{"id":242652,"date":"2026-05-11T12:57:30","date_gmt":"2026-05-11T16:57:30","guid":{"rendered":"https:\/\/ibkrcampus.com\/campus\/?p=242652"},"modified":"2026-05-12T04:30:59","modified_gmt":"2026-05-12T08:30:59","slug":"is-this-party-like-1999","status":"publish","type":"post","link":"https:\/\/www.interactivebrokers.com\/campus\/traders-insight\/ibkr-market-insights\/is-this-party-like-1999\/","title":{"rendered":"Is This Party Like 1999?\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0"},"content":{"rendered":"\n

(Today\u2019s Theme Music: The artist formerly known as \u201cthe artist formerly known as\u201d Prince<\/a>.)<\/p>\n\n\n\n

We have previously noted, most recently last week<\/a>, that there seemed to be a generational difference of opinion among investors.  Those who went through the internet bubble are more likely to ask me whether the current market runup is reminiscent of that era.  Those who are younger \u2013 particularly those who began investing after the Global Financial Crisis (GFC) \u2013 are far less apt to raise concerns of that type.  That does not preclude the latter group from asking why the former might be expressing concerns.  Today\u2019s piece hopes to reconcile those views.<\/p>\n\n\n\n

Let me preface this by noting that both attitudes \u2013 both nervous and sincerely skeptical about that nervousness \u2013 are equally valid.  Let\u2019s also stipulate that while \u201cthis time it\u2019s different\u201d is often considered the most dangerous phrase in investing, it can be equally perilous to draw inappropriate parallels.  Hopefully it is easier to try to answer this question: why do people compare today\u2019s market to that of 1999-2000?<\/p>\n\n\n\n

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  1. The rush to build out data centers is reminiscent of that era\u2019s rush to build out bandwidth<\/strong>.\u00a0 We can stipulate that artificial intelligence has the potential to be as transformative as the internet was.\u00a0 It is also true that huge investments in bandwidth were required to allow us all to connect to the internet.\u00a0 Then like now, some of the most profitable, cash-generating companies were paying for this investment.\u00a0 Indeed, the \u201cbaby bells\u201d and others were not nearly as profitable as the current hyperscalers, but then again, the bandwidth investments pale in comparison to those of current data center plans.\u00a0 Remember, it was only recently that Cisco (CSCO) and current darling Intel (INTC) surpassed their bubble-era highs<\/li>\n\n\n\n
  2. Linear and\/or parabolic moves are inherently unstable<\/strong>.\u00a0 This is not specific to either period.\u00a0 It can apply to the recent run-up in precious metals too.\u00a0 But it is difficult for some to refrain from getting a bit of vertigo when they see moves of this type:<\/li>\n<\/ol>\n\n\n\n

    6-Months, NDX (red\/green candles), SPX (blue line)<\/em><\/strong><\/p>\n\n\n\n

    \"\"<\/figure>\n\n\n\n

    Source: Interactive Brokers<\/em><\/p>\n\n\n\n

    6-Months, NDX (red\/green candles), SPX (blue line), SOX (purple line)<\/em><\/strong><\/p>\n\n\n\n

    \"\"<\/figure>\n\n\n\n

    Source: Interactive Brokers<\/em><\/p>\n\n\n\n

    It is understandable why seeing a 70% rally in SOX in under six weeks might cause some to consider whether we have come too far too fast, especially when memories of the following chart are etched in some older folks\u2019 minds.<\/p>\n\n\n\n

    NDX Index, Jan 1, 1999 to May 11, 2000, with 50-day moving average<\/em><\/strong><\/p>\n\n\n\n

    \"\"<\/figure>\n\n\n\n

    Source: Bloomberg<\/em><\/p>\n\n\n\n

    The rally in NDX from October 1999 to March 2000 surpassed the current 70% mark.  If we take the starting point at around 2400, the first 70% gain was at about 4000.  There was another 20% left to run.   But the current SOX and historic NDX seem at least similar.<\/p>\n\n\n\n