Austinsayhi
2020-08-28
这篇文章不错,转发给大家看
This Isn't 1999 -- But It's Getting Closer
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{"i18n":{"language":"zh_CN"},"detailType":1,"isChannel":false,"data":{"magic":2,"id":973500412,"tweetId":"973500412","gmtCreate":1598545745336,"gmtModify":1704219554258,"author":{"id":3494333756882055,"authorId":3494333756882055,"authorIdStr":"3494333756882055","name":"Austinsayhi","avatar":"https://static.tigerbbs.com/248d8c462f1db87ea9cdc11fc3173332","vip":1,"userType":1,"introduction":"","boolIsFan":false,"boolIsHead":false,"crmLevel":1,"crmLevelSwitch":1,"individualDisplayBadges":[],"fanSize":32,"starInvestorFlag":false},"themes":[],"images":[],"coverImages":[],"extraTitle":"","html":"<html><head></head><body>\n这篇文章不错,转发给大家看</body></html>","htmlText":"<html><head></head><body>\n这篇文章不错,转发给大家看</body></html>","text":"这篇文章不错,转发给大家看","highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"favoriteSize":0,"link":"https://laohu8.com/post/973500412","repostId":2061496134,"repostType":2,"repost":{"id":"2061496134","pubTimestamp":1598273987,"share":"https://www.laohu8.com/m/news/2061496134?lang=&edition=full","pubTime":"2020-08-24 20:59","market":"us","language":"en","title":"This Isn't 1999 -- But It's Getting Closer","url":"https://stock-news.laohu8.com/highlight/detail?id=2061496134","media":"Vince Martin","summary":"Over the last two decades, comparisons to the 'dot-com bubble' have badly underestimated the mania of the late 1990s.\n In particular, investors often forget that market optimism went well beyond Internet stocks.\n A narrower 2020 rally isn't quite the same thing; but in several categories and verticals, the same mistakes are being made.\n ","content":"<html><body><div><div><div><div>Summary</div><div><p>Over the last two decades, comparisons to the 'dot-com bubble' have badly underestimated the mania of the late 1990s.\n </p><p>In particular, investors often forget that market optimism went well beyond Internet stocks.\n </p><p>A narrower 2020 rally isn't quite the same thing; but in several categories and verticals, the same mistakes are being made.\n </p></div></div></div><div><p>For about two decades, I bristled any time comparisons were made to the dot-com bubble of the late 1990's. After all, I saw the bubble in real-time. Based on that direct experience, any comparisons to 1999 significantly understated the insanity that permeated the market of that era.</p> <p>I don't bristle any more, or at least not quite to the same extent. The craziness of the 2020 market isn't as broad, or as intense, as that seen in the late 1990s. But this market certainly has echoes of that bubble. We're seeing some of the same trends and, more importantly, many of the same mistakes. It's more reasonable to compare the current market to 1999/early 2000 than it's been in the last two decades. And so if history repeats, there seems a real chance for a significant drawdown in U.S. stocks, even if that drawdown is unlikely to match the staggering value destruction seen in 2000-2002.</p> <p>It's worth repeating: this isn't 1999. But at least as far as the equity markets go, we're as close as we've been since then.</p> <h2>A Firsthand View</h2> <p>I saw 1999 firsthand. To be sure, I didn't work on Wall Street, either literally or figuratively. I was a sales trainee at a retail brokerage in midtown <a href=\"https://laohu8.com/S/MHC.AU\">Manhattan</a>. But I was close enough to see the day-to-day trading in, and madness of, U.S. stocks into and out of the peak.</p> <p>Our business model was simple. We cold-called leads and tried to get them to purchase an individual stock. (No <a href=\"https://laohu8.com/S/AONE.U\">one</a>, myself included, seemed to grasp the incongruity of pitching Internet stocks through such an old-fashioned method.) If that initial purchase worked, the plan was to follow up, and hopefully manage a greater and greater share of the now-client's assets.</p>\n<div></div> <p>With one exception, the salespeople focused on the hot Internet stocks of the day. That exception was my training broker, likely the only employee in the firm over 40. He pitched regional banking stocks to leads and clients alike, on a simple thesis. Investors could make solid dividends in the sector at a time when interest rates seemed 'abnormally' low, until which point the bank invariably was taken over in the consolidation that took place after the repeal of Glass-Steagall. He took no shortage of grief in 1999, but clients who stuck with him no doubt were rewarded.</p> <p>We had a particular focus on fiber providers Metromedia Fiber and Global Crossing, and other equipment manufacturers whose names escape me. For a while, it unsurprisingly was an excellent business. Those kinds of stocks almost literally couldn't go down after earnings. Analysts notoriously raced to post ever-higher price targets.