Editor's Note: This article was originally published at 9 a.m. on Real Money on Aug. 26. Sign up for a free trial of Real Money.
As everyone knows by now, the S&P 500 breached 2000 yesterday. Round numbers are pretty arbitrary, but they do have significance. Let's discuss.
I had a little extra time yesterday afternoon, so I set down to reading a set of lecture notes from Peter Thiel's class at Stanford. Quick story: I heard through the grapevine that the faculty at Stanford was very unhappy at the prospect of Peter Thiel teaching a class. After all, he was this unwashed practitioner without a PhD. After a bit of wrangling, the university listed his class. It filled up in the span of a minute.
Peter Thiel was talking at length about his experience in the 1990s. We tend to think that the 1990s was all a stock-market bubble, but nothing could be further from the truth. It started as a really bad, awful recession, and the recovery from it was very weak. If you were an investor at the time, you looked around and saw that emerging markets were a basket case, uninvestable. Europe was stagnant. Then you had the Asian financial crisis and the Russian debt default. In a lot of ways, tech was the only asset class that wasn't unattractive for some reason.
So throughout the 90s, even though stocks went up a lot, the market kind of limped along from crisis to crisis and there was a lot of lingering pessimism throughout the decade on account of the recession and the subsequent "jobless recovery." It was a long bull market, but it didn't feel like one. People were pretty much miserable up until 1998.