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Tech enters bear territory
Nasdaq bear markets: 2000-02 (-78%), 2008 (-56%), 2018 (-24%), 2020 (-33%), 2022 (-37%). Recovery times vary enormously — the dot-com bust took 15 years; 2020 took 4 months.
Editorial commentary written by ALAN analysts. Figures cited below are analyst-authored context — they are not derived from the chart above and may reflect different windows or sources.
2000 was a profitless speculation bubble (80% of IPOs had no earnings). Today's tech leaders generate massive free cash flow. Comparing every tech decline to dot-com is analytically lazy.
Tech bear markets driven by multiple compression (2022: rising rates) recover much faster than those driven by earnings collapse (2000-02: dot-com revenue evaporation).
Tech has delivered ~14% annualized since 2010 vs. ~11% for the S&P 500. The premium compensates for higher volatility. Eliminating tech exposure after a bear market locks in the pain without capturing the recovery.
Before extrapolating a tech bear market, identify which kind it is: declines driven by rising rates compressing valuations have recovered far faster than those driven by evaporating earnings. Review whether your holdings' cash flows are intact — and if they are, rebalancing back to target has historically served investors better than eliminating the exposure after the damage.