10/12/2008 03:00 pm ET Updated May 25, 2011

We are Not Going to Party Like it's 1999!

When I was in college Prince used to sing "we are going to party like it´s 1999". Surprisingly that´s what the markets are singing now. 1999 was almost a decade ago but the value of stocks now is the value of stocks in 1999. If you had kept a 1999 newspaper stock listings, it would do now. The world however has grown around 40% since then. World GDP that is. So what are the markets saying? That we are going to shrink to the levels of 1999? I don´t think so.

I think we will have a bad recession, negative growth, a rise in unemployment. But I don´t think we are going back to 1999. That´s why I started buying stocks last month. I was all cash. Now I have around 20% of my portfolio in stocks and I am down 24% in that 20%. I started with 5% of my portfolio in stocks and I kept buying as stocks went down. Initially I experimented with buying banks and I did poorly. Banks may eventually turn around but buying them is for government watchers. They are at the epicenter of this hurricane and all subject to the whim of some ex GS employees. Why did Lehman go under and Bear Stearns was helped? I think what Paulson is doing has no logic and I was wrong in thinking that I could understand him or the markets as they relate to government intervention. Instead last week I sold banks in spite of the bailout and I bought utilities, pharmaceutical companies like Merck or Lilly, and big tech stocks like Dell, Microsoft, Apple, Nokia. And if this week they go down I will buy more and go more into stocks. My rule now is that for every 10% stocks go down I put another 10% of my portfolio away from cash in top stocks. My objective is to keep those stocks for a long time. Let´s say I think of my 4 children when I think of those stocks. I think of the buying opportunity of their lifetime. Looking back a month ago when I started buying some stocks, of course I wish that I had resisted hunting for bargains and waited. I would be 24% better off today. Still I am sure that we are now or in the next months in the buying opportunity of their generation and will keep buying. And hopefully we will party, buying in 2008 at prices of 1999.

Added later: I just found an article in the New York Times that makes the same point I make with more examples.