</p> <p>The broker who sat across from me pitched a stock named Teligent, one of many CLECs (competitive local-exchange carriers) that aimed to take on the Baby Bells. (There is a different publicly traded company with the same name now.) In my memory (which from research appears directionally correct), Teligent stock went from $6 to $120 in something like 18 months. The broker's book of business rose exponentially.</p> <p>By early 2002, Teligent was bankrupt, and the broker presumably was in a different line of work. My firm went under around the same time, by which time I'd already moved on (ironically, to a dot-com that remains in business to this day).</p> <h2>A Crazy Time</h2> <p>Admittedly, I wasn't working on the floor of the NYSE or working as a sell-side analyst. But simply being around the market every day, with CNBC on and Bloomberg headlines ticking through, was more than enough, even at the age of 20, for me to understand what a frenzy 1999 and early 2000 proved to be.</p> <p>But where 1999 stands out is in the fact that its reach spread well beyond the financial industry. Many of my friends day-traded (I mean, literally day-traded); my prized access to a Bloomberg terminal would make me more popular than I'd been before or since.</p>\n<div></div> <p>My relatives were not much different. In fact, I remember the day I realized the bubble had gone too far: Christmas Eve, 1999, when a kindly relative with no interest in the stock market or any real need to risk capital told me he had bought thousands of dollars worth of a company with a brand-new search engine. It would prove to be a \"pump and dump\" scheme.</p> <p>My experience certainly was not out of the ordinary. The extent to which investing dominated American life in the late 1990s cannot be overstated. In July 1999, a <em>Newsweek</em> cover story noted that \"They're Rich (And You're Not)\", covering both massive gains in dot-com stocks and the then-new phenomenon of stock options for employees.</p> <p>As Barry Ritholtz noted in 2009, CNBC was ubiquitous as well:</p> <blockquote><p>The late 1990s were the days of wine and roses for the channel. As stocks became like sports teams rooted on by mom and pop, more members of the non professional investing public became regular viewers. During the irrational exuberance era, CNBC was everywhere. Gyms, bars, restaurants, any public place you went into that had a TV — even sports bars! — had the ticker strewn channel running in the background.</p></blockquote> <p>CNBC's daytime ratings peaked at 343,000. That doesn't sound like much, perhaps, but given its presence in so many public places millions of people were watching the channel every day. And that was with competition from CNNfn, which would shut down in 2004. (Fox Business didn't arrive until 2007.)</p> <p>Certainly, the current market has some echoes. Robinhood alone reportedly reached 13 million users in March. Charles Schwab (SCHW) saw trading daily activity more than double in the second quarter (though its acquisition of assets from USAA likely was a factor). E*TRADE (ETFC) activity more than tripled.</p> <p>Still, at least from a 'feel' standpoint, this market doesn't have quite the same reach or the same social impact. And, obviously, there wasn't a pandemic raging in 1999. There were other things to do; millions of people chose to invest instead.</p>\n<div></div> <h2>The Breadth of 1999</h2> <p>It's also worth noting that the phrase \"dot-com bubble\" itself seems to have colored our collective memory of the stock market in the late 1990s. The phrase seems to suggest that the frothy trading was mostly limited to Internet stocks. And the supposedly \"quintessential\" stocks of the bubble usually are those names: Pets.com, Webvan, TheGlobe.com, Beenz and Flooz (the latter a pair of digital currency companies).</p> <p>But the bubble went far beyond the internet. (Many of the infamous names actually came on relatively late: Pets.com, for instance, only went public in February 2000.) For instance, Teligent was part of a \"telecom bubble\" that by one estimate destroyed a staggering $750 billion in value. Some of the optimism toward telecoms obviously was driven by Internet growth, but CLECs also were promising to route traffic around the monopolistic \"Baby Bells\". </p> <p>And it's worth looking at annual returns for the S&P 500 into and out of the market's March 2000 peak:</p> <p><img height=\"261\" loading=\"lazy\" src=\"https://static.seekingalpha.com/uploads/2020/8/23/944836-15981591465019698.jpg\" width=\"640\"/><em>source: macrotrends.net</em></p> <p>From the beginning of 1995 (459.11) to March 2000 highs (1527.46) — a little over five years — the S&P 500 rose 232%. To put that in perspective, it took the index more than seven and a half years to post the same gain from the 2009 low. </p> <p>And the market at the beginning of 1995 was not bouncing off a historic crisis. In fact, the S&P had gained in 11 of the preceding 13 years (including 1987, interestingly enough), with only a 6.6% decline in 1990 and a 1.5% fall in 1994.