Markets are gripped by déjà vu: AI mania and mega-cap dominance echo the dotcom boom, only this time the companies are bigger, richer, and harder to ignore. Passive flows keep pushing indices higher, tempting investors to stop worrying about fundamentals and just buy the market. But history — and 2025’s surge in precious metals — suggests survival demands more than blind faith.
Introduction
In 1997 I walked into SBC Warburgs in London after five years with the Swiss Bank Corp in Sydney. The City was buzzing: everyone had a deal, everyone had a dotcom pitch, and the pub talk never failed to drift into what web address would be worth a fortune in 5 years. It felt like the future was arriving all at once — and in a way, it was. But markets have a way of humbling true believers. Tony Dye knew that. As investment director at Phillips & Drew, he was the stubborn value man in a momentum market. Dubbed Dr Doom, he warned that equities were wildly overpriced. He refused to join the party. Clients ran as fast as they could. UBS the parent of P&D gave up, they were too busy dealing with their own problems after a reverse takeover by SBC. In March 2000, just days before the Nasdaq rang the bell, Dye was given the boot. Weeks later it was all over. Dye was right. But in markets, being right too early is the same as being wrong. John Maynard Keynes said it best: markets can stay irrational longer than investors can stay solvent. I watched this unfold from my desk at Broadgate near Liverpool Street Station. It left a scar and a question: does resisting the tide ever pay? It’s not fun being Dr Doom during a boom.
Fast forward twenty-five years and the déjà vu is strong. Artificial Intelligence has replaced the internet as the big idea. A handful of trillion-dollar stocks dominate the indices. Passive flows keep pumping them higher. To sit out is to risk being left behind. So, should we still care about fundamentals — or just buy the market and stop worrying?
Historical Parallel
The dotcom boom was a heady mix of hope and hubris. Between 1995 and 2000 the Nasdaq quadrupled, fueled by companies with no profits and no plan beyond a website. When the music stopped, it stopped brutally. The index lost nearly 80% in two years.
Billions evaporated. Enron and WorldCom added scandal to collapse. The lesson endures: revolutions can be real, but that doesn’t make every stock a good investment. Valuations matter, eventually. And it wasn’t all wreckage. Amazon survived. Google was born as the bubble burst. In fact Google’s search engine killed the value of web addresses. Infrastructure built in the frenzy — broadband, data centres, digital rails — laid the foundation for the growth that followed. Dotcom destroyed wealth, but it also planted the seeds of today’s mega-caps.
Today’s Market
Today’s market feels eerily familiar and that’s leaving the crypto bros to one side. Once again, a new technology has investors convinced the rules have changed. Once again, a few names dominate. The so‑called Magnificent Seven — Apple, Microsoft, Amazon, Alphabet, Meta, Nvidia, Tesla — make up almost a third of the S&P 500.
The difference? Today’s leaders print money. Nvidia’s recent quarterly results showed revenue rose 55.6% year-over-year to $46.74 billion, that’s more than most dotcom darlings were ever worth. But sheer size brings its own risks. And flows have changed. Passive investing is now the default. Every ETF purchase, pushes more money into the same names. It’s a self‑reinforcing loop. Technology meets speculation, again.
The Case for Ignoring Fundamentals
Getting into the math, Standard & Poor’s SPIVA scorecards show in the U.S., 87% of large‑cap funds lagged the S&P 500 over the last decade; over 20 years the failure rate hits 95%.
Australia tells the same story, diversification is basically non-existent. In Australia, half your portfolio is banks and miners before you’ve even started. CBA is the most expensive bank in the developed world and all it really does it mortgages and pay fully franked dividends. 85% of domestic equity funds and 94% of global equity funds
underperformed across 15 years. Even in 2025’s first half, seven in ten Aussie funds trailed their benchmark. Momentum makes the case stronger. Apple, Microsoft, Amazon — compounding machines. Nvidia, the poster child of AI, turned from $100bn to $2trn in just five years. Shorting that on valuation grounds was career suicide. Meanwhile central banks keep stepping in when markets wobble — 2008, 2020 — feeding the sense that downside is cushioned. Put it together and the argument is simple. Indexing works. Momentum is real. Policy backstops give comfort. In this world, ignoring fundamentals doesn’t look lazy. It looks rational.
The Case Against
Markets don’t ring a bell at the top — they whisper, then they scream. Even giants stumble when the cost of money rises. Ask Nasdaq investors who lost a third in 2022 when rates spiked. Concentration risk is the clearest warning light. Ten stocks now make up 35% of the S&P 500. In Australia, banks and miners are half the ASX 200. The top five names alone — CBA, BHP, Westpac, NAB, ANZ — carry 30%. Diversification? More illusion than reality. Add the wildcards: geopolitics, Big Tech regulation, sticky inflation. Central banks may soften blows, but they can’t repeal valuation. Momentum delays gravity. It doesn’t cancel it.
Synthesis
The way I see it, we’ve got two scripts in front of us. One is 1999: momentum looks unstoppable until it isn’t. The other is 1985: new tech really does power decades of growth. Today’s market has shades of both. The trick isn’t to pick the script, it’s to stay solvent whichever one gets a tick.
The lesson? Fundamentals lag, but they never disappear. The challenge is surviving long enough to benefit when they finally assert themselves. That means resisting the temptation to call the top, while avoiding the hubris of believing cycles have been abolished.
Conclusion
Survival demands balance. Ride the market but build shock absorbers. Diversify. Drip-feed capital. Don’t make timing your religion.
And add ballast. In 2025, precious metals have reminded us why they matter: gold up nearly 39% YTD, silver 47%, platinum 58%. These aren’t fads; they are hedges. In an era where governments reach for the printing press at every stumble, hard assets stand apart. They can’t be conjured into existence by policy.
So don’t stop worrying — worry smarter. Own the market winners, or at least some of them, but better still also own something that has value when gravity returns. Steroids may delay the fall, but when it comes, you’ll want more than hope in your portfolio.