My Own Dot-Com Bust

My investing journey, Part 5: 2021 and 2022

Sep 28, 2026 · @Deniz Erkan

"You just got lucky"

When I showed my results to a friend I respect, someone I think of as a mentor, he made a comment I have heard in different forms many times since. One could say you just got lucky, he said. Technology went up for twenty-three years, you invested in technology, so of course you did well.

Really? Look at the long stretch and you can tell that story: technology went up, I owned technology, not a big deal. But it was not an easy ride. For my portfolio, 2022 was worse than the global financial crisis, and the companies I owned fell as far as the leaders of the dot-com crash. Let me tell you what happened.

Watching the first crash

When the dot-com bubble burst, I was just getting started. I was at Microsoft, I watched it happen, and I knew the numbers: Amazon fell about 95%, Cisco 86%, the Nasdaq more than three-quarters. But I was not participating in any meaningful way. I had no skin in the game, so it never really hit me. I was an observer.

In 2021 and 2022, I was not observing. Stocks I owned fell 87% to 97% from their highs. I lost 47% in 2022, compared with 28% in 2008. It was my own dot-com bust, and it arrived in a year when the S&P 500 fell only 19%.

The damage

My Own Dot-Com Bust: chart 1

Yahoo Finance daily closes, split-adjusted; Nasdaq-100 and S&P 500 price indexes

Those are the calendar-year numbers for 2022 alone. From their 2021 highs to their 2022 lows, the falls were worse: Upstart 97%, Farfetch 95%, Fiverr 92%, Twilio 90%, DocuSign 87%.

They had one thing in common. None of them was earning money from its operations. Upstart, an AI lending marketplace, was a thesis I believed in: lending decisions made better by machine learning. Twilio, DocuSign and Fiverr were cloud businesses growing fast and spending faster. Farfetch was losing $847 million a year from its operations. In a world of free money, investors paid for their growth. Then the money stopped being free. In 2022 the Federal Reserve raised rates seven times, from near zero to 4.25–4.50%.

Two waves

The crash came in two waves, and they felt very different.

The first wave hit in 2021, and it hit the story stocks. Farfetch, Upstart, Twilio, Fiverr, DocuSign and Elastic all cost me heavily that year. But my winners were still running. Nvidia, Tesla and AMD earned more than the losers lost, and my portfolio finished 2021 up 17%. It is easy to ignore a fire when the rest of the house is warm.

The second wave hit in 2022, and it hit everything. Rising rates did not care whether a company made money. Cloudflare, AMD, Nvidia, Microsoft and Datadog, the companies I understood best, all lost me money that year. My portfolio fell 47%. At the worst point, it was down more than 60% from its peak.

I held the companies I understood. That turned out to be the right decision: Cloudflare, Nvidia and AMD were among the largest drivers of my returns from 2023 through 2025. But holding was only possible because I had already paid, in 2021, for the positions I did not understand.

Everyone has a plan

Mike Tyson said everybody has a plan until they get punched in the mouth. In 2022, I got punched in the mouth, badly.

Holding on to your convictions is much harder than most people think. When the house is burning, you forget your thesis. Every day the screen tells you that you were wrong, and every instinct tells you to get out before it gets worse. The only thing that holds against that pressure is knowing, precisely, why you own each company: what your thesis is, what would prove it wrong, and whether that has actually happened. You have to be able to defend it to yourself on the worst day.

2022 is when I held on to my game plan. I could do it for the companies I had built my own understanding of, because the thesis was mine. Nothing about Cloudflare's network, or the demand for Nvidia's and AMD's chips, had broken. Only the prices had.

What it taught me

A company can fall 90%. Size every position as if it might. Before 2021, I knew this as a fact about history. After 2022, I knew it as a fact about my own accounts. The question I ask now is not only how much I could make, but what the position can lose while I wait to find out whether I am right.

A company that does not earn money is a bet on the price of money. When rates were near zero, investors happily paid today for profits that might arrive in ten years. When rates rose to 4.5%, those distant profits were suddenly worth far less, and the companies that needed investors' money to keep operating were hit hardest. Owning a business that pays its own way is a different risk from owning one that depends on the market's generosity.

Borrowed conviction never survives a crash. The companies I held through 2022 were the ones whose thesis I owned. The ones I could not defend were the ones I should never have sized as if I could. A conviction you borrowed from someone else, or from a story, is gone the first time you are punched.

Conviction is not what you believe on the way in. It is what you still hold when the house is burning.

Engineered compounding,
Deniz Erkan

Disclosure: This letter describes my personal investment history. Returns are reconstructed estimates from monthly account balances, are not audited, and do not reflect fees or taxes any other investor would pay. Company examples are my own positions and are not recommendations. This history is separate from the Runtime fund and its algorithmic strategy. Past performance does not predict future results. This is not investment advice.

Sources

  • Stock prices: Yahoo Finance daily closes, split-adjusted (Farfetch under its post-delisting symbol FTCHQ)
  • Federal Reserve: open market operations and target range history
  • Operating results: Upstart, Twilio, DocuSign and Fiverr fiscal 2022 annual reports; Farfetch 2022 annual report (IFRS)
  • Dot-com bust: Nasdaq Composite, Amazon and Cisco price history, 2000–2002