</p> <p>It wasn't just dot-com stocks that reached unsustainable levels. It's quite clear that the S&P 500 did the same. In March 2000, it had rallied 582% from 1987 lows. The index now would have to rally <em>another</em> 36% from Friday's close in a little over a year just to match the same performance from the 2009 bottom. And even investors who avoided Internet and telecom names in 2000 would have taken a huge hit. Had they bought the index at the top (admittedly ignoring dividends), they would have briefly been in the green by 2007 — and then have to wait all the way until 2013 to get back above water.</p>\n<div></div> <h2>A More Narrow 2020</h2> <p>Social and personal effects aside, it's the breadth of the late 1990s bubble that stands out relative to the market of 2020, in particular. Yes, the market has rallied despite pandemic impacts. And, yes, the NASDAQ Composite of the last few years looks a bit like the S&P of the late 1990s:</p> <p><img height=\"203\" loading=\"lazy\" src=\"https://static.seekingalpha.com/uploads/2020/8/23/944836-15981602967434356.jpg\" width=\"640\"/><em>source: macrotrends.net</em></p> <p>But the market isn't bidding up every name indiscriminately. Almost 60% of S&P 500 components have declined year-to-date. The Russell 2000 is down 7% this year. There have been some seemingly ludicrous rallies driven at least in part by Robinhood traders. But there's an obvious (and yet oft-missed) incongruity in blaming the Federal Reserve for creating an environment that allowed Hertz (HTZ) stock to soar while in bankruptcy, while ignoring the fact that it was in that very same environment that Hertz went bankrupt.</p> <p>Even looking at the tech stocks that have soared this year, the comparisons to late 1990's analogues show how different this market is. As I noted last year, well-known investor David Einhorn has compared Chewy (CHWY) to Pets.com. Chewy has generated $5.4 billion in revenue over the past four quarters. Pets.com booked \"approximately $5.8 million\" in sales during its past year; the company had to estimate revenue because it went bankrupt so quickly.</p> <p>This is not to say that CHWY is a buy; indeed, I backed off my bull case this summer owing to valuation concerns (the stock predictably has continued to gain). Nor is to say that the biggest recent beneficiaries of multiple expansion — SaaS stocks, Tesla (TSLA), Shopify (SHOP), <a href=\"https://laohu8.com/S/W\">Wayfair</a> (W), etc. — are buys, or even fairly valued. (I have my concerns.)</p> <p>But those companies at least are real businesses. Shopify has a market-dominant platform. Tesla actually makes cars. Wayfair and Chewy actually ship goods. They're not fiber companies assigned billion-dollar market capitalizations before the fiber was even turned on (or laid), or Internet companies with minimal revenue and no real business plan whose stocks gained hundreds of percent immediately after their IPOs. Valuation and/or margin concerns for those stocks (and many others) are legitimate, but it's simply nothing like 1999. </p>\n<div></div> <h2>History is Rhyming</h2> <p>From 2000 highs, the S&P 500 dropped 49% to 2002 lows. The NASDAQ Composite did far worse, declining 78% in a little over two years. It infamously wouldn't return to its highs until April 2015. </p> <p>I'm enormously skeptical that we'll see anything close to those kinds of pullbacks in this market. (Indeed, I'm skeptical we'll see that kind of peak-to-trough performance in my lifetime.) Again, it's worth repeating: for the market as a whole, this is not a repeat of 1999.</p> <p>But in pockets of the market, I wouldn't be stunned to see drawdowns of 50% or greater. (The cannabis sector provides an intriguing recent example.) And that's because investors certainly seem to be making some of the same mistakes seen in the late 1990s. My belief goes beyond simply arguing that valuation concerns seem as pressing, particularly as tech, as they have been in the past two decades.</p> <p>It's how the market is getting to those valuations that looks worrisome, particularly in key sectors. In SaaS, for instance, we're certainly seeing echoes of the dot-com bubble in the use of comparable valuations. </p> <p>I was reminded of this by a conversation on <a href=\"https://laohu8.com/S/TWTR\">Twitter</a> last week among investors I follow (and respect). The argument essentially was that SaaS Stock ABC was 'cheap' because it traded at a lower price-to-revenue multiple relative to Stocks DEF and XYZ (both of which served different end markets) despite having a better business model and potentially a bigger addressable market.