The Davis Dynasty Book Review
Shelby Davis was an investor who began his investing career in the post-World War II era, focusing on undervalued insurance companies. At that time, the sentiment towards stocks was very negative and he invested in companies that were out of favor. Not only is The Davis Dynasty an investment book, it is also a biography and a great historical reference. In this review, I will be focusing on mainly the things that pertain to investing.
Secular Stock Market Cycles
Shelby Davis, born in the early 1900s, lived through many secular market cycles. These market cycles generally result in valuations rising or falling over extended periods that can last up to 20 years. This is very important because it impacts the returns investors get.
Periods where valuations are rising provide an enormous tail wind. Two recent periods most investors today will recognize are the 1982 to 2000 period and the period that started in 2009. As of this writing (May 2025), we know the current secular bull market is getting long in the tooth and that valuations are high. It's not yet clear when the current cycle will end (or if it's already ended). The definitive start and end points are only clear in hindsight.
There were secular bear markets from 1929 to 1949, roughly 1965 to the early 1980s, and 2000 to 2009. The exact start and end points can be nuanced, but these periods share characteristics: high valuations (at the start) and government policy missteps. In the 1920s, excessive leverage fueled asset prices, while in the mid-1960s, valuations rose faster than earnings.
Most investors focus on short term trends. During many of these secular cycles, there are many smaller bull and bear markets. In the current secular bull market, there have been many corrections and multiple bear markets. When zooming out over a longer period, however, the secular trend remains intact whether it's heading towards higher or lower valuations. The table below shows a very long slump (1929-49) that was followed by a 17-year period in which the Dow Jones Industrial Average (DJIA) rose at a rate of over 11% per year.
DJIA Secular Cycles
| Period | Start Value | End Value | Years | CAGR* | Start P/E | End P/E |
|---|---|---|---|---|---|---|
| 1929–1949 | 381.17 | 200.00 | 20 | -3.17% | 25.0 | 6.6 |
| 1949–1966 | 161.60 | 995.00 | 17 | 11.28% | 6.6 | 17.8 |
| 1966–1982 | 995.00 | 1046.54 | 16 | 0.32% | 17.8 | 7.7 |
*Compound Annual Growth Rate (CAGR)
The Late 1940's
In the 1940's, bonds were the favored investment despite some real disadvantages:
- high tax rates on interest
- high inflation
- financial repression
During this period, holding cash and investing in bonds generally resulted in losses, exacerbated by taxes on interest. While bonds were seen as safe, stocks were considered extremely risky. This was a stark contrast to market tops like 1929, where stocks were generally perceived as safe.
Income tax rates had a huge impact on the wealthy who were the main consumers of bonds. Depending on one's income, the top tax bracket hit 94% at one point. Surprisingly, this didn't discourage many wealthy investors from buying bonds.
The 1940's also had periods of high inflation. Average annual inflation was 5.5% for the decade and was quite volatile. So, if the income taxes weren't eating away enough of the investor's returns, inflation ensured that investors would lose purchasing power when factoring in both of these problems. Nominal yields did not keep pace with wartime and post-war inflation.
After the war, the Federal Reserve manipulated interest rates by keeping them artificially low. The U.S. government wanted to keep borrowing costs low to manage the growing national debt, which surged to over 120% of GDP by 1946. The Federal Reserve and U.S. Treasury entered into a cooperative agreement to cap interest rates on government debt. Longer term rates were capped at 2.5%.
Despite all the problems and the disadvantages of investing in bonds, stocks provided plenty of great opportunities. By the end of the decade, many stocks were trading below 10x earnings, many with dividend yields of over 5%.
Below is an illustration of the relationship between the DJIA index and valuations over the secular bear market that lasted throughout the 40's.
DJIA – Secular Bear Market (1929–1949)
| Year | DJIA Level* | Key Event | Avg P/E Ratio* | Dividend Yield* |
|---|---|---|---|---|
| 1929 | 381 (Sept high) | Market peak before crash | ~32× | ~2.9% |
| 1932 | 41 (July low) | Market bottom | ~6–8× | ~10% |
| 1933 | 90 | New Deal begins | ~9–10× | ~6–7% |
| 1937 | ~190 | Recovery peak | ~17–18× | ~4% |
| 1938 | ~100 | Second recession starts | ~11× | ~6% |
| 1945 | ~195 | WWII-fueled recovery | ~15–16× | ~3.5% |
| 1949 | ~200 | Postwar recovery, pre-1950s boom | ~9–10× | ~6.5% |
*Approximations based on the variabilities within any given year/period
As seen in the table above, the onset of World War II further depressed stock prices as the war effort shifted economic priorities. The Depression era was characterized by deflation and a shortage of liquidity due to the money supply. Roosevelt's devaluation in 1933 contributed to a recovery. The absence of safeguards like the FDIC exacerbated the economic pain. Note the recovery that took place from 1933-1937 which didn't last.
