Earny Asks: The Market Is Like a Party and Parties Weren't Meant to Last
Today, we discuss:
1999
Do you remember 1999? It was the kind of time that people wrote songs about.
You see, we thought the party was about to end. There was something called the Year 2000 Bug or Y2K bug. As I recall, legacy computer code written before the mid-1990s didn’t have a way of rolling over the date to account for the 2000s. And that legacy code ran lots of critical infrastructure! So, as the ball dropped on Times Square, nobody was certain whether airplanes would fall out of the sky, or your bank would lose access to your account, or your Dot-com era employer might just vaporize along with the internet.
Prince wrote 1999 back in the 1980s, before the Y2K bug was a thing. But it was the song of the year as we all worried about what might happen.
I was on TheStreet’s Stocks & Markets podcast this week, and after taping, James “Rev Shark” DePorre reminded us that the party in 1999 was driven by the tons of money that was being pumped into the system in order to correct the Y2K bug. So, tech stocks ripped higher while old economy stocks dropped.
You can see that clearly in the chart below where the Nasdaq soared into early 2000, while Warren Buffett's Berkshire Hathaway (BRK.A) (BRK.B), which invested in those old economy companies, dropped. The relationship reversed as the economy soured.
