Word: nasdaq
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Dates: during 2000-2009
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Five years to get even? My sense is that many, if not most, individuals harbor hope that tech stocks, which dominate the NASDAQ, will spring back to life much sooner than that. With the NASDAQ down nearly 50%, it's logical to presume it has no place to go but up. Logical, but not necessarily correct. We're unwinding a bubble, and it's going to take time. Even when the decline finally ends, there will be no fast recovery...
...weekly paddle-tennis game has taken an interesting turn. I play with a trader and two money managers, and lately, points lost on the NASDAQ have been discussed more hotly than those lost on the court through blurred vision and spot rule revisions. To sharpen our focus and have a bit of fun, at our last outing we each made a stab at how long it will take the NASDAQ to get back to its March 10 record close of 5,049. The surprising results spurred me to widen the sample last week with calls to 10 other Wall Street...
Like a lot of folks, I hadn't been giving a NASDAQ recovery much thought. But I am now, and here...
Here's some basic math. The NASDAQ has lost half its value. To get even, it must double. At 10% a year, money doubles in about seven years. That gets you the drawn-out recovery. Yet no-dividend growth stocks should compound at 12% to 15%, implying a recovery in about five years. And I believe the market has muscle memory; having been there once, it's easier to get back. My prediction? Three years. Odds are I'm wrong. What's important, though, is that I'm mentally set for a grind. Go ahead, Mr. Market, surprise me, pleeeeze...
GIVE IT UP With tech funds down more than 20% on average, 2000 is a good bet to be the first time in 15 years that the funds lose money. After NASDAQ hit bottom last week, a spate of brokerages issued pleas to stubborn tech-boom day traders to give in and learn to invest rather than just trade. Hot but stable sectors being championed include pharmaceuticals and municipal bonds...