Are we repeating the late 1990s dot-com crash?”

Lately, we have had several clients reach out with variations of that exact same question. With major stock indexes continually pushing toward record highs, driven heavily by a handful of massive tech giants, it is completely natural to look at today’s landscape and feel a sense of deja vu.

You may be worried about another technology bubble.

At first glance, the concentration of gains makes the anxiety understandable. However, when we look beneath the surface, today’s market fundamentals look vastly different from the speculative frenzy of 2000. In fact, a much more accurate parallel is March 1986, when Microsoft went public.

1999 vs. Today: Real Earnings vs Hype

At its core, investing is a simple concept: when you purchase a stock or index, you are a fractional owner of that business, entitling you to the future cash flows and earnings of the company.

During the late 1990s dot-com bubble, the market completely forgot this concept. The dot-com bubble was fueled by pure market speculation. Companies with no revenue, zero (or negative) profits, and “.com” in their name were awarded multi-billion-dollar valuations. When everything settled and the hype faded, they collapsed because there was no economic foundation supporting them.

Today’s market is fundamentally different. The market is primarily being led by a group of dominant tech enterprises commonly known as the “Magnificent Seven” – which includes Google, Amazon, Apple, Meta, Microsoft, Nvidia, and Tesla. Rather than relying on pure speculation, these companies are pillars of global commerce with historic profitability. Recent research data from FactSet¹ relays that aggregate earnings for the Magnificent Seven are up over 63% year-over-year, marking the strongest growth since the COVID markets. These businesses have massive cash reserves, strong balance sheets, and increasing corporate earnings.

A conversation earlier this week sparked an interesting perspective. Today’s market may look a lot like 1986 more than 1999. In March of 1986, Microsoft held its initial public offering (IPO). At the time, Microsoft was not a speculative company; it was a highly profitable, dominant business that fundamentally changed how the world operated. The tech industry today is deploying real-world infrastructure and generating real revenue, much as personal computing and productivity software did four decades ago.

The Undercurrents of Greed

While the top-tier businesses are fundamentally sound, bubbles can happen anywhere. Greed always finds a way to creep into a hot market, and we are starting to see those familiar red flags today.

Look no further than the massive hype surrounding the upcoming private-to-public listings, such as the highly anticipated SpaceX IPO. While SpaceX is a historic, industry-defining company, its targeted $1.5 trillion private valuation has already drawn warnings from Morningstar analysts², who suggest its actual discounted cash flows value the firm closer to $780 billion – roughly half the target. When investors blindly invest or trade excessively on margin (borrowed money) to chase these themes, it signals that emotions and greed are overriding disciplined investing.

Markets are bound by an unbreakable mathematical law: regression to the mean. When an asset class or individual sector experiences outsized gains that wildly outpaces its long-term average, it will eventually slow down, pull back, or consolidate to return to its historical baseline.

How We Handle the Heat: Our Trading Process

So, how do we protect your wealth from the psychological tug-of-war between the fear of missing out and the fear of a crash? We don’t guess, and we don’t time the market. We rely on a strict trading process rooted deeply in Modern Portfolio Theory (MPT).

Every client portfolio has a customized “target weight” for different asset classes based on their unique risk tolerance, risk capacity, and long-term financial plan. Because certain sectors have had increased volatility recently, individual pieces of your portfolio naturally drift away from their intended targets.

Our internal rule is straightforward: when any single asset class grows to be 25% above its original target weight on a relative basis (for example, a 10% target drifting above 12.5%), we systematically trim the holding to bring it back into balance.

Because of the volatility seen throughout this year, our process has triggered a significant wave of rebalancing. Over the past few weeks, we have been actively trimming allocations in these asset classes:

• Technology: Taking profits from the roaring AI, semiconductor, and software run.
• Emerging Markets: Locking in gains from international growth spurts.
• Microcap Stocks: Reducing exposure to volatile, smaller companies that surged alongside the broader market enthusiasm.

Trimming is Not Panicking

When we trim these sectors, it does not mean we think they are going to zero or that a crash is imminent. Rather, it means we are forcing the portfolio to do exactly what good portfolio management requires: selling high and buying low.

By shaving off the excess gains from the leading asset classes, we automatically reallocate those dollars into underappreciated asset classes that are currently trading at a relative discount. This disciplined process removes emotion entirely from the equation. It allows our clients to participate in secular growth cycles – like the software boom of 1986 or the digital infrastructure era of today – while maintaining a diversified portfolio. We are here for you, and please let us know if there is anything we can do to help.

Jake Spradlin, CFP®

© 2026 The Arkansas Financial Group, Inc., All rights reserved.

References

1. “‘Mag 7’ and Other 493 S&P 500 Companies Are Reporting Highest Earnings Growth Since 2021.” FactSet Insight, FactSet, 21 May 2026, insight.factset.com/mag-7-and-other-493-sp-500-companies-are-reporting-highest-earnings-growth-since-2021
2. “SpaceX: What Investors Need to Know About Its Enormous Upcoming IPO.” Morningstar Equity Research, Morningstar, 1 June 2026, www.morningstar.com/stocks/spacex-what-investors-need-know-about-its-enormous-upcoming-ipo

The Arkansas Financial Group, Inc. is a Fee-Only Financial Planning Firm located in Little Rock, AR serving clients in Arkansas and throughout the country.

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by The Arkansas Financial Group, Inc. [“AFG]), or any non-investment related content, made reference to directly or indirectly in this commentary will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this commentary serves as the receipt of, or as a substitute for, personalized investment advice from AFG. AFG is neither a law firm, nor a certified public accounting firm, and no portion of the commentary content should be construed as legal or accounting advice. A copy of the AFG’s current written disclosure Brochure discussing our advisory services and fees continues to remain available upon request or at www.arfinancial.com.

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