Jeremy Schwartz: Today Is Nothing Like The 2000 Tech Bubble

Jeremy Schwartz argues that today’s market is not like the 2000 technology bubble. The nine stocks Jeremy Siegel criticized then all had triple-digit price-to-earnings ratios; most major technology-related stocks now trade in the 20s. The expanded technology sector, about half of the S&P 500, trades at roughly 22 times forward earnings, below its 30-year median of about 30. Tesla is an outlier at roughly 150–200 times earnings, while Apple is in the high 30s. Schwartz sees no broad public-market bubble comparable to 2000 and considers valuations reasonable.

Schwartz says earnings growth, particularly among large companies exposed to AI, is driving the market more than interest rates or geopolitics. He also sees investor sentiment as skeptical rather than uniformly euphoric. AI productivity gains have not yet meaningfully spread to the average company, and Russell 2000 profit margins remain around levels seen 20 years ago. AI could add inflationary demand in the short term while also creating deflationary effects, but Schwartz does not expect a massive Federal Reserve hiking cycle. He says some technology layoffs may reflect earlier overhiring, even as AI is already affecting some companies and workforces; he cited Microsoft severance packages for 27,000 employees, or 27% of its workforce.

Schwartz sees SpaceX’s ability to build power, cooling, and computing infrastructure as a potential competitive advantage. He said the company has three gigawatts of compute and called ten additional gigawatts a reasonable possibility. At $50 billion per gigawatt, that scale would imply $500 billion in revenue, within a $500 billion-to-$1 trillion scenario Elon Musk has discussed. Schwartz sees a possible rationale for combining SpaceX and Tesla through AI, connected cars, Starlink, and compute, and considers SpaceX acquiring Tesla the likelier structure. WisdomTree’s U.S. and European space ETFs hold SpaceX at roughly 15–17%; Schwartz said he is evaluating greater exposure through investment committees and active funds.

Schwartz argues that portfolios should reflect investors’ circumstances rather than default to a 60/40 stock-bond allocation. He noted that 10-year TIPS yields were around 2.5%–3%, near their highest level in almost 30 years, and that a 2.5% return would double money in 30 years. He sees bonds as potential protection against adverse events, unlike the earlier period when low yields and inflation made them “risk with no return.” WisdomTree has offered capital-efficient overlay funds since 2018, combining exposures such as stocks, bond futures, gold, and long-short strategies. One example pairs 90 cents of stocks with 60 cents of bond futures per dollar invested; futures can take exposure above 100%, with short-term interest rates determining financing costs.

Schwartz says WisdomTree has spent seven years investing in a tokenization platform, starting with liquid assets such as Treasury exposure and large-cap and technology stocks rather than illiquid private assets. He sees on-chain finance as well suited to agents because it is efficient, operates around the clock, and is permissionless. However, liquidity and 24/7 trading could face hiccups, including limited monitoring outside normal market hours. The host cited a Citi estimate that $3 trillion to $10 trillion of assets could be on-chain by 2030 and said WisdomTree’s on-chain money-market product had more than $1 billion in assets.

Schwartz estimates that roughly $8 trillion to $9 trillion in checking accounts earns zero, with $10 trillion or more potentially receiving an inadequate rate. At a 4% return, he says consumers could earn about $350 billion that banks would not receive. He sees agents’ access to financial services as a competitive challenge for banks and expects a meaningfully higher cost of capital to be a long-term headwind. WisdomTree manages about $170 billion globally, with roughly a quarter in commodities; Schwartz says U.S. investors are underexposed to commodities and alternatives. He rejects calling Bitcoin “digital gold,” but sees a reasonable case for it as a portfolio diversifier and hedge. WisdomTree models have allocated up to 5%, initially funded from bonds in 60/40 portfolios and later from stocks.