Tech-Bust Lessons From a Former Wall Street Insider

[Inside Wall Street with Nomi Prins]( Tech-Bust Lessons From a Former Wall Street Insider By Nomi Prins, Editor, Inside Wall Street with Nomi Prins I was working on Wall Street when the dot-com bubble burst. In early 2000, I’d joined Goldman Sachs as a managing director. I wasn’t specifically involved with the group whose job it was to take new tech startups public. But I watched as Goldman’s – and the market’s – bad bets on tech imploded around me… By the time I left Goldman in 2002, a lot of startups had failed. In the years prior, there was a real push to bring these companies public at the firm. There was so much money to be made for the investment banks that brought these companies public. Recommended Link [Former Bank VP: “Prepare now or risk everything!”]( Former investment bank VP, Teeka Tiwari, just revealed that the U.S. dollar will be replaced with a digital dollar – giving the government control over all of your money. If you have any U.S. dollars in your account… prepare now… or risk losing everything… [image]( According to Teeka, you can “opt out” of this potential dollar recall. [Read what Teeka has to say about the dollar recall and come out of it wealthier than ever.]( -- A typical fee for underwriting – or arranging – an initial public offering (IPO) could range at 4-7% of the total value of the IPO. On top of that… If you were “in” with a company’s IPO, you stood to make other money from that company. How? By providing other financial services – such as acting as a broker for the IPO shares or lending money to the company to grow its business. In other words, Wall Street could make money even if an IPO eventually went south. (By the way, that’s still true today.) And when Wall Street sees dollar signs, it gets greedy. In 1998, IPOs were worth only $2 billion. A year later, in 1999, they were worth about $24 billion – including Goldman’s IPO. That means the amount of money thrown at companies to take them public jumped 1,100% in just one year. The stock market followed. Over that same period, the tech-heavy Nasdaq Index nearly doubled in value. When the tech bubble burst in March 2000, the impact was dramatic. As much as $5 trillion was wiped out from the market in just two-and-a-half years. Folks who bet on the [right names at the wrong time]( got crushed. But they weren’t the only ones. Today, I’m going to show you what happens when you bet on the right long-term trend – but follow the crowd into the wrong names. Recommended Link [Shame on Wall Street!]( [image]( Shame on Wall Street! They’ve collected an estimated $17 billion in payouts from a unique investment Brad Thomas calls “Amazon’s secret royalty program…” But they never told you. In fact, you won’t find it listed anywhere on Amazon’s website… Because this is not endorsed by Amazon at all. Yet, by exploiting an IRS loophole (buried on page 1,794 of the U.S. tax code)… A small group of regular Americans have discovered how to collect consistent payouts from opportunities like this. “Started from a zero balance… Just hit $1,200 a month in [royalties].” – Neil P. “Increased my [royalties] to over $30,000 last year.” – Tom K. “Increased my [royalties] from about $2,000 to $60,000…” – Elaine T. If you want to participate, click the button below for details. The next payout deadline is scheduled for September 10th. [HURRY: Learn How YOU Can Collect the Next Payout Before September 10th.]( *Verified review. Past performance does not guarantee future results. -- Lessons From the Dot-Com Frenzy The S&P 500 Information Tech sector has already climbed 39% this year. Compare that to the broad S&P 500’s 16% gain. If you’re feeling the FOMO, you might be tempted to rush into any tech name. But doing so blindly can be dangerous. Many folks learned that lesson the hard way when the dot-com bubble burst in the early 2000s. One of the most infamous examples is Pets.com. It’s become the poster child of the dot-com bust. After a year of irrational excitement – including a costly Super Bowl ad – Pets.com collapsed. It filed for bankruptcy only nine months after it went public in February 2000, having lost 99% of its stock value. And Pets.com was just one of many companies that had a great idea during the tech boom… but missed the mark on timing and execution. Take Webvan. In the late 1990s and early 2000s, it aimed to revolutionize the grocery delivery industry. Webvan promised customers the convenience of ordering groceries online and having them delivered to their doorstep. In 1999, the company went public, and its stock price soared. At its peak, Webvan had a market capitalization of $8.4 billion, despite never turning a profit. But a year later, the dot-com bubble popped. Webvan’s shares tumbled 99%. [Chart] By mid-2001, the company had to file for bankruptcy. Despite substantial investments in infrastructure and marketing, its revenue couldn't cover the expenses, let alone make a profit. We saw something similar with a company called theGlobe.com. TheGlobe.com was one of the first social networking websites. It allowed users to create their own profiles, connect with others, and share content. TheGlobe.com made headlines when it went public in November 1998. On the first trading day alone, its stock price skyrocketed from $9 to $63.50 – a 606% spike. But theGlobe.com’s success was short-lived. As the dot-com bubble began to deflate in the early 2000s, shares in theGlobe.com, like many other dot-com companies, plunged. [Chart] TheGlobe.com filed for bankruptcy in April 2000, just a year after its IPO. Recommended Link [The One Ticker Retirement Plan]( Over the Shoulder Demo Now Available [image]( Market Wizard Larry Benedict crushed the market in 2022. But he didn't do it with a “traditional” method… For a limited time, he’s sharing a free over-the-shoulder “demo” of his strategy in action. It takes less than 10 seconds… [Watch it here.]