The 1950's Bull Market
The 1940s were marked by poor stock market performance and the popularity of bonds due to risk aversion. By the early 1950s, only about 4% of people owned stocks. This is hard to imagine today, when the majority own stocks directly or indirectly (through instruments like 401(k)s).
The secular bear market ended in 1949, and the subsequent bull market saw exceptional returns. However, even five years into this new bull market, stock ownership was still low. Typically, retail investors enter the market late in the cycle, missing out on significant gains.
Magazine covers and articles are commonly regarded as the best contrarian indicators. "Is Wall Street Obsolete?" appeared on the cover of Fortune in 1954.
Shelby Davis was both an investor and a stockbroker. Despite his impressive returns, he didn't attract many clients. In fact, most of his money was made through investing his own capital. Most retail investors chase hot tips and sexy new industries rather than focus on boring and undervalued assets like insurance companies.
These out-of-favor sectors and industries may not attract attention until they establish a long track record of high returns. By this time, the opportunity may have passed. Davis was active in various clubs and often rose to leadership positions in them, yet his investment ideas were largely ignored.
Davis was also very frugal, avoiding debt/leverage except when it came to investments. This approach magnified his gains. The frugality of his personal life may have obscured the extent of his success, limiting his appeal to potential clients. He didn't buy an expensive car or a large mansion.
Nifty Fifty
In the 1960's, retail investor participation in the stock market increased, but many of these investors had already missed at least half the secular bull market. Unfortunately, this behavior is typical because a long period of rising prices is needed to attract investors.
By around 1966, a new secular bear market began, following a period of high stock valuations after delivering returns of over 11% going back to 1949. Real returns (adjusted for inflation) over the next 15 years would be negative. By this time, Shelby Davis had built an impressive portfolio built around insurance companies. Steering clear of popular themes, including the Nifty Fifty, offered downside protection in the next challenging period.
In the late 60's, the Nifty Fifty era began, characterized by high valuations for perceived "can't lose" companies. Despite the great performance and quality of these companies, overpaying for stocks resulted in poor performance. General Electric, Coca-Cola, and IBM were just some of the companies included in the Nifty Fifty. The demise of the Nifty Fifty is a classic illustration of the Davis Double Play working but in reverse. (We will cover this important concept in detail later in this review.)
The 1970s Inflation and Bear Market
The trend based on the Nifty Fifty narrative was unsustainable. A major recession in 1973-1974 put an end to it. The 1970s were marked by unexpected economic problems like oil shocks and high inflation. By this time, Shelby Davis Jr. had also entered the business. He founded is own investment management firm (eventually becoming Davis Select Advisors).
During this period, Shelby Davis Sr. and Jr. were managing investment funds separately. Even though insurance was generally a poor-performing industry at this time, Shelby Davis Sr. continued to hold insurance companies. Shelby Davis Jr.'s fund also struggled in the 1970s. However, it managed to outperform most other funds, which was enough to stay in business.
Geico, despite having been one of Warren Buffet's favorite insurance companies, nearly failed in the 1970s. Geico's troubles stemmed from expanding its customer base beyond government employees, which adversely affected its profitability. The company eventually brought in new management, along with Warren Buffett, who implemented a turnaround strategy. Shelby Davis Sr. disagreed with this strategy due to shareholder dilution and sold his stake. This turned out to be a big mistake because the company eventually recovered. The lesson here is that although shareholder dilution is generally not a preferred means to raising capital, there are certain situations where it is necessary.
Throughout the book, there are references to Warren Buffett and Benjamin Graham. Buffett sold his partnership in 1969 because he felt the market was too overpriced (somewhat similar to today where Berkshire Hathaway holds over $300 billion in cash). This behavior often precedes a market downturn, with the buildup of cash being temporary as better opportunities eventually present themselves.
