How quickly memories fade. Consider the following—in 1999, a handful of highflyers in Information Technology were trouncing the rest of the market while Britney Spears was topping the Billboard charts. Fast forward nearly 20 years. Spears is re-releasing her hit “Baby, one more time,” on vinyl, and, as shown, a basket of tech stocks is dominating in a way similar to the heyday of the dotcom era.

So why does this matter? It highlights the market extremes hiding in plain view. Distortions created during the 1990s tech bubble are easy to see in hindsight, however, investors seem to be having a difficult time recognizing them in the present. The remarkable strength of so-called FAANG*, we believe, has led to indifference toward risk by investors and inflated returns of the S&P 500 just as “CESDO” (Cisco Systems, Inc., EMC Corporation, Sun Microsystems Inc., Dell Inc., and Oracle Corporation) propped up the broader Index back in the late ‘90s.

While we aren’t making a call on where the market goes from here, we would note when the tech bubble burst in the spring of 2000, investors quickly rediscovered the importance of valuations and financially sound businesses. As disciplined bottom-up investors, a renewed focus on the intrinsic value of companies would be music to our ears.