</p> <p>The problem in a rising market is that this logic becomes circular. ABC is 'cheap', so it catches up and/or passes DEF and XYZ. At that point, XYZ bulls (and analysts) see their stock as 'undervalued', and the cycle continues. By the end (and we may be nearing it), rational investors are arguing that 15x revenue for DEF is undervalued solely because it is undervalued relative to peers (or, sometimes, just another stock with a similar operating model); no one seems to be pricing in the very real risk that <em>all three stocks</em> are overvalued. This is precisely the mistake investors (and analysts) made during the bubble. Admittedly, in the late 1990's, this problem often centered on \"eyeballs\" (literally page views), but the fundamental issue still holds.</p>\n<div></div> <p>We're also seeing a repeat of 'hot' sectors being treated as if every player is going to win, even if those sectors are largely zero-sum games. Search engines, fiber, and CLECs were prime examples in the late 1990s. COVID-19 vaccine and treatment stocks seem the most obvious example right now: one would think that particularly good news from one firm in a mostly zero-sum market would lead other stocks to decline. That rarely has been the case, however. To a lesser extent, the same trend holds in sectors like sports betting and CDNs (content delivery networks) like Fastly (FSLY), Limelight Network (LLNW), and Cloudflare (NET). </p> <p>And certainly we've seen a flood of retail money as we did two-plus decades ago. To be sure, it's no secret that retail investors generally have done well in this market: it's likely the only time in history when institutions sold to individual investors at the bottom rather than the top. Meanwhile, the impact of Robinhood on the market as a whole is overstated, as is the supposedly unfocused and uniformed bent of investors on the platform. After all, the four most popular stocks, per the final data from Robintrack, are Ford (F), General Electric (GE), Apple (AAPL), and Microsoft (MSFT). Meanwhile, institutional investors weren't immune to the late 1990s hysteria, and they're not immune to yield- or trend-chasing now.</p> <p>But there are a number of dodgy (at best) companies that have rallied sharply this year. Many have given back their gains; some have not. The late 1990s and early 2000s were a golden age for questionable stocks, let alone outright frauds, and in retrospect I believe this era will look the same even for U.S.-based names. There are more companies taking more advantage of this market, and in most cases it's retail investors who will take the brunt of the losses (if they haven't already).</p> <p>There are aspects of this market that share more similarity to 1999 than anything we've since (other than perhaps the last days of the housing bubble). And the stocks and sectors that have benefited most from the \"irrational exuberance\", to use an infamous 1990s term, are the ones most likely to see a 2000-style implosion. Put another way, I don't believe this market will crash, but I believe that more than a few stocks will.</p>\n<div></div>\n<span></span><p><b>Disclosure:</b> <span>I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.</span> <span>I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.</span></p></div><div><div></div><span><svg height=\"16\" viewbox=\"5.799999713897705 7.799999237060547 20.30000114440918 16.39999771118164\" width=\"16\"><path d=\"M26.1 9.7c-.7.3-1.5.6-2.4.7.9-.5 1.5-1.3 1.8-2.3-.8.5-1.7.8-2.6 1-.8-.8-1.8-1.3-3-1.3-2.3 0-4.1 1.9-4.1 4.1 0 .3 0 .6.1.9-3.4-.2-6.5-1.8-8.5-4.3-.4.7-.7 1.4-.7 2.1 0 1.4.7 2.7 1.8 3.4-.7 0-1.3-.2-1.9-.5v.1c0 2 1.4 3.7 3.3 4.1-.3.1-.7.1-1.1.1-.3 0-.5 0-.8-.1.5 1.6 2.1 2.8 3.9 2.9-1.4 1.1-3.2 1.8-5.1 1.8-.3 0-.7 0-1-.1 1.8 1.2 4 1.9 6.4 1.9 7.6 0 11.8-6.3 11.8-11.8v-.5c.8-.6 1.5-1.3 2.1-2.2zm0 0\" fill=\"#FFFFFF\"></path></svg><svg height=\"18\" viewbox=\"11.000001907348633 6.799999713897705 9.999998092651367 18.600000381469727\" width=\"10\"><path d=\"M20.6 6.8h-2.4c-2.7 0-4.4 1.8-4.4 4.6v2.1h-2.4c-.2 0-.4.2-.4.4v3c0 .2.2.4.4.4h2.4V25c0 .2.2.4.4.4h3.1c.2 0 .4-.2.4-.4v-7.7h2.8c.2 0 .4-.2.4-.4v-3c0-.1 0-.2-.1-.3-.1-.1-.2-.1-.3-.1h-2.8v-1.8c0-.9.2-1.3 1.3-1.3h1.6c.2 0 .4-.2.4-.4V7.1c0-.2-.2-.3-.4-.3zm0 0\" fill=\"#FFFFFF\"></path></svg><svg height=\"16\" viewbox=\"6.200000286102295 6.699999809265137 19.5 18.700000762939453\" width=\"14\"><path d=\"M25.7 18.2v7.2h-4.2v-6.7c0-1.7-.6-2.8-2.1-2.8-1.2 0-1.8.8-2.1 1.5-.1.3-.1.6-.1 1v7H13s.1-11.4 0-12.6h4.2v1.8c.6-.9 1.5-2.1 3.8-2.1 2.7 0 4.7 1.8 4.7 5.7zM8.6 6.7c-1.4 0-2.4.9-2.4 2.2 0 1.2.9 2.2 2.3 2.2 1.5 0 2.4-1 2.4-2.2 0-1.2-.8-2.2-2.3-2.2zM6.5 25.4h4.2V12.8H6.5v12.6zm0 0\" fill=\"#FFFFFF\"></path></svg><svg height=\"14\" viewbox=\"4.5 6.499999523162842 22.900001525878906 18.999998092651367\" width=\"18\"><path d=\"M20.9 16.9c.1.2.1.3.1.5 0 .3-.1.6-.3.9-.2.2-.4.4-.7.5-.1 0-.3.1-.4.1-.3 0-.7-.1-.9-.3-.3-.2-.5-.5-.5-.8v-.3c0-.3.1-.6.3-.8.2-.2.4-.4.7-.5.2-.1.3-.1.5-.1.3 