The 1980s Bull Market and Falling Interest Rates
The early 1980s saw a significant shift in interest rates, which marked the end of a 30 to 40-year bond bear market that began after World War II. In the 1940s, people favored bonds despite the unfavorable conditions. By the early 1980s, with the 10-year US Treasury bond yielding 15%, bonds were out of favor. Paul Volcker's commitment to reducing inflation made these high-yield bonds attractive, especially with the prospect of falling interest rates.
Hard assets, like oil and real estate, were overpriced due to high inflation. While real estate's attractiveness is debatable, the potential for price appreciation and refinancing amid falling interest rates made it a worthwhile investment.
In the early 1980s, gold and silver experienced a blow-off top, with prices reaching unsustainable levels. The subsequent decline highlights the cyclical nature of commodities markets.
Meanwhile, stock prices were compelling. Barron's had declared "the death of equities" on its cover (August 1979), indicating just how out of favor they were.
The chapter titled "Davis Buys Everything" initially suggested a broader investment scope for Davis. However, it primarily referred to his subscription to Value Line. While Value Line was a valuable resource, it didn't offer in-depth information. Davis used Value Line's ratings to guide his investments, dabbled in day trading, and lent shares to short sellers. Despite this lack of focus, his net worth surged in the 1980s, driven by his continued holdings in insurance companies, which rebounded strongly.
Shelby Davis Jr.'s fund also performed well in the 80s, benefiting from the trend of falling interest rates and falling inflation. He invested heavily in bank stocks, as lower rates encouraged borrowing and asset price inflation.
This book, published in 2001, noted the trend of falling interest rates (which ultimately continued until the early 2020's). These long-term cycles are remarkable. The question regarding today's environment is whether rates will continue to rise or if we will eventually return to a more moderate inflation environment.
Black Monday
Black Monday, the term given to the stock market crash on October 19, 1987, resulted in a massive sell-off that resulted in the largest single-day percentage decline (22.6%) in history. Portfolio insurance and programmatic trading were blamed for this crash.
Following the crash, Shelby Davis Sr. advocated buying opportunities, countering the prevailing pessimism from gurus and pundits who predicted a prolonged bear market or even another Great Depression.
Figures like Felix Zulauf and Jim Rogers were among those predicting more doom and gloom. When sentiment turns negative, the media tends to capitalize on this by featuring more doom and gloom pundits. As is the typical case, all this bearish news should be taken with a grain of salt and bottom-up investing should remain the focus.
As it turned out, the 1987 crash was nothing more than a blip within a secular bull market. It was not the turning point of something big like a major recession or a new secular bear market. The lesson from this crash is to seize opportunities rather than be paralyzed by fear. And to avoid the misleading narratives promoted in the financial news.
Japanese Asset Price Bubble
Prior to the bubble, Shelby Davis Sr. had invested in Japan, and his analysis of the Japanese market after the 1989 crash proved prescient. He likened Japan's economic slump and low interest rates to the Great Depression, correctly predicting a prolonged secular bear market.
With the benefit of hindsight, we know that Japan experienced multiple "lost decades," with the market only showing signs of improvement in the late 2010s and early 2020s due to low valuations. Investors who bought Japanese stocks at the right time could have made money, but those who held through the 1990s and 2000s likely suffered big losses.
1990's
The book concludes by discussing Chris Davis taking over the Davis Venture Fund in the late 1990s, just before the market peak in early 2000. The fund continued to focus on its traditional sectors, such as insurance and banking, while avoiding the overpriced tech companies of the dot-com boom.
The book references Jeremy Siegel's Stocks for the Long Run, which argued that even overpriced companies could deliver returns over the very long term. However, this requires a very long time horizon and the ability to withstand significant drawdowns, which is extremely difficult for most investors. Because buying an overpriced asset likely entails holding it as an unrealized loss for an extended length of time, the better approach would be to hold out for a better price. Over this long stretch, there are usually multiple buying opportunities along the way.
The Davis's favored a "growth at a reasonable price" strategy, avoiding both fundamentally poor companies and excessively expensive, high-growth stocks. They targeted companies with moderate growth and reasonable valuations. Paying a high price for a stock implies high growth expectations, and any disappointment can lead to a sharp decline in valuation. (See the "Davis Double Play" example below for an example.)
