The Piton Investment Team often researches historical patterns in markets to have data available that could be a guide to current and upcoming trends in the market. It is not straightforward how, or whether, a previous trend is likely to play out in the current era. Some trends have more historical data available (there are decades of data about market patterns during election years, for example) than others. Among this week’s data, the team looked at a pattern that was intriguing enough to generate discussion. The Bespoke Investment Group (bespokepremium.com) publishes regular market research, and this week the team focused on their comparison of Netscape in 1994-1998, when internet browsers were new and developing rapidly, with OpenAI, from the time that ChatGPT become publicly available as a tool. The NASDAQ composite index is dominated by technology stocks and can in some ways be viewed as an overview of performance of the tech sector at various times. Bespoke decided to compare the performance of the NASDAQ over the 875 days since ChatGPT became public with the first 875 days of the Netscape web browser being public.
There is an evident similarity in the pattern of performance.
The next chart quantifies the difference between the two time periods:
Especially in light of current conversations about whether there is now an “AI Bubble” comparable to the “dot-com bubble” of 2000, the comparison raises important but difficult questions: Does this suggest that the NASDAQ will soon spike as it did in the late 90’s? Will the “bubble” burst after that? The Piton Investment Team is committed to protecting the wealth of Piton clients and does not seek volatile opportunities, but volatility in the tech sector as represented by the NASDAQ index would have broad and profound impact on the markets and other investments, not least because key technology companies make up so much more of the markets than they did in the 1990’s. For now, then, the team will check on this pattern, and stay vigilant for other data and patterns that confirm or run counter to it. Whatever pattern emerges, the goal and commitment will remain the same: to grow and protect the wealth of Piton clients so that they have means to pursue fulfilling lives.