→ Module 2 1995 Investing Strategy: Capitalizing on the Internet Revolution

1995 Investing Strategy: Capitalizing on the Internet Revolution

The mid-1990s marked the dawn of the Internet Age and the beginning of an unprecedented bull market. Here's how to invest like it's 1995, positioning yourself for the coming tech boom while managing risks.

Step 1: 1995 Market Landscape

Key Economic Drivers

Strong GDP growth (2.7% in 1995, accelerating to 4% by 1999)
Low inflation (2.5-3% range)
Tech revolution begins (Windows 95 launch, Netscape IPO)
Federal funds rate at 6% (stable monetary policy)
Bond market turbulence (Orange County bankruptcy aftermath)

Available Investing Tools

Early online brokers (E*Trade launched 1992, $14.95 trades)
Yahoo Finance (founded 1995)
CNBC (becoming essential for investors)
Printed Value Line reports (still widely used)

Step 2: Best Investment Strategies

1. The Internet Infrastructure Play

Top Picks:

Cisco Systems (CSCO) - Internet backbone equipment
Intel (INTC) - Pentium processor demand
Microsoft (MSFT) - Windows 95 dominance
Netscape (IPO August 1995) - First major internet IPO

Strategy: Focus on companies building the internet's plumbing before the dot-com hype.

2. Old Economy Value Stocks

Undervalued Gems:

General Electric (GE) - Jack Welch turnaround
Coca-Cola (KO) - Global expansion
Walmart (WMT) - Retail dominance

Why: These provided stability during tech volatility.

3. Telecommunications

Growth Areas:

Wireless carriers (McCaw Cellular acquired by AT&T)
Fiber optics (Lucent Technologies spin-off)

4. International Markets

Emerging Opportunities:

Asian Tigers (South Korea, Taiwan tech growth)
Latin America (Post-1994 "Tequila Crisis" recovery)

Step 3: Research & Analysis

Key Metrics to Watch

P/E ratios (Market average ~15, tech ~25)
Revenue growth (20%+ for tech leaders)
Cash flow (Critical for survival in eventual downturn)

Information Sources

The Wall Street Journal (Tech section expanding)
WIRED magazine (Spotting emerging trends)
IPO prospectuses (Available at broker offices)

Step 4: Trade Execution

How Investing Worked

Place order via phone ($30 full-service) or early online ($15 E*Trade)
Market orders executed within minutes
Confirmations mailed within 3 days

New Developments

NASDAQ becoming tech hub
After-hours trading introduced
First index ETFs launched (SPDR in 1993)

Step 5: Risk Management

Diversification Approach

40% Technology (leaders only)
30% Blue chip value stocks
20% International
10% Cash

Warning Signs

Excessive IPO valuations
Companies adding ".com" to names
Margin debt increasing

Sample 1995 Portfolio

Stock	Sector	1995 Price	2000 Price
Microsoft	Tech	$5	$60
Cisco	Networking	$2	$80
Intel	Semiconductors	$5	$75
Walmart	Retail	$12	$70
GE	Industrial	$15	$60

Historical Performance

$10,000 invested in 1995 → $100,000+ by 2000
Tech leaders returned 1,000-4,000%
Even "old economy" stocks tripled+

Key Insight: 1995 was the perfect time to invest in quality tech infrastructure plays before the dot-com mania, while maintaining exposure to stable value stocks.