2/ Every document hereon comes from my former employer Bernstein Research's internal research archive, which extend back to 1994
Unfortunately, they're not available to the public (even Bernstein's client website cuts off at 2003), but happy to give more details if necessary
— Corry Wang (@corry_wang) January 2, 2021
4/ LESSON #2: Calling bubbles is easy, making money is hard
In truth, the hard part about the tech bubble wasn't noticing it. The hard part was timing it
Our equity strategist tried in January 99… he was off by 14 months (and another 30 point gap in value vs growth) pic.twitter.com/9CchWkLIJr
— Corry Wang (@corry_wang) January 2, 2021
6/ LESSON #4: "Tech" bubble was a misnomer… it was really a large cap growth bubble
See the valuation table below, 1 year before the top
Yes, Microsoft traded at 70x earnings. But Coca Cola was 43x. Pfizer was 92x. Every stock here was a disaster over the next 10 years… pic.twitter.com/iUuDjCRBfl
— Corry Wang (@corry_wang) January 2, 2021
8/ LESSON #6: Fundamentals follow price, not vice versa
The bubble popped in Q1 2000. Fundamentals didn't decelerate until Q4 2000.
It was reflexivity at work. Lower stock prices = less capex spend = less revenue growth = lower stock prices. A vicious cycle pic.twitter.com/hEHeSy7g7k
— Corry Wang (@corry_wang) January 2, 2021
9/ What's the takeaway here?
Be humble.
For bears, it's easy to call a bubble. Anybody can do that. Timing is the hard part
For bulls, it's easy to point to the fundamentals. Historical investors weren't dumb. The hard part is matching fundamentals with price…
— Corry Wang (@corry_wang) January 2, 2021