In the Q3 2023 shareholder letter for the Third Avenue Value Fund, fund manager Matthew Fine, reflects on the parallels between today’s mania around the “Magnificent 7” stocks and the 2000 dot-com bubble. Under Marty Whitman’s leadership, Matthew saw Third Ave steer investors through the internet bubble and is now applying the same principles in today’s investing environment.
Below is an excerpt from the Q3 shareholder letter:
Marty Whitman: We get protection by being price-conscious and by being extremely knowledgeable about our holdings.
“It was repeatedly asserted that their definitions of value needed to adapt or evolve and that they failed to grasp that the investing landscape had fundamentally changed. For a person with as little perspective as I had at the time, this was a very confusing situation. On one hand, you had Marty and other legendary peers in the field who argued, very compellingly, that the investing community had lost its collective mind in rampant speculative excess. On the other hand, you had important new technologies championed by a group of entrepreneurs and investors who were arguing this time is different. And the “this time is different” folks were getting rich, making it very challenging to argue against success. But, if you knew Marty at all, you are aware that he had a steel spine and there was absolutely no chance of him acquiescing. Just months later, in early 2000, the dot-com bubble finally burst under its own weight. I still to this day am not aware of a specific cause of the collapse, other than the extremes simply having exhausted themselves. Many investors suffered crushing losses, having been seduced by the momentum of rapid equity gains and having completely lost any consciousness of the valuations of the companies they were buying or holding. Many non-professional investors suffered terrible losses of lifetime savings as a result of having been sold irresponsible stories by some of the professionals who managed their money.”
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