In 1999, we lost the rational, all that mattered was the irrational, says Jim Cramer

Key Concepts:

• Market Rationality vs. Irrationality
• .com Bubble (late 1990s)
• "Year of Magical Thinking"
• Legitimate vs. Fraudulent Stock Movements
• D-Waves (presumably referring to downturns or corrections)

Comparison to the .com Bubble:

The speaker emphasizes that the current market is not analogous to the .com bubble era of the late 1990s. He acknowledges the existence of irrational exuberance and potential fraud, but argues that these are occurring alongside legitimate growth and investment opportunities in strong companies.

The .com Bubble Experience:

• Late 1990s Market: The speaker recalls a strong market in the 1990s, even with higher interest rates.
• Fall of 1998 Onward: The market began to exhibit signs of irrationality with stocks like "Circle Internet or Figma or Bullish" experiencing inexplicable rallies.
• 1999: Loss of Rationality: The market became dominated by irrational behavior. Hundreds of companies went public, most of which failed within two years. This soured an entire generation of investors.
• 2000: Pure Froth: The market was characterized by companies with no revenue or viable business plans. Many companies pursued the same ideas (search engines, dark fiber, internet retail) without offering anything unique.

Current Market Assessment:

• Fraud vs. Legitimate Moves: The speaker acknowledges the presence of fraud in the current market but stresses that there are also legitimate and justifiable movements in the stocks of strong companies.
• "Year of Magical Thinking": The speaker uses this term to describe the current market environment, implying a degree of irrationality or over-optimism.
• Interdependence of Good and Bad: The speaker argues that the "runs" (positive momentum) in good stocks are often intertwined with the "runs" in bad stocks. You can't have one without the other.
• Not Like 1999/2000: The speaker explicitly states that the current market is not comparable to the end of 1999 or March 2000 (the peak of the .com bubble).

Conclusion:

The speaker advises against exiting the market based on fears of a .com bubble-like collapse. While acknowledging the presence of irrationality and potential fraud, he emphasizes that the current market also contains legitimate investment opportunities in strong companies. The key takeaway is to differentiate between legitimate growth and speculative bubbles, and not to let the presence of the latter deter investment in the former.