Nasdaq's Return to 3000

Posted by - Monday, March 12th, 2012

The tech bubble of the late 1990s was a huge boost for the Nasdaq, which rose above 3000 and even peaked at 5048.62 in spring of 2000.

Since then the face of the Nasdaq has changed, but it may see a similar rise again soon, and this time with more staying power.

The top companies then were unstable, unpredictable, and volatile. Now, however, they’re stagnant.

But it makes them reliable.

The technology stocks that were at the top in the late ‘90s are some of the same ones that are leading the market now. They just look different, and that could make all the difference.

At the end of last week, the Nasdaq closed at 2988.34. It’s closing in on 3000 once again.

Many of the companies pay dividends now, and the dividend yields are significantly higher. Price to earnings ratios are lower, but they’re in a more stable territory.

Todd Morgan of Bel Air Investment Advisors LLC told the Wall Street Journal:

“If you just look at the Nasdaq 3000 number, it looks like things are crazy, but this is one of those cases where it really is different this time.  The math did not work 12 years ago.  Today, the same companies are a lot more mature and solid.”

Technology companies run the risk of falling if the economy slows down again or if problems in Europe take a turn for the worse. But this time, there’s a lot more chance for good too.

The chart below compares top companies from 1999 to companies today:

Nasdaq 3000

                                               (Click to enlarge)

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