The Nasdaq looks like it is going to be approaching the record high that it set in the year 2000. You remember the year 2000, right? That was the year when internet companies flooded the Nasdaq. It appeared that, every single week, internet companies were debuting on Wall Street and were rewarded by huge market valuations. It appeared at that time that investors just couldn’t get enough of internet stocks. Not surprisingly, Nasdaq hit its record high at that point.
Well, it took only 15 years for the Nasdaq to get to that point. What happened in the years between? The Nasdaq crashed. People woke up to the fact that they were holding on to the stock of companies that aren’t making any money. In fact, things got so ridiculous in the year 2000 that analysts were seriously floating the idea that company success should be measured by more than simply profit and loss. Can you imagine how ridiculous things were?
Well, it appears that things are getting that ridiculous again. If you look at the Nasdaq performance, we are getting close to breaking past the year 2000 record high point. Moreover, if you look at the Nasdaq companies that are contributing to Nasdaq’s overall value, they are getting fewer and fewer. This means that most of the stocks really aren’t performing all that well. There are only these few stars that are pushing up the index.
This is seriously bad news. It hides from view the underlying financial weakness of Nasdaq component stocks. I suspect that once the market crashes again, and it is only a matter of time, the Nasdaq will get flattened yet again. We are talking back to close to the 800 or 900 point.