2000's
In 1999, Warren Buffett cautioned that the overall market was overvalued, with the market's P/E ratio around 50. This insight proved accurate, as the 2000s were a challenging decade for U.S. stocks.
The Davis Venture Fund's cautious approach served them well during this period. The book highlights the importance of investing in companies with strong balance sheets, low debt, and durable businesses that can weather downturns.
Fannie Mae
Another company mentioned in the book is Fannie Mae. Both Shelby Davis Sr. and Jr. invested in this company, with Davis Sr. growing the position to $11 million. Chris Davis recommended selling their position in Fannie Mae (book calls this a "rookie mistake" and infers this was somewhere around the mid 90's). Fannie Mae, a government-sponsored enterprise (GSE), holds securitized mortgages. Although Fannie Mae was sold well before its peak, it also got sold well before the Global Financial Crisis (GFC).
During the 2000s housing bubble, Fannie Mae bought risky mortgages, which ultimately contributed to its collapse during the GFC. It's unclear whether the Davis's would have sold Fannie Mae before the collapse, but their value investing approach suggests they would have either recognized the overvaluation or recognized the disconnect between the mortgages and the value of the assets they were secured by.
Fannie Mae was very profitable in the 1980s and 1990s, facilitating home ownership with 30-year fixed-rate mortgages. However, this system also contributed to inflating house prices as interest rates dropped.
Actively Managed Funds and Retail Investors
Actively managed mutual funds were typical in the 20th century before indexing got popular. They tended to have high turnover rates, triggering capital gains taxes for investors. That is, the buying and selling within the portfolio by the fund manager triggered taxable events, regardless of whether the investor sold anything. ETF's later became a common workaround for this problem. The high turnover among typical fund managers also factored into poorer performance as they tend to chase the "hot hand" by buying trendy stocks.
One key takeaway is that the average investor often underperforms the market due to poor timing, jumping from one fund to another (another case of the "hot hand" fallacy). That is, the retail investor does worse than the average mutual fund because they are always chasing the hottest fund. Funds that have the "hot hand" tend to underperform once their hot streak ends. This can be due to their holdings becoming overvalued and/or luck evening out over a long period of time.
The Davis Venture Fund had little portfolio turnover and sought long-term investors who would stay the course through critical periods like recessions and bear markets.
Holdings
Shelby Davis Sr. bought a wide range of holdings, and his portfolio, which would be later analyzed by his grandson Chris, revealed that a large portion of the gains came from a small number of long-held insurance companies, including Berkshire Hathaway.
Shelby Davis Jr. also had considerable overlap in his holdings with his father. As Chris Davis took over managing the fund, the book delves into the dynamics of family relationships and the transfer of wealth across generations.
Investing in Insurance Companies
Insurance companies faced challenges. They collected premiums upfront but paid out claims later. The dilemma was what to do with the collected cash in the meantime, as investment options were limited, and returns were poor due to taxes. Shelby Davis believed that lifting restrictions on how insurance companies could invest their money would significantly impact their profitability. This eventually came to fruition after the 1940's and investments made in this industry paid off handsomely.
Frugality, Inheritance and Succession Planning
As mentioned earlier, Shelby Davis Sr.'s frugality was sometimes seen as excessive. With regards to spending on non-essential consumption, he would explain you would actually spend much more than the actual price because of lost future investment returns. For example, a $50 pair of shoes actually costs $500 since you didn't invest the money instead.
Shelby Davis Sr. was also wary of leaving large inheritances, echoing Warren Buffett's concern that it could diminish the younger generation's drive. He believed that the pleasure of earning wealth oneself is invaluable. He did, however, establish a charitable trust to manage the wealth transfer, aiming to minimize taxes.
Chris and Andrew Davis joined forces to manage the Davis funds, expanding their offerings to include a real estate fund run by Andrew.
Career Paths of the Davis Grandsons
The book also explores the career paths of the Davis grandsons, Chris and Andrew, who both became money managers. They initially worked at banking firms before transitioning to fund management. The grandfather, Shelby Davis Sr., valued a philosophy background for investors, believing it provided essential critical thinking skills. He did not favor the traditional finance or MBA path.
On Investing in Tech
Shelby Davis Sr. generally avoided technology investments, not out of disdain, but from a principled commitment to investing within his circle of competence. His legacy emphasized durability, cash flow, and long-term compounding over speculation on emerging trends.
