Lessons From The Dot-Com Collapse

200 comments and counting in my latest Seeking Alpha article!

In this article, I look back at the post-2000 dot com collapse that sent the Nasdaq down almost 80%. There are many similarities to today, unfortunately. Remember Nortel? Once a symbol of progress, it eventually landed in the dustbin of stock market history.

This article includes an excerpt from Warren Buffett’s 2000 investor letter and comments from Sun Microsystem’s former CEO on investor irrational exuberance.

Article Summary

  • We’ve seen this show before. In 2000, unrealistic expectations eventually burst, sending the Nasdaq down almost 80%.
  • While growth scarcity and lower discount rates justify higher prices, many stocks currently trade at huge valuations.
  • The recent 30% drop caused by Fastly’s 5-6% revenue guidance hints at the risks growth investors are taking.
  • History repeats itself. While money can be made riding a bubble, investors should remain humble and take actions to mitigate downside risk.

Read the full article

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