0 .6.1.8.3.1 0 .3.2.4.5zm-.9 3.7c-.1-.1-.3-.1-.4-.1-.1 0-.2 0-.3.1-1 .6-2.2.9-3.4.9-.9 0-1.8-.2-2.6-.6-.1 0-.3-.2-.4-.3-.1 0-.2-.1-.2-.1-.1 0-.2-.1-.3-.1-.1 0-.2 0-.3.1-.1.1-.2.1-.3.3-.1.1-.1.3-.1.4 0 .1 0 .2.1.4.1.1.1.2.3.3 1.1.8 2.5 1.1 3.8 1.1 1.2 0 2.4-.3 3.5-.8.1-.1.3-.2.5-.3.1-.1.2-.1.3-.2.1-.1.1-.2.2-.3v-.2c0-.1 0-.2-.1-.3l-.3-.3zm-8-1.9c.2.1.3.1.5.1.4 0 .7-.2 1-.4.3-.2.5-.6.5-1v-.1c0-.4-.2-.7-.5-1-.3-.2-.6-.4-1-.4h-.3c-.5.1-.9.5-1.1 1 0 .1-.1.3-.1.4 0 .3.1.6.3.9.2.3.4.4.7.5zm15.4-3.6v.2c0 .6-.2 1.1-.5 1.5-.3.4-.7.8-1.1 1v.7c0 1.2-.4 2.4-1.1 3.3-1.3 1.8-3.4 2.8-5.4 3.3-1.1.3-2.2.4-3.4.4-1.7 0-3.4-.3-4.9-.9-1.6-.7-3.2-1.7-4.1-3.3-.5-.8-.8-1.8-.8-2.8v-.7c-.4-.2-.8-.6-1.1-1-.3-.4-.5-1-.5-1.5 0-.8.3-1.5.8-2s1.2-.9 2-.9h.2c.4 0 .8.1 1.1.2.3.1.6.3.9.5.1 0 .2-.1.3-.1 1.7-1 3.6-1.4 5.4-1.5 0-.9.1-1.9.6-2.7.4-.7 1-1.3 1.8-1.4.3-.1.6-.1.9-.1.8 0 1.6.2 2.3.5.3-.5.8-.9 1.3-1.1.3-.1.7-.2 1-.2.4 0 .7.1 1.1.2.5.2.9.5 1.2 1 .4.4.6.9.6 1.5v.3c-.1.7-.4 1.3-.9 1.7-.5.4-1.1.7-1.8.7H23c-.6 0-1.3-.4-1.7-.8-.4-.5-.7-1.1-.7-1.8v-.1c-.6-.3-1.3-.5-1.9-.5h-.3c-.5 0-.9.4-1.1.8-.3.6-.4 1.4-.4 2.1 1.8.1 3.7.6 5.3 1.5 0 0 .1 0 .1.1.1-.1.2-.2.4-.3.5-.3 1.1-.5 1.7-.5.3 0 .5 0 .8.1.6.2 1.1.5 1.5 1 .4.4.7 1 .7 1.6zm-5.4-6s0 .1 0 0c0 .4.2.7.4.9.2.2.5.4.8.4h.1c.3 0 .6-.1.9-.4.2-.2.4-.5.4-.8v-.1c0-.3-.2-.6-.4-.9-.2-.2-.6-.4-.9-.4H23c-.3.1-.5.2-.7.4-.2.4-.3.6-.3.9zm-13.6 5c-.2-.1-.5-.2-.8-.2h-.1c-.4 0-.7.2-1 .4-.3.3-.5.6-.5 1v.1c0 .2.1.5.2.7.1.2.2.3.3.4.5-1 1.2-1.8 1.9-2.4zm16.1 4.5c0-.8-.3-1.7-.8-2.3-1-1.3-2.4-2.2-4-2.7-.3-.1-.6-.2-.9-.2-.9-.3-1.9-.4-2.8-.4-1.2 0-2.5.2-3.7.6-1.5.5-3 1.4-4 2.7-.5.7-.8 1.5-.8 2.3 0 .3 0 .6.1.9.2.7.5 1.3 1 1.8.4.5 1 1 1.6 1.3.1.1.3.2.4.2 1.7.9 3.6 1.3 5.4 1.3h1c1.9-.2 3.8-.7 5.4-1.9.5-.4.9-.8 1.3-1.3s.6-1.1.7-1.7c0-.2.1-.4.1-.6zm1.5-3.3c0-.2 0-.4-.1-.6-.1-.3-.3-.5-.6-.6-.3-.1-.6-.2-.8-.2-.3 0-.5.1-.8.2.8.7 1.4 1.4 1.8 2.4.1-.1.3-.3.3-.4.1-.3.2-.6.2-.8zm0 0\" fill=\"#FFFFFF\"></path></svg><svg height=\"10\" viewbox=\"4.699999809265137 8.300000190734863 22.599998474121094 15.40000057220459\" width=\"16\"><path d=\"M4.7 8.3v2.5L16 17l11.3-6.1V8.3H4.7zm0 3.7v11.7h22.6V12L16 18.1 4.7 12z\" fill=\"#FFFFFF\"></path></svg><svg height=\"14\" viewbox=\"87.43199920654297 227.56399536132812 422.6809997558594 382.7259826660156\" width=\"20\"><g><g><rect fill=\"none\" height=\"42.929\" width=\"42.929\" x=\"421.615\" y=\"375.172\"></rect><g><rect fill=\"none\" height=\"42.929\" width=\"42.929\" x=\"421.615\" y=\"375.172\"></rect><path d=\"M87.432,332.244v193.283h85.424v84.763h251.855v-84.763h85.402V332.244H87.432z M383.309,568.021H214.237 v-105.67h169.072V568.021z M464.543,418.101h-42.929v-42.929h42.929V418.101z\" fill=\"#FFFFFF\"></path></g></g><rect fill=\"#FFFFFF\" height=\"84.536\" width=\"253.609\" x=\"175.93\" y=\"227.564\"></rect></g></svg></span></div></div></body></html>","source":"seekingalpha","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; 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height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nThis Isn't 1999 -- But It's Getting Closer\n</h2>\n\n<h4 class=\"meta\">\n\n\n2020-08-24 20:59 GMT+8 <a href=https://seekingalpha.com/article/4370386-this-isnt-1999-getting-closer><strong>Vince Martin</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>SummaryOver the last two decades, comparisons to the 'dot-com bubble' have badly underestimated the mania of the late 1990s.\n In particular, investors often forget that market optimism went ...</p>\n\n<a href=\"https://seekingalpha.com/article/4370386-this-isnt-1999-getting-closer\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"SHOP":"Shopify Inc","NET":"Cloudflare, Inc.","MSFT":"微软","F":"福特汽车","09086":"华夏纳指-U","AAPL":"苹果","03086":"华夏纳指","FSLY":"Fastly, Inc.","GE":"GE航空航天","TSLA":"特斯拉","SCHW":"嘉信理财","W":"Wayfair","CHWY":"Chewy, Inc."},"source_url":"https://seekingalpha.com/article/4370386-this-isnt-1999-getting-closer","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"2061496134","content_text":"SummaryOver the last two decades, comparisons to the 'dot-com bubble' have badly underestimated the mania of the late 1990s.\n In particular, investors often forget that market optimism went well beyond Internet stocks.\n A narrower 2020 rally isn't quite the same thing; but in several categories and verticals, the same mistakes are being made.