( -- What This Means for Your Money Today These were both great ideas. They provided services and products that younger generations now take for granted. Pets.com’s business model was similar to what Chewy does today. In 2022, Chewy brought in $8.4 billion in revenue by selling pet supplies online. Webvan was similar to grocery delivery companies like Amazon. Amazon brought in $29.5 billion in sales from its grocery delivery business last year. And the idea behind theGlobe.com was similar to modern-day social media platforms like Facebook. Today, Facebook’s parent company, Meta, brings in $115.8 in revenue every year from its social media businesses. In other words, folks who bet on Webvan and theGlobe.com at the height of the dot-com boom weren’t wrong about the future of the internet. They weren’t even wrong about the promises these companies were selling. But a great idea doesn’t mean much without the right execution. That’s where companies like Webvan and theGlobe.com fell short. And, after the dot-com bust, they couldn’t recover. So here’s the lesson for today. When things get frothy in the markets and valuations get distorted – like some of them are today in tech – patience and diligence pay off. Nobody has a crystal ball to know today which stocks will go bust like Webvan and theGlobe.com… and which stocks will be the Amazons and Facebooks of tomorrow. So don’t go “all in” on any single tech or AI investment. Bet small, and split your bets across different names. Regards, [signature] Nomi Prins Editor, Inside Wall Street with Nomi Prins P.S. At my Distortion Report advisory, we’ve identified two names that are pushing the envelope on technology today. These are proven businesses with multi-decade track records. They offer a relatively low-risk way to bet on the biggest trend in tech today – artificial intelligence (AI). Plus, one of them pays a near-5% dividend. Paid-up Distortion Report subscribers can catch up on our initial write-up [here]( for all the details. If you’re not paid-up yet, learn more about a subscription [right here](. --------------------------------------------------------------- Like what you’re reading? Send your thoughts to [feedback@rogueeconomics.com](mailto:feedback@rogueeconomics.com?subject=RE: Inside Wall Street Feedback). MAILBAG On Monday, we asked you if you think AI has created a new tech bubble. This reader argues it’s too early for AI to be in a bubble… If AI is just getting started, at least beyond its current development, how could it be in a bubble yet? People sure like finding things to be scared about. Furthermore, this is not the year 2000, and investing experts who keep harping on Nvidia and ChatGPT are demonstrating that they don't care about the future of AI. These are the only two options?! – John F. Do you agree with John that it’s too soon for AI to be in a tech bubble? What does the future of the AI tech sector look like? How do you think the market will play out? Write us at [feedback@rogueeconomics.com](mailto:feedback@rogueeconomics.com?subject=RE: Inside Wall Street Feedback). IN CASE YOU MISSED IT… [“You need at least $100 of this asset – and it’s NOT gold” – Dr. Nomi Prins]( $100 is all you need… Former Goldman Sachs managing director Dr. Nomi Prins has identified an investment she’s calling ‘the world’s hardest asset’ – and she’s recommending it to friends, family, and followers. She’s talked about it on podcasts… live TV… and in her newest, bestselling book, Permanent Distortion. Dr. Prins says: “This asset has nothing to do with gold or silver, but it has many of the same features to protect your wealth – and preserve your privacy.” As the turbulence in our world grows worse and worse… [Click here now to see what Nomi is recommending before it’s too late.]( [image]( [Rogue Economincs]( Rogue Economics 55 NE 5th Avenue, Delray Beach, FL 33483 [www.rogueeconomics.com]( [Tweet]( [TWITTER]( To ensure our emails continue reaching your inbox, please [add our email address]( to your address book. This editorial email containing advertisements was sent to {EMAIL} because you subscribed to this service. To stop receiving these emails, click [here](. Rogue Economics welcomes your feedback and questions. But please note: The law prohibits us from giving personalized advice. To contact Customer Service, call toll free Domestic/International: 1-800-681-1765, Mon–Fri, 9am–7pm ET, or email us [here](mailto:memberservices@rogueeconomics.com). © 2023 Rogue Economics. 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