams and IPOs, and a frenzy of new people flooding into the market chasing gains.
2)Choosing winners. You could argue that most of the top 20 in 2000 deserved their spot, but MSFT took years to branch out of the OS business, INTC had already reached market saturation and didn't innovate, and IBM was on its way out. Other companies like AAPL, NVDA, AMZN, AMD *also* got slaughtered in 2001, but back then we didn't have iphones, appstores, crypto mining, or $2000 GPUs. Stuff like google was also relatively new and just a web browser. If you wanted to make money after the crash, you had to guess the future and not the now.
3)The market also broke down outside of tech. It wasn't just
pets.com. It was also Ernon, September 11, the Iraq/Iran wars, and other economic woes.
4)Passive Index investing wasn't really a thing in 2001. People usually either had mutual funds with other people managing their money, or they called up some shithole like computershare and bought individual stocks through them. So retail in the dotcom bubble was mostly the type of people buying IPOS like ABNB, DASH, UBER, HOOD, PLTR, DJT. This isn't saying any individual bet is right or wrong, but there's a definite benefit to your stock when people throw their paycheck into an index and your stock gets 6% of that. Something like TSLA probably would've crashed harder in 2022 if it wasn't in the index.
