Chart of the week: Dotcoms come of age
Fifteen years ago, the Nasdaq eclipsed 5,000 before the dotcom bubble burst. But the index’s latest foray above this milestone should be more sustainable.
Fifteen years ago this month, the Nasdaq eclipsed 5,000 after almost tripling in two years. It then promptly collapsed as the dotcom bubble inevitably burst. But the index's latest foray above this milestone should be more sustainable.
It is no longer so technology-heavy, with the sector now comprising 40% of the index, rather than 60%, and the average Nasdaq company now survives for 25 years as opposed to 15. But most importantly, Nasdaq-listed firms generate far more earnings the top ten are almost five times more profitable than in 1999 and no longer cost the Earth, even if they aren't exactly cheap.
Article continues belowTry 6 free issues of MoneyWeek today
Get unparalleled financial insight, analysis and expert opinion you can profit from.
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
The index is on a trailing (historic) price/earnings ratio of 32, a shade above the average for the past 20 years. That's down from an insane 175 in March 2000.
