The Los Angeles Rams are a different team today than they were 22 years ago, but are we different investors? That year, I managed a team of senior brokers servicing the most actively trading clients of Charles Schwab. My employees had a fun pool for the NFL playoffs, and I was given the wild card Tennessee Titans, who made it to the big game to face the Rams. From October 19th, 1999, through December 31st, 1999 (over 10 short weeks and only a month before the Super Bowl), the NASDAQ soared a scorching +51%. But the market was riddled with new, unproven technology companies going public for the first time. People had faith in the new kids on the block though, and football fans went crazy when another new kid on the block, Kurt Warner, led the Rams to victory – becoming the first undrafted quarterback and the first year-one starter to win the Super Bowl. One of the most talked about things on Monday morning was the stop of the Titans wide receiver one yard short of a game-winning touchdown in the last seconds. But at Schwab, there was even more talk about the commercials, because the appetite that year for new technology companies was voracious. So what happened to the tech companies who aired the most popular ads that year?
You can watch most of the ads on YouTube, and it makes for a fun time (hint: there were LOTS of animals!). Many established companies added a tech slant to their ads, and many newer companies like WebMD and eTrade survived the economic slowdown that would quickly follow. But the majority of poorly funded, unprofitable companies are no longer – names like OurBeginning.com, Epidemic Marketing, and my favorite unprofitable dotcom posterchild, Pets.com, all went out of business. Numerous others were bought out and ultimately shuttered or liquidated. The creative media makes ads with fun, punchy story-telling and sexy graphics, but when it comes to successful investing, it is critical to keep a cool head and do the hard math.
Today, celebrities like Matt Damon, Gisele Bundchen, and Tom Brady are promoting companies like Crypto.com, the Singapore-based cryptocurrency application, and FTX, the Bahamian cryptocurrency exchange. Budweiser sold out NFT digital images of vintage beer cans in just an hour last fall, and someone recently paid $450,000 to be Snoop Dogg’s neighbor in his Sandbox Metaverse. These pitches almost all have the “fear of missing out” slant baked-in to drive new business and dollars into crypto, NFT, and Metaverse investments. In 2000, the tech-heavy NASDAQ peaked only a month after the Super Bowl, and then fell a whopping -76% by the autumn of 2002. The 2000 Super Bowl has often been called the “dotcom bowl.” Beware as celebrity endorsers pitch various forms of Crypto, NFT’s, and the Metaverse this Sunday during Super Bowl LVI. If any lesson came from Super Bowl XXXIV it should be, in my opinion, have fun, but avoid letting ads drive your most important investment decisions. During that time after Super Bowl XXXIV a $1,000,000 portfolio of lower-quality tech stocks would have dropped to $240,000, losing a whopping $760,000. I lost a few dollars in my work pool back then, but I didn’t join the hype and chase high-flying tech stocks only to watch my retirement portfolio crash. History does not repeat itself, but I believe it rhymes.