In the fall of 1999, I was a newly minted CEO of a large Canadian asset manager and feeling pretty good about myself. That was until an important client, a prominent Vancouver businessman, called to introduce himself and tell me: "Tom, your firm isn't relevant any more."

He was referring to the fact that we didn't own enough tech stocks such as Cisco, Nokia, Intel and, of course, Nortel. We just didn't get the dot-com era.

Irrelevant? It turned out to be far from the case, but his words hit hard because we weren't keeping up with the high-flying U.S. market at the time.

Today feels a lot like that moment. If you're a portfolio manager and don't own enough tech, specifically AI, it's a struggle to keep up with the market. And you're reminded of it every day by clients and the media.

What do I do in situations like this? The first thing is remind myself of what got me here. If I've learned anything from previous cycles, it's not the time to fold your tent.

During the tech boom, more than a few value managers changed their stripes and shifted to where the action was. After growth stocks rolled over, their franchises never recovered. The renowned hedge fund Tiger Management took a bigger step. It closed its doors in March, 2000, which turned out to be days before the market turned.

What else? Well, I pray for rain (a cooler market would help) and talk to veterans who have been through this before.

I also pull out a trusty old file folder called "KEEP. RE-READ." It contains reports and articles I've saved. While rummaging through it last week, I came across a Peter Bernstein interview in Money magazine from November, 2004. Mr. Bernstein is the author of Against the Gods, a seminal book about financial risk. To quote the article's introduction, he's "patient wisdom personified."

Mr. Bernstein has long since passed, so we don't know what he'd say about today's investment landscape, but his words from 2004 are still useful and timely. I'll curate the interview through a 2025 lens.

When asked what important things he had to unlearn over the years, he said, "That I knew what the future held, I guess. That you can figure this thing out. … I've become increasingly humble about it over time and comfortable with that."

He elaborated, "Anything can happen. There really is such a thing as a 'paradigm shift,' when people's view of the future can change very dramatically and very suddenly. That means that there's never a time when you can be sure that today's market is going to be a replay of a familiar past."

Fortunately, he has a solution for never-ending uncertainty. "That's what diversification is for. It's an explicit recognition of ignorance. And I view diversification not only as a survival strategy but as an aggressive strategy, because the next windfall might come from a surprising place. I want to make sure I'm exposed to it."

Diversification is out of vogue today because markets have been led by a handful of U.S. tech stocks. I'm sure Mr. Bernstein would be frustrated by how long it has taken for those other windfalls to emerge, but they will.

His understanding of investors' behaviour, specifically their inconsistencies, has always stuck with me. He observed that investors generally know their fallibility in calmer markets, but become confident in their views and bolder in their actions at points of extreme panic and euphoria.

I would put today's investors in the latter camp. I listened to a tech-oriented podcast recently in which the panel agreed that investors won't make any money owning the S&P 493 (the S&P 500 minus the Magnificent 7). According to them, AI and crypto are the only places to be.

Mr. Bernstein's most interesting comments tap into the speculative times we find ourselves in, when return is the sole objective and risk is swept under the carpet. "You have to think about the consequences of what you're doing and establish that you can survive them if you're wrong. Consequences are more important than probabilities."

In other words, there's always a chance you'll be wrong. If you are, and your portfolio is devastated, it's not a justifiable strategy.

And when Mr. Bernstein was asked 21 years ago if investors have gotten smarter, he said, "I think my answer would be no. The day-trader phenomenon would not have developed out of a population that was thoughtful about how the stock market works."