The dot-com boom was one of the most fascinating periods in market history. Technology was suddenly the “emperor’s new clothes”, companies rushed to list on stock markets, investors piled in, and the fear of missing out (FOMO) drove prices higher and higher.
Lastminute.com is often cited as a symbol of the crash in March 2000. But it wasn’t alone. Many companies had little revenue, huge debt, and no clear path to profitability. Like any bubble, prices inflated beyond reason, and like every bubble eventually does, it burst.
When it did, markets saw nearly three years of negative returns. Entire portfolios were wiped out. The lesson? A great story doesn’t always make a great investment.
Fast Forward to Today: Is This Another Bubble?
The word “bubble” is now thrown around for two areas:
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AI and technology stocks
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Cryptocurrencies
Let’s look at both separately.
Crypto: A High-Octane, High-Volatility Asset Class
Crypto is inherently volatile, this is not opinion, it’s data. Fidelity’s long-term analysis shows that Bitcoin has experienced annualised volatility of over 60%, far higher than equities or commodities. Movements of ±10% in a single day are normal, not unusual.
Is crypto in bubble territory?
That question is harder to answer because crypto does not have a tangible cash-flow-producing asset behind it. Unlike a business earning profits, a property generating rent, or a bond paying interest, crypto’s value is driven by belief, adoption, scarcity, and sentiment — not fundamentals.
However, one clear trend is emerging:
Long-term crypto holders are gradually diversifying.
Not selling everything… but blending.
Taking some profit, reducing concentration risk, and reallocating into equities, bonds, property, and cash.
That behaviour is often a sign that investors feel valuations are stretched — or simply that they recognise the benefits of building a more balanced portfolio.
AI & Tech: Bubble or Just Expensive?
AI and technology stocks are a very different conversation from the dot-com era.
1. Many of today’s leaders are profitable
Nvidia, Microsoft, Alphabet, Meta, Amazon (in recent years), and Tesla generate billions in cash flow. These are not speculative startups with no revenue — they are some of the most profitable businesses on the planet.
2. They generally aren’t burdened with debt
In fact, companies like Apple are net cash positive.
This makes them far more resilient than the “zombie companies” we saw 20 years ago.
3. Valuations are high — but not necessarily irrational
Is paying 50x earnings expensive?
Compared to 20x in the 1980s, yes. But we must remember:
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Today’s tech firms scale globally with near-zero marginal cost.
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Profitability can grow exponentially with AI integration.
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Traditional valuation anchors are harder to apply when business models have changed fundamentally.
That said, markets can — and often do — get ahead of themselves. Even great companies can become overpriced.
4. Company-specific risk still matters
Take Tesla, for example. When shareholders approved Elon Musk’s pay package, they effectively acknowledged that Musk is Tesla. That’s a classic example of key-person risk.
Great narratives can blur investment judgement.
Corrections vs Crashes
We have experienced multiple multi-year downturns:
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2000–2003 — dot-com collapse
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2008–2009 — global financial crisis
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2022–2023 — inflation shock and rate hikes
And sharp but brief crashes such as:
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2020 — COVID
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2025 — Tariffs
These events feel dramatic in real time — but over a 20-, 30-, or 40-year investing journey, they become a small part of a much bigger picture.
The real danger is that investors focus too heavily on short-term drops and lose sight of long-term outcomes.
Conclusion: Bubble or Not, the Long-Term Plan Matters Most
Are prices high today?
Possibly. Markets may need to cool. That’s normal.
Does it change the long-term case for a diversified portfolio?
No.
For crypto investors, early adopters have been rewarded. But many newer investors have been driven by FOMO — and when volatility hits, they panic-sell, locking in losses.
For equity investors, valuations may ebb and flow, but the underlying long-term drivers of returns remain:
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profits
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innovation
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economic growth
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reinvestment
Whether markets are expensive, cheap, or somewhere in the middle, the principle remains the same:
A disciplined, diversified, long-term investment plan beats trying to time bubbles.
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