When Will the Nasdaq Make a New High?

Yesterday, the Nasdaq Composite made another new 14-year high. The index got as high as 4,661.23. Actually, it’s not far from topping that today.

The refrain “14-year high” has been heard an awful lot lately, because the high established in March 2000 was so amazingly high. The peak of the Nasdaq Bubble was so far removed from any rational valuation that it’s taken us years to get back to it. Almost every major tech stock is trying to pierce its “14-year high.”

On March 9 and 10, 2000, the Nasdaq Composite had back-to-back closes over 5,000. On the 9th it closed at 5,046.86. The next day, it was at 5,048.62. Less than 18 months before, it was at 1,343.87, and less than 18 months later, it was at 1,387.06.

The peak was truly extraordinary. At its peak, the Nasdaq’s nominal price was 3.6 times the S&P 500. Now it’s 2.3 times the S&P 500. The Nasdaq has to rally another 8% to match its all-time high. I think that’s certainly possible over the next few months, but I’m wary of making any prediction.

Bear in mind, though, things have taken longer. The Dow Jones didn’t break its September 3, 1929 high until November 23, 1954. A gap of 25 years.

Posted by on November 12th, 2014 at 10:31 am


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