Biggs’ Big Call: The Dot-Com Bubble

Our second story this week about Barton Biggs.
He was laughed at for predicting the Dot-Com Bubble, calling it “the biggest bubble in the history of the world,” but he was proved right just months later.

Remember the dot-com bubble? Right up until it burst, the Dow Jones Industrial Average had been posting 25 percent annual gains on average since 1995.

Nonetheless, in the face of these gains, Barton Biggs very publicly called the U.S. stock market “the biggest bubble in the history of the world” in a July 1999 Bloomberg TV interview.

He was laughed at until March 2000.

That's when the Nasdaq Composite Index plummeted by 78 percent. It then took nearly 15 years to recover. Biggs' accurate prediction helped propel him to the top of the financial world.

But Biggs didn't always get things right. In 2007, he failed to detect the coming Global Financial Crisis. He later admitted that failure to TV personality Charlie Rose, but said he had recovered by scooping up many underpriced stocks in 2008, while prices wallowed.

The balance of all his wins and losses made up an impressive career. At Morgan Stanley, he built the firm’s investment management division to over $400 billion in assets under management. His early calls on tech and emerging markets (especially China) led to billions of dollars in gains for clients.

In personal wealth, Biggs would have earned tens or hundreds of millions of dollars over his career, although no public estimate is available. He was managing a $1.5 billion hedge fund at the time of his death, where I estimate he earned from $30 million to $50 million a year from management and performance-based fees.

If you want to read Monday's newsletter about Barton Biggs, you can find it here. Watch for our email tomorrow, when you'll learn how Biggs lost out to some surprising competition in his first attempt to manage a stock portfolio.

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