Nasdaq 100 achieves a mean feat within a decade. Perusing a decade worth of wealth-creation activities, one would be hard-pressed to say what other assets did more than NASDAQ stocks in enriching investors.
The value of NASDAQ 100 Index stocks combined has increased by over $7 trillion. 2019 ended as the best year since its bull run started.
The massive increase was powered by Apple’s stocks nearly doubling as well as the impressive performances of Microsoft and Facebook stocks.
The contribution of these tech giants surged by 38 percent over the 12 months of 2019. This is a record high increase since 2009.
According to Business Mirror, even though technology companies required around 15 years to recover after the dot-com crash, its recovery is short of impressive.
Starting in 2015, the stock performance of technology companies nearly doubled.
Performance of NASDAQ Tech Stocks Nowhere Near Dot-Com Era
Regardless of the rampant appreciation, however, most stocks still trade well-below their bubble-era highs in terms of earnings.
The dot-com rally period remains unprecedented.
Even if today’s valuation of 27 times annual profits cannot be scoffed at, it’s nowhere as impressive as the dot-com rally period.
At the time, near the triple-digit ratios can be seen.
According to Doug Ramsey, Leuthold Group’s chief investment officer, he does not think it’s possible to achieve valuations in his lifetime. The current rates are so much closer to these valuations than he expected, however.
He thinks the current rates are already remarkable, given it is only 20 years after the crisis.
Leuthold keeps a keen eye on the Internet market. The company plots out earnings, dividends, cash flows, and other measures.
This is to know the current stage of the Internet market relative to the 90s.
Ramsey said that studying the two periods can highlight how crazy things really got two decades ago.
Tech Bubble Crash Looming?
He is also not saying that a crash is imminent. He, however, is cautious against the continuous buying of these stocks.
There is a sense that people are becoming wary of technology firms and their stocks though. Regulatory scrutiny is so much more substantial. Even President Donald Trump himself criticized technology firms so much more recently.
Technology users also are starting to become more suspicious of smartphone providers and social media companies.
According to Bokeh Capital’s Kim Forrest however, the fundamentals of the present tech giants are much more stable than those in the past affected by the dot-com crisis.
In 1999, even if there was a lot of hope in the products of a tech company, very few of them were really earning revenues. Tech companies today, despite some being unprofitable, are at least experiencing some revenues.
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