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Barry Ritholtz

Wall Street Hype Has Evolved Since the Dot-Com Era

Similarities are everywhere, but investors need to understand five key differences.

This bull market is very different. 

This bull market is very different. 

Photographer: Drew Angerer/Getty Images

 Parallels abound between the frothy run up in stocks since April 2020 and the late 1990s dotcom boom. Consider the 600% gain in the shares of Tesla Inc., the GameStop Corp. short-squeeze played out with options on the “free” trading app Robinhood that drove the stock from less than $10 to almost $500, or the sudden surge in the shares of mortgage firm Rocket Cos. And, of course, the ongoing phenomenon that is Bitcoin, soaring from around $10,000 to more than $57,000 in a matter of months.

While similarities are seemingly everywhere, there are also significant differences. Knowing and understanding those differences will provide insight as to whether the current episode ends with a bang like in the first quarter of 2000, when the Nasdaq 100 Index peaked late that March before embarking on an 81.9% tumble that lasted until October 2002, or a whimper like in the fourth quarter of 2018, when the benchmark suffered a 22.8% drop between early October and late December only to be followed by a robust rebound right up until the Covid-19 pandemic took hold in February 2020.