This conservative approach extended into the early tenure of his son, Shelby Davis Jr., and later, his grandson Chris Davis, who carried the firm’s traditions forward at Davis Advisors. Like Warren Buffett and Peter Lynch, the Davis family was wary of the tech sector's hype cycles and valuation excesses, especially during the dot-com boom of the late 1990s. Their skepticism served them well — by steering clear of high-flying but unprofitable tech names, they preserved capital during the crash of 2000–2002 and were praised for maintaining discipline when many others were caught up in speculative fervor.
In the 2000s and beyond, however, the Davis firm evolved its view, selectively investing in some tech companies that met their stringent criteria: understandable business models, durable competitive advantages, strong balance sheets, and reasonable valuations.
Checklists and Final Thoughts
The final chapter offers investment checklists and advice, emphasizing the difficulty of finding the "next Microsoft." While many companies may exhibit rapid growth, it's challenging to predict which ones will sustain that growth over the long term.
The Davis investment philosophy emphasizes avoiding both cheap and expensive stocks, focusing on moderately priced stocks with reasonable growth prospects.
They also consider the earnings yield, comparing it to bond yields. For example, a stock with a P/E ratio of 15 has an earnings yield of 6.6%, while a stock with a PE ratio of 30 has an earnings yield of 3.3%. If the 10-year bond yields 5%, the stock with the lower earnings yield is generally less attractive.
When considering what companies to invest in, the author suggests thinking of companies like IBM, Intel, and Hewlett-Packard. While these were good companies at one time, today's equivalents might be Lululemon, Chipotle, or Costco. If you like the company, but not the price tag, simply wait for a chance to pay less. This also goes to show that great companies change over time and that they are, by no means, guaranteed to remain great.
Shelby Davis Sr. famously said, "Bear markets make people a lot of money. They just don't know it at the time."
The book also highlights the importance of considering industry-specific cycles and one-time events that can create buying opportunities. Examples include the BP oil spill and Chipotle's e-coli outbreak, which caused significant stock sell-offs.
The book concludes by emphasizing the importance of investing in superior management and learning from history while avoiding the trap of expecting past patterns to repeat exactly.
Chris Davis notes the importance of staying the course, emphasizing that stocks are less risky over longer time horizons.
From its inception in 1969 through 2000, the Davis New York Venture Fund significantly outperformed the S&P 500.
The book ends by noting the challenge Chris Davis faced in finding investment opportunities that met his father's and grandfather's criteria, highlighting the ongoing difficulty of finding attractively valued, high-quality companies.
Davis Double Play
This is one of the key concepts in which Shelby Davis Sr. was able to achieve such incredible long-term returns.
Within in the realm of value investing, an investor is hoping for 2 things to happen:
- Earnings Growth (the company grows profits over time)
- P/E Expansion (the market assigns a higher multiple to those earnings)
Achieving growth in valuation (multiple expansion) is more likely when the stock was bought below its intrinsic value. Below, we'll walk through a simple example using a 10-year holding period.
- Initial Investment: $1,000
- Holding Period: 10 years
- Annual Earnings Growth: 10%
- P/E Ratio starts at 10x and increases to 20x over the period.
| Year | Earnings per Share (EPS) | EPS Growth | P/E Ratio | Stock Price | Investment Value |
|---|---|---|---|---|---|
| 0 | $1.00 | – | 10x | $10.00 | $1,000.00 |
| 10 | $2.59 | +10% CAGR | 20x | $51.80 | $5,180.00 |
So, the investment grew at an average of 18.15% per year, thanks to the combined effect of 10% earnings growth and P/E expansion from 10x to 20x. If the stock still traded at 10x earnings at the end of the holding period, the return would have only matched earnings growth (10%).
Unfortunately, this concept works in reverse also. Which is why it's critical to avoid paying too much. In the book, they example mention is a stock trading at 30x earnings. Assuming $1 earnings per share and a $30 stock price, if earnings get cut in half and the multiple that Mr. Market is willing to pay drops to 10, then the stock price will drop to $5.
Since this book is a great historic reference of the 20th century, I will conclude with a timeline of key events.
Detailed Timeline
Pre-1929: High stock valuations, public sentiment regarded stocks being generally safe.
1929: Stock market crash occurs, marking the beginning of a long secular bear market. Extreme overvaluation and policy mistakes are identified as reasons.
1932: Smoot-Hawley Tariff Act is implemented, a policy mistake that exacerbates the ongoing economic depression.