\n For about two decades, I bristled any time comparisons were made to the dot-com bubble of the late 1990's. After all, I saw the bubble in real-time. Based on that direct experience, any comparisons to 1999 significantly understated the insanity that permeated the market of that era. I don't bristle any more, or at least not quite to the same extent. The craziness of the 2020 market isn't as broad, or as intense, as that seen in the late 1990s. But this market certainly has echoes of that bubble. We're seeing some of the same trends and, more importantly, many of the same mistakes. It's more reasonable to compare the current market to 1999/early 2000 than it's been in the last two decades. And so if history repeats, there seems a real chance for a significant drawdown in U.S. stocks, even if that drawdown is unlikely to match the staggering value destruction seen in 2000-2002. It's worth repeating: this isn't 1999. But at least as far as the equity markets go, we're as close as we've been since then. A Firsthand View I saw 1999 firsthand. To be sure, I didn't work on Wall Street, either literally or figuratively. I was a sales trainee at a retail brokerage in midtown Manhattan. But I was close enough to see the day-to-day trading in, and madness of, U.S. stocks into and out of the peak. Our business model was simple. We cold-called leads and tried to get them to purchase an individual stock. (No one, myself included, seemed to grasp the incongruity of pitching Internet stocks through such an old-fashioned method.) If that initial purchase worked, the plan was to follow up, and hopefully manage a greater and greater share of the now-client's assets.\n With one exception, the salespeople focused on the hot Internet stocks of the day. That exception was my training broker, likely the only employee in the firm over 40. He pitched regional banking stocks to leads and clients alike, on a simple thesis. Investors could make solid dividends in the sector at a time when interest rates seemed 'abnormally' low, until which point the bank invariably was taken over in the consolidation that took place after the repeal of Glass-Steagall. He took no shortage of grief in 1999, but clients who stuck with him no doubt were rewarded. We had a particular focus on fiber providers Metromedia Fiber and Global Crossing, and other equipment manufacturers whose names escape me. For a while, it unsurprisingly was an excellent business. Those kinds of stocks almost literally couldn't go down after earnings. Analysts notoriously raced to post ever-higher price targets. The broker who sat across from me pitched a stock named Teligent, one of many CLECs (competitive local-exchange carriers) that aimed to take on the Baby Bells. (There is a different publicly traded company with the same name now.) In my memory (which from research appears directionally correct), Teligent stock went from $6 to $120 in something like 18 months. The broker's book of business rose exponentially. By early 2002, Teligent was bankrupt, and the broker presumably was in a different line of work. My firm went under around the same time, by which time I'd already moved on (ironically, to a dot-com that remains in business to this day). A Crazy Time Admittedly, I wasn't working on the floor of the NYSE or working as a sell-side analyst. But simply being around the market every day, with CNBC on and Bloomberg headlines ticking through, was more than enough, even at the age of 20, for me to understand what a frenzy 1999 and early 2000 proved to be. But where 1999 stands out is in the fact that its reach spread well beyond the financial industry. Many of my friends day-traded (I mean, literally day-traded); my prized access to a Bloomberg terminal would make me more popular than I'd been before or since.\n My relatives were not much different. In fact, I remember the day I realized the bubble had gone too far: Christmas Eve, 1999, when a kindly relative with no interest in the stock market or any real need to risk capital told me he had bought thousands of dollars worth of a company with a brand-new search engine. It would prove to be a \"pump and dump\" scheme. My experience certainly was not out of the ordinary. The extent to which investing dominated American life in the late 1990s cannot be overstated. In July 1999, a Newsweek cover story noted that \"They're Rich (And You're Not)\", covering both massive gains in dot-com stocks and the then-new phenomenon of stock options for employees. As Barry Ritholtz noted in 2009, CNBC was ubiquitous as well: The late 1990s were the days of wine and roses for the channel. As stocks became like sports teams rooted on by mom and pop, more members of the non professional investing public became regular viewers. During the irrational exuberance era, CNBC was everywhere. Gyms, bars, restaurants, any public place you went into that had a TV — even sports bars! — had the ticker strewn channel running in the background. CNBC's daytime ratings peaked at 343,000. That doesn't sound like much, perhaps, but given its presence in so many public places millions of people were watching the channel every day. And that was with competition from CNNfn, which would shut down in 2004. (Fox Business didn't arrive until 2007.) Certainly, the current market has some echoes. Robinhood alone reportedly reached 13 million users in March. Charles Schwab (SCHW) saw trading daily activity more than double in the second quarter (though its acquisition of assets from USAA likely was a factor). E*TRADE (ETFC) activity more than tripled. Still, at least from a 'feel' standpoint, this market doesn't have quite the same reach or the same social impact. And, obviously, there wasn't a pandemic raging in 1999. There were other things to do; millions of people chose to invest instead.