For only the 3rd time in history, the Nasdaq index hit and closed at 5000. The last time it happened was 15 years ago March 27, 2000).
So this famous market index with Intel, Microsoft, BestBuy, Apple, Amazon, Ebay, Yahoo, Priceline, Bed Bath and Beyond, Starbucks, etc. inside of it has taken 15 years to break-even…
… or has it?
In inflation adjusted points, the Nasdaq would have to be about 7000 to really equal where it was in 2000. In other words, in order to have the same purchasing power, the index would have to be 40% now than it was in the year 2000.
With the S&P 500 and the Dow at new all-time highs, and the Nasdaq’s move, are we set for a fall soon?
I doubt it. The Nasdaq trades at about 26 times earnings while it traded at 120 times earnings in the dot.com bubble of 2000. The companies in the index today are much more mature, generate real sales and earnings unlike the big flops like Pets.com which traded at absurd levels before quickly melting into nothing.
Interest rates remain very low. Employment is slowly improving (but not wage growth). The US economy is pretty much the envy of the whole world.
That’s not to say that there are economic and even political issues that could provide headwinds. Most of our 3rd party private wealth money managers are fully invested, but are ready to go to cash if necessary.
Which will come first? Will we hit 7000 next or see the index falls to 4000 again? What do you think? Have you positioned your portfolio for either event?
all the best… mark
