What If Tech Bear Market Lasts 2+ Years?

A page from my dotcom experience when I was 19 years old and freshman at Michigan State University and would try to find time in between classes to slip into computer lab, open my Datek brokerage account (later acquired by ToS) and trade the market with $700 LOL

In August 1998, Russia defaulted on its sovereign debt. Long Term Capital Management (LTCM) was holding a large position when that happened. That fund collapsed. Investors lost millions. But the worst part was as Russian currency collapsed, it took down many other emerging market currencies with it in 1998. Major chaos in stock market. The Fed stepped in with huge liquidity injections. That marked the beginning of euphoria as Nasdaq went straight up with wild speculation in dotcom stocks from 1998 to 2000 and that period brought in whole new breed of retail investors that saw opportunity to make tons of money very very fast. Hundreds of new IPOs with zero revenues. Wild speculation. The bubble finally burst in March 2000 and ultimately Nasdaq fell by -86% from top to bottom in late 2002 before it was all over. When I was finishing my Masters classes in 2003, I remember one of my finance college professors telling us all in the classroom how he bought Cisco stock at the peak and he kept averaging down. In one year from March 2000 to March 2001, Cisco lost 77% value. At the very bottom in late 2002, Cisco had lost -96% value. Priceline was the same way. Dell Computers, EMC, Yahoo, Amazon and many others all the same way. Luckily for me, I saw all this right in the beginning years of my finance career.

Now fast forward to today’s regime:

The pandemic of 2020 was one of those unique events like 1998. Sharp ignition in fiscal and monetary stimulus on fears of great depression marked the beginning of that euphoric phase that brought whole new breed of retail investors. Driven by commission free trading, Chamath selling hot SPACs, prospects of rising stock market as the only game in town with main street shut down due to covid restrictions, the rise of Redditt/WSB clubs, the rise of Cathie Wood wildly speculating on bubbly assets, Charles Schwab seeing 80% rise in new funded accounts, GameStop, Avis Car, AMC all going wild, Upstart going wild with a joker analyst coming on CNBC who couldn’t even explain what the company does, metaverse nonsense, NFT monkeys and apes jpegs being bought and sold, EV bubble with the likes of Quantumscape IPO with no revenues expected until 2025 at $30 billion valuation, same with Nikola, same with countless other SaaS, and Tesla rises to a point that it becomes bigger than total value of next world’s top 10 automakers combined. And now finally, that liquidity is being removed from the market.

I am not saying Nasdaq to fall by -90% from top to bottom again, I certainly hope not. Just making comparisons and want to ask a question that nobody wants to ask: What if tech bear market lasts 2+ years?

Fahad