\n The Breadth of 1999 It's also worth noting that the phrase \"dot-com bubble\" itself seems to have colored our collective memory of the stock market in the late 1990s. The phrase seems to suggest that the frothy trading was mostly limited to Internet stocks. And the supposedly \"quintessential\" stocks of the bubble usually are those names: Pets.com, Webvan, TheGlobe.com, Beenz and Flooz (the latter a pair of digital currency companies). But the bubble went far beyond the internet. (Many of the infamous names actually came on relatively late: Pets.com, for instance, only went public in February 2000.) For instance, Teligent was part of a \"telecom bubble\" that by one estimate destroyed a staggering $750 billion in value. Some of the optimism toward telecoms obviously was driven by Internet growth, but CLECs also were promising to route traffic around the monopolistic \"Baby Bells\". And it's worth looking at annual returns for the S&P 500 into and out of the market's March 2000 peak: source: macrotrends.net From the beginning of 1995 (459.11) to March 2000 highs (1527.46) — a little over five years — the S&P 500 rose 232%. To put that in perspective, it took the index more than seven and a half years to post the same gain from the 2009 low. And the market at the beginning of 1995 was not bouncing off a historic crisis. In fact, the S&P had gained in 11 of the preceding 13 years (including 1987, interestingly enough), with only a 6.6% decline in 1990 and a 1.5% fall in 1994. It wasn't just dot-com stocks that reached unsustainable levels. It's quite clear that the S&P 500 did the same. In March 2000, it had rallied 582% from 1987 lows. The index now would have to rally another 36% from Friday's close in a little over a year just to match the same performance from the 2009 bottom. And even investors who avoided Internet and telecom names in 2000 would have taken a huge hit. Had they bought the index at the top (admittedly ignoring dividends), they would have briefly been in the green by 2007 — and then have to wait all the way until 2013 to get back above water.\n A More Narrow 2020 Social and personal effects aside, it's the breadth of the late 1990s bubble that stands out relative to the market of 2020, in particular. Yes, the market has rallied despite pandemic impacts. And, yes, the NASDAQ Composite of the last few years looks a bit like the S&P of the late 1990s: source: macrotrends.net But the market isn't bidding up every name indiscriminately. Almost 60% of S&P 500 components have declined year-to-date. The Russell 2000 is down 7% this year. There have been some seemingly ludicrous rallies driven at least in part by Robinhood traders. But there's an obvious (and yet oft-missed) incongruity in blaming the Federal Reserve for creating an environment that allowed Hertz (HTZ) stock to soar while in bankruptcy, while ignoring the fact that it was in that very same environment that Hertz went bankrupt. Even looking at the tech stocks that have soared this year, the comparisons to late 1990's analogues show how different this market is. As I noted last year, well-known investor David Einhorn has compared Chewy (CHWY) to Pets.com. Chewy has generated $5.4 billion in revenue over the past four quarters. Pets.com booked \"approximately $5.8 million\" in sales during its past year; the company had to estimate revenue because it went bankrupt so quickly. This is not to say that CHWY is a buy; indeed, I backed off my bull case this summer owing to valuation concerns (the stock predictably has continued to gain). Nor is to say that the biggest recent beneficiaries of multiple expansion — SaaS stocks, Tesla (TSLA), Shopify (SHOP), Wayfair (W), etc. — are buys, or even fairly valued. (I have my concerns.) But those companies at least are real businesses. Shopify has a market-dominant platform. Tesla actually makes cars. Wayfair and Chewy actually ship goods. They're not fiber companies assigned billion-dollar market capitalizations before the fiber was even turned on (or laid), or Internet companies with minimal revenue and no real business plan whose stocks gained hundreds of percent immediately after their IPOs. Valuation and/or margin concerns for those stocks (and many others) are legitimate, but it's simply nothing like 1999. \n History is Rhyming From 2000 highs, the S&P 500 dropped 49% to 2002 lows. The NASDAQ Composite did far worse, declining 78% in a little over two years. It infamously wouldn't return to its highs until April 2015. I'm enormously skeptical that we'll