→ Module 2 1990s Investing Strategy: How to Profit from the Tech Boom and Bull Market

1990s Investing Strategy: How to Profit from the Tech Boom and Bull Market

The 1990s were a golden age for investors, featuring the longest bull market in U.S. history and the dawn of the Internet Age. Here's your complete guide to investing like it's 1995.

Step 1: Understand the 1990s Market Landscape

Key Economic Drivers

Tech Revolution (PCs → Internet)
Low Inflation & Interest Rates
Globalization Acceleration
Strong GDP Growth (Avg. 3.8% annually)

Available Tools (Pre-Internet Dominance)

Newspapers: Wall Street Journal, Investor's Business Daily
TV: CNBC (launched 1989), Wall Street Week
Broker Research: Merrill Lynch, Goldman Sachs reports
Early Online: AOL (1991), Yahoo Finance (1996)

Step 2: Best Investment Strategies

1. The "Four Horsemen" of Tech (Mid-90s)

Microsoft (MSFT) - Windows 95 dominance
Intel (INTC) - Chip demand explosion
Cisco (CSCO) - Internet backbone
Dell (DELL) - PC direct sales model

Strategy: Buy & hold through 1999

2. Dot-Com Bubble (Late 90s)

Early Winners (Pre-1999):

Amazon (AMZN) - IPO 1997
eBay (EBAY) - IPO 1998
Yahoo (YHOO) - IPO 1996

Bubble Warning Signs (1999):

Companies with no profits soaring
"eyeballs" over earnings valuations

3. Old Economy Stocks

Walmart (WMT) - Retail dominance
GE (GE) - Jack Welch era
Coca-Cola (KO) - Global expansion

4. International Markets

Japan (early 90s crash → value plays)
Asian Tigers (Hong Kong, Singapore, S. Korea)

Step 3: How to Research Stocks in the 90s

1. Fundamental Analysis

P/E Ratios (under 20 was reasonable)
Revenue Growth (15%+ ideal)
Dividend History (for blue chips)

2. Sources of Information

Value Line Investment Survey
S&P Stock Reports
Company Annual Reports (mailed)

3. Technical Analysis (Gaining Popularity)

Moving Averages
MACD
Chart Patterns

Step 4: Executing Trades in the 90s

Process

Call your broker ($50+ commission)
Market orders took minutes/hours
Settlement: T+3 (trade + 3 days)

New Developments

Online Trading Emerges (E-Trade 1996)
Discount Brokers (Schwab lowered fees)

Step 5: Risk Management

1. Diversification

40% Technology
30% Blue Chips
20% International
10% Cash

2. Bubble Warning Signs

Nasdaq P/E over 100 (1999)
IPOs doubling on first day
"Day Traders" quitting jobs to trade

3. Exit Strategy

Take profits at 100% gains
Rebalance annually
Move to value stocks in 1999

Sample 1995 Portfolio

Stock	Sector	Why
MSFT	Tech	Windows 95
INTC	Semis	PC demand
WMT	Retail	Supercenter expansion
KO	Beverage	Global growth
JNJ	Healthcare	Steady performer

Historical Performance

$10,000 invested in 1995 → $50,000+ by 1999
Microsoft: +1,000%
Dell: +2,000% (1990-1999)

Key Lesson: The 90s rewarded tech visionaries but punished latecomers to the bubble.