Lessons from the 1999 Dotcom Bubble: Top Stocks That Took 25 Years to Recover

⏰ The Last Time Everyone Piled Into the Same Stocks

To truly understand why crowded trades are dangerous, we have to go back to the last time investors were this confident on a handful of names.

Let's rewind to 1999.

Many of you probably weren't even invested in the market back then. You were likely in high school, college, or just starting your career. But at that time, technology was changing the world, and the internet was going to rewrite the rules of business forever.

Every headline reinforced the same message:

"This time is different"

Sound familiar? It certainly does to me.

📉 What Happened Next?

The funny thing is, the story about the internet was actually undertold. The internet did even more than people expected.

But here's what's interesting: valuations didn't matter anymore. Cash flow didn't matter. What mattered was owning the companies that would dominate the future.

And on December 31st, 1999, the stocks I'm about to show you were the most owned stocks in the market.

📌 First, You Need to Understand What Happened Next

From 2000 to 2002, the NASDAQ collapsed by nearly 80%.

Many of those hot stocks took 10 to 15 years to get back to their previous highs—if they even made it.

🏢 The Top 10 Most-Owned Stocks of 1999: Where Are They Now?

1️⃣ Microsoft

Shares didn't reach their dotcom bubble high again until 2017
That means nearly two decades of flat returns
Ironically, in 2012 a tech CEO told me I was stupid for owning it, and now it's one of the most traded stocks out there

2️⃣ Cisco

This one is even crazier
Just a few weeks ago, it finally reached the levels it traded at in 2000
25 years later!

3️⃣ Walmart

You might say, "Paul, Walmart is up 5x since then"
But here's what you need to realize: Over a 25-year period, 5x is only about a 6.5% annual return
That's not very good

4️⃣ General Electric

I bet some people don't even know what this company is
It has been a disaster since 2000
They would have been better off in 2000 selling all parts of the company and giving the money to investors

5️⃣ Exxon Mobil

This one is interesting
It actually went on quite a bull run between 2000 and 2008, rising from $45 to $95
The reason? Oil prices went to $140 per barrel in 2008

6️⃣ Intel

Similar story to Cisco, but even worse
It has never reached its 1999 highs
In fact, it still trades at a 50% discount to those levels
But here's the thing: Revenue has increased significantly since then

7️⃣ Citigroup

Really saw its downfall during the financial crisis
If you owned shares in 2000, you would still be down over 75% a mere 25 years later
At the lows, you would have been down over 90%

8️⃣ IBM

Super boring
Had a flat decade following the dotcom bubble

9️⃣ Home Depot

Great company
Even a name completely separate from tech traded at such high valuations in 2000 that
A decade later, it was down 50%
Remember this: Just because a company is not tech does not mean it can't be egregiously overpriced

🔟 Oracle

It took Oracle shareholders 17 years to break even on their investment

📊 The Core Lesson

I don't think anyone can deny that for the most part, these have been phenomenal businesses. Market leaders, dominant players, household names still today. All these names are still around.

But this story is exactly why:

"A great story can become a bad investment if you pay the wrong price."

And I'll tell you something else. All these companies here likely have higher revenue and profit today than they did 25 years ago. And yet the stocks have not, for the most part, done well over a 10 or 15-year period after those highs.

👥 What Did Retail Investors Own in 1999?

Surprise, surprise. They were far more concentrated in pure dotcom stocks:

Cisco - We just talked about this
Lucent - A telecom equipment company expected to change the world... went completely out of business
Microsoft
General Electric
Intel
Oracle
AT&T - Similar to Intel, trades at around 50% of its 2000 price
AOL - Get ready for this one

🤯 The Shocking Story of AOL

At its peak, market cap of $200 billion
Acquired by Verizon just 10 years later for $4.4 billion
98% decline, in just 10 years
Talk about absolute destruction of wealth

⚠️ The Lesson

These names were simply overhyped and overpriced. And that's the lesson:

When everyone agrees, future returns usually aren't going to be as heroic as you would expect.

The list from 25 years ago was actually less tech-concentrated than today. But retail investors were far more concentrated in pure dotcom stocks.

When the market as a whole starts selling assets like an ETF, these regular names are going to get hit hard too.

💭 Final Thoughts

Ask yourself these questions right now:

Are my holdings in "everyone agrees" stocks?
Are the valuations of these stocks higher than their historical averages?
If these stocks dropped 60% and stayed there for 10 years, could I handle it?

History repeats itself. But only when we don't learn from it.

Remember: A great company is not always a great investment. Price matters.