see anything close to those kinds of pullbacks in this market. (Indeed, I'm skeptical we'll see that kind of peak-to-trough performance in my lifetime.) Again, it's worth repeating: for the market as a whole, this is not a repeat of 1999. But in pockets of the market, I wouldn't be stunned to see drawdowns of 50% or greater. (The cannabis sector provides an intriguing recent example.) And that's because investors certainly seem to be making some of the same mistakes seen in the late 1990s. My belief goes beyond simply arguing that valuation concerns seem as pressing, particularly as tech, as they have been in the past two decades. It's how the market is getting to those valuations that looks worrisome, particularly in key sectors. In SaaS, for instance, we're certainly seeing echoes of the dot-com bubble in the use of comparable valuations. I was reminded of this by a conversation on Twitter last week among investors I follow (and respect). The argument essentially was that SaaS Stock ABC was 'cheap' because it traded at a lower price-to-revenue multiple relative to Stocks DEF and XYZ (both of which served different end markets) despite having a better business model and potentially a bigger addressable market. The problem in a rising market is that this logic becomes circular. ABC is 'cheap', so it catches up and/or passes DEF and XYZ. At that point, XYZ bulls (and analysts) see their stock as 'undervalued', and the cycle continues. By the end (and we may be nearing it), rational investors are arguing that 15x revenue for DEF is undervalued solely because it is undervalued relative to peers (or, sometimes, just another stock with a similar operating model); no one seems to be pricing in the very real risk that all three stocks are overvalued. This is precisely the mistake investors (and analysts) made during the bubble. Admittedly, in the late 1990's, this problem often centered on \"eyeballs\" (literally page views), but the fundamental issue still holds.\n We're also seeing a repeat of 'hot' sectors being treated as if every player is going to win, even if those sectors are largely zero-sum games. Search engines, fiber, and CLECs were prime examples in the late 1990s. COVID-19 vaccine and treatment stocks seem the most obvious example right now: one would think that particularly good news from one firm in a mostly zero-sum market would lead other stocks to decline. That rarely has been the case, however. To a lesser extent, the same trend holds in sectors like sports betting and CDNs (content delivery networks) like Fastly (FSLY), Limelight Network (LLNW), and Cloudflare (NET). And certainly we've seen a flood of retail money as we did two-plus decades ago. To be sure, it's no secret that retail investors generally have done well in this market: it's likely the only time in history when institutions sold to individual investors at the bottom rather than the top. Meanwhile, the impact of Robinhood on the market as a whole is overstated, as is the supposedly unfocused and uniformed bent of investors on the platform. After all, the four most popular stocks, per the final data from Robintrack, are Ford (F), General Electric (GE), Apple (AAPL), and Microsoft (MSFT). Meanwhile, institutional investors weren't immune to the late 1990s hysteria, and they're not immune to yield- or trend-chasing now. But there are a number of dodgy (at best) companies that have rallied sharply this year. Many have given back their gains; some have not. The late 1990s and early 2000s were a golden age for questionable stocks, let alone outright frauds, and in retrospect I believe this era will look the same even for U.S.-based names. There are more companies taking more advantage of this market, and in most cases it's retail investors who will take the brunt of the losses (if they haven't already). There are aspects of this market that share more similarity to 1999 than anything we've since (other than perhaps the last days of the housing bubble). And the stocks and sectors that have benefited most from the \"irrational exuberance\", to use an infamous 1990s term, are the ones most likely to see a 2000-style implosion. Put another way, I don't believe this market will crash, but I believe that more than a few stocks will.\n\nDisclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.","news_type":1},"isVote":1,"tweetType":1,"viewCount":214,"commentLimit":10,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"symbols":[],"verified":2,"subType":0,"readableState":1,"langContent":"CN","currentLanguage":"CN","warmUpFlag":false,"orderFlag":false,"shareable":true,"causeOfNotShareable":"","featuresForAnalytics":[],"commentAndTweetFlag":false,"upFlag":false,"length":25,"xxTargetLangEnum":"ZH_CN"},"commentList":[],"isCommentEnd":true,"isTiger":false,"isWeiXinMini":false,"url":"/m/post/973500412"}
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