During their latest episode of the VALUE: After Hours Podcast, Taylor, and Carlisle discussed Only 1 Tech Stock From The 1999 Dotcom Bubble Beat The Market By 2007. Here’s an excerpt from the episode:
Tobias: Meb had a tweet today.
Jake: How are you, Meb?
Tobias: “How many of the 10 most valuable tech stocks in the world at the peak of the dotcom bubble beat the market by the time of the next bull market peak in 2007?”
Jake: Oh, gosh.
Tobias: I’ll give you the name. See if that helps.
Jake: Yeah, that’ll help.
Tobias: Microsoft?
Jake: No.
Tobias: Cisco?
Jake: No.
Tobias: Intel?
Jake: Ooh, maybe.
Tobias: No. IBM? No.
Jake: Doubtful.
Tobias: America Online?
Jake: [laughs]
Tobias: No?
Jake: That one’s an easy.
Tobias: Oracle? No. Dell Computer? No. Sun Microsystems? No. Qualcomm? No. Hewlett Packard? No. None of them.
Jake: Oh.
Tobias: All right, here’s the next question though. “How many were ahead at the end of 2022-
Jake: Okay.
Tobias: -fully 23 years after the dotcom bubble crested?”
Jake: All those same names?
Tobias: Yep.
Jake: Oh, gosh. Microsoft?
Tobias: That’s it. You got it.
Jake: [laughs] I’m glad you stopped me before I added more wrong answers. [laughs] Wow.
Tobias: Yeah.
Jake: You can’t be real enthusiastic about those odds, right? Like, bellwether best and all those. In 1999, you would have given me totally logical and very, very believable reasons why all of those were dominant companies for the next 20 years, right?
Tobias: Yeah. In that list, there’s Cisco and Oracle.
Jake: Intel, 95% market share at that point. What other company do you know has an entire huge industry locked up at 95% market share?
Tobias: Hewlett Packard, Qualcomm, Sun Microsystems, Qualcomm, Dell Computer, Oracle, America Online.
Jake: You would have told me network effects, first mover, advantage, ability to outspend on R&D compared to everyone else. You could never catch them. All of those would have been like very– No one would have laughed you out of the room at that point.
Tobias: You could have held them all. I think one of the things it really demonstrates is that no one knows what’s going to happen. Businesses, when they look really– If the lever that you’re pulling on is the quality of the business, it’s hard because they often look good because they’ve had that cyclical tailwind at their back for a period, which they had– Cisco is the one. Some people have made some comparisons between Cisco and Nvidia, because Cisco, there was that panic for internet routers at the end of the 1999, 2000, and everybody front end loaded five years of buying.
Jake: Yeah.
Tobias: It helped Cisco out, perhaps in the same way people have front end loaded five years of buying for Nvidia. I don’t know. I’m not close enough to it, but it just wouldn’t surprise me.
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Article by The Acquirer’s Multiple.
