Corry Wang Profile picture
Jan 2, 2021 9 tweets 4 min read Read on X
1/ Lessons From The Tech Bubble:

Last year, I spent my winter holiday reading hundreds of pages of equity research from the 1999/2000 era, to try to understand what it was like investing during the bubble

A few people recently asked me for my takeaways. Here they are - Image
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
3/ LESSON #1: Everybody knew it was a bubble

Unfortunately, the quip "it's not a bubble if everyone says it is" just isn't true

Investors were comparing the internet sector to tulip mania as early as mid-98. Bernstein held an entire conference on it in June 99! ImageImage
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) Image
5/ LESSON #3: Nobody knew the bubble popped until months after it did

Nobody noticed in March 2000 when it finally popped. Our equity strategist (who bet his career on it!) didn't catch on until June ImageImage
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... Image
7/ LESSON #5: Most large cap tech stocks in the bubble had real businesses with strong fundamentals

The internet stocks were a sideshow. In 2000, the software sector had a $1 trillion market cap, 20% net margins, 20% annual growth

The problem? It was trading at 16x sales Image
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 Image
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...

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More from @corry_wang

Jun 23
1/ I just finished a 2.5 week trip through China today, my first visit in about a decade. I was there for family reasons, but it also happened to be my first time in the country as a tech industry observer

My amateur travel journal on the China tech market - Image
2/ OBSERVATION #1 - Yes, everything really does run on WeChat

If you're a foreign traveler visiting China, you really must set up WeChat Pay and Alipay beforehand. For me, this was the Chinese equivalent of Whatsapp + Chrome + Venmo + my credit card + my subway card + Doordash
3/ I didn't use cash a single time on my 19 day trip. Everybody took WeChat Pay, from Michelin-starred restaurants, to McDonalds, to butchers at the farmers markets in tier 3 cities, to performing musicians in national parks
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Read 28 tweets
Jan 21
1/ Just realized we recently passed the 30 year anniversary of Nathan Myhrvold's internal Microsoft memo "Road Kill on the Information Highway."

This 1993 memo is probably the most prescient set of 10-ish predictions ever written on the rise of the internet Image
2/ A hobby is mine to read books about the future, written in the past (how else could you grade the author's work?)

Let's grade Myhrvold's predictions:
3/ PREDICTION #1: The rise of a surveillance society - police bodycams, CCTV, 24/7 personal recording, and AI deepfakes

GRADE: A-

Pretty close! Image
Read 12 tweets
Oct 11, 2023
1/ Just caught up with a few investor friends in the consumer space last week about Ozempic and GLP1s

As far as I can tell, everything basically hinges on: how much does it matter that every consumer product in the world depends on a tiny cohort of super consumers?
2/ What happens if it turns out we’ve actually invented an all-purpose anti-addiction drug?

I suspect it’s not properly appreciated how many consumer categories follow a power law distribution of consumptiontheatlantic.com/health/archive…
3/ The top 9% of US adults account for 34% of US candy consumption Image
Read 7 tweets
Sep 19, 2023
1/ I was rereading Softwar (the 2004 book on Larry Ellison and Oracle) this morning, and the main thing that stood out to me is that pretty much every idea in software today was already basically around 20 years ago Image
2/ Twenty years ago, everybody in the software industry was already debating whether "best of breed" applications would triumph over integrated solutions from Accenture ("one throat to choke") Image
3/ Twenty years ago, everybody in software was already complaining about how every company's data was getting siloed across a hundred different databases daisy-chained together by hacky ETL scripts, instead of a single system of record Image
Read 7 tweets
May 15, 2023
1/ The more time I spend in the corporate world, the more I understand why everybody just hires ex-consultants and investment bankers

It’s not because McKinsey or Goldman Sachs actually teach you how to do the job, per se

It’s because hiring undergrads is a free rider problem
2/ Ultimately, new graduates don’t actually know how to do anything

This is less intended as a value judgment (I was the same when I graduated from Amherst), and more as a statement of fact that elite American universities are not intended to be trade schools
3/ Even if you already know “hard skills” like accounting or SQL, you usually still need 2-3 years to acquire the requisite soft skills to work independently, eg how to present to execs, how to make your ideas clear, how to convince coworkers to do stuff they don’t want to do…
Read 8 tweets
May 14, 2023
It’s an awesome feeling when you come across a new blog or Substack, read a half dozen of their posts, and think “wow, every single one of these is good.” Only happens to me once or twice a year

Anyways, that latest blog is dynomight.net
I have no idea who @dynomight7 is but you’re cool, keep up the the good work
Some posts I’ll call out:

Why first discoveries in science are overrated, given the frequency of simultaneous invention (good ideas tend to be products of their unique time and place, at which point they become obvious to everyone around them)

dynomight.net/wta-science
Read 5 tweets

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