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Source: WSJ interactive


Great piece in today’s WSJ comparing the Nasdaq today versus 12 years ago:

“In November 1999, the technology world was ablaze with an investment frenzy that favored unprofitable, unproven companies that were valued for their potential “clicks” and “eyeballs.”

Now, the biggest 100 Nasdaq-listed companies look a lot more like their more sedate counterparts on the Dow Jones Industrial Average.”

What are the key differences between 1999 and 2012?

-Tech stocks are cash rich (in some cases, crazy rich)
-Almost half pay dividends.
-Raise money in the bond market, carrying 10X debt than 1999 at ultralow rates;
-Price-to-earnings ratios are average.
-Companies are much more stable, earnings more reliable multiples more rational
-Tech stocks are once again outpacing rest of the market — Nasdaq up ~15% YTD vs 5.8% gain for the Dow

Good stuff . . .


A Coming of Age for Nasdaq
Tech-Heavy Index’s Solid Profits, Sane Valuations Differ From Bubble Era
WSJ, March 11, 2012

Category: Markets, Technology

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6 Responses to “Nasdaq 3000: 2012 vs 1999”

  1. albnyc says:

    Partying like 1999 was more fun, IMO.

  2. rd says:

    I have always had some serious concerns about the tech companies as an overall investment vehicle. When your product lines are driven by Moore’s Law so that entire product lines can appear from nowhere and vanish in a decade, then many investors are simply transferring their assets to the company’s founders and investment banks. This was clearly the case in the late 90s when it was just insane. Even the most successful product and software innovator of the past 30 years went through at least one down cycle where it could have vanished in a puff of smoke if Steve Jobs had not come back. We are seeing that happen now with RIMM which created an entire market sector.

    Dividends of less than 2% imply a couple of decades or more to get your cash back unless there is pretty spectacular growth. If it doesn’t issue a lot of dividends before it tanks, then you had better time your exit well. With few companies paying dividends until the last handful of years, a buy-and-hold NASDAQ investor from 2000 would still be down over 50% in real terms. The S&P 500 has done far better than this, even though its returns are substantially lower than historical norms.

    There is good money to be made, but at many of the valuations over the past 15 years it has been more speculation than investing.

  3. Moopheus says:

    “Great piece in today’s WSJ ”

    Another change from 1999: the number of times someone can say this with a straight face.

  4. constantnormal says:

    This sure does mess with people’s minds … those who relate things to history, at least … but then one must remember that we have blown past the usual and customary historical boundaries, we are where No US Economy Has Ever Gone Before … we have entered The Twilight Zone …

  5. Ruslan says:

    It would be interesting to look at numbers of Internet Information Providers sector :)

  6. [...] Big Picture posted a cool infographic from the Wall Street Journal on Nasdaq 3000: 2012 vs 1999. Apple wasn’t in the top 10 companies in 1999. You can guess where it is [...]