1932-1933: Low points for the stock market and the economy during the Great Depression.
1933: A significant four-year rally in stocks begins, with prices increasing substantially (DJIA up 400%). Roosevelt devalues the dollar, contributing to the rally and recovery.
1937: The stock market rally peaks. The government begins a period of austerity and changes policy, leading to the second downturn of the Depression.
Late 1930s: Start of World War II: The second downturn of the Depression continues. The impending war further depresses stock prices.
1940s: High inflation rates are experienced. The Federal Reserve artificially keeps interest rates low, resulting in negative real interest rates. Investing in bonds becomes popular despite unfavorable returns and high taxes on interest.
Post World War II Era (starting late 1940s): Bonds remain the most popular investment due to risk aversion. Shelby Davis begins his investing career focusing on undervalued insurance companies.
1949: The secular bear market that began in 1929 ends.
1950-1953: Korean War takes place. Returning GIs contribute to another round of inflation, negatively impacting bonds.
1951: The financial repression suppressing bond yields is lifted, causing interest rates on long-term bonds to rise and bond prices to fall.
1954: Retail investor participation in the stock market remains very low (around 4%), even though a new secular bull market has been underway for approximately five years.
1960s: Retail investor participation in the stock market increases, but many miss the early and potentially biggest gains of the secular bull market.
Mid to Late 1960s: A new secular bear market begins, following a period of high stock valuations.
Around 1968-1972: "Nifty Fifty" era, characterized by high valuations for perceived "can't lose" companies.
1969: The Davis New York Venture Fund, run by Shelby Davis Jr., is established.
1970s: A very bad decade for stock investors, forming the bulk of the secular bear market that started in the mid-late 1960s. Many fund managers are wiped out. Unexpected economic problems, including oil shocks and inflation, emerge. The insurance industry, Shelby Davis Sr.'s focus, performs poorly. Geico nearly fails due to expanding customer base and increased claims.
1972: Benjamin Graham publishes the final edition of The Intelligent Investor, advising only a 25% allocation to stocks.
1973-1974: A major recession occurs.
1974: The stock market low is reached during the recession, presenting a significant buying opportunity within the ongoing secular bear market.
Late 1970s - Early 1980s: Shelby Davis Sr. begins buying a wide variety of stocks as the secular bear market nears its end. Interest rates peak, ending the bond bear market that began after World War II.
1980s: Falling interest rates. Long bull market for bonds begins. Stocks are extremely cheap. Shelby Davis Sr.'s net worth recovers significantly and surges in the 1980s, largely due to his insurance holdings performing well. Shelby Davis Jr.'s Venture Fund, which struggled in the 1970s, starts to outperform, attracting more capital. Shelby Davis Jr. focuses on bank stocks, anticipating benefits from falling interest rates. Michael Milken and junk bonds are mentioned as part of this era of rising leverage.
1984-1998: The average mutual fund gains over 500%, but the average fund investor only gains 186% due to constantly switching between funds.
1987: A stock market crash occurs, where the Dow Jones Industrial Average loses over 20% in a single day. Despite dire predictions from some pundits, Shelby Davis Sr. aggressively buys stocks.
1989: The Japanese stock market crashes, marking the beginning of a long economic slump and secular bear market for Japan.
Early 1990s: Shelby Davis Sr. begins winding down his investment activities, with his portfolio largely consisting of insurance companies.
1991: A bear market occurs concurrent with the Gulf War, but it is short-lived, and the long-term bull market resumes shortly after.
Mid-1990s: Shelby Davis Sr. passes away (age 85). His wealth is transitioned into charitable trusts and the Davis Venture Fund. Chris Davis convinces Shelby Davis Sr. to sell positions in Fannie Mae.
Late 1990s: Chris Davis takes over running the Davis Venture Fund. The focus remains on value investing in "boring" sectors like insurance and banking, contrasting with the popularity of soaring tech and dot-com companies. There is a financial crisis involving Long-Term Capital Management and Russian/Asian debt defaults, which is contained.
1999: The US stock market, particularly the broader market, is considered very overvalued (around 50 times earnings). Warren Buffett publicly expresses low expectations for future stock returns. The Dow Jones Industrial Average crosses 10,000.
Early 2000: The peak of the dot-com bubble and the broader market occurs (Dow reaching 11,000, Nasdaq over 5,000).