A few weeks ago, the NASDAQ composite index, the barometer of mainly North American hi tech companies, passed back over 3000. When was the last time it was over 3000?
Well, you have to go back to a Clinton White House era for that during the first dotcom boom. The NASDAQ was to climb to over 5000 a few months later only to crash to 1100 during the two year tech wreck fallout that followed. Watching it languish around the early and mid 2000s for about ten years has been a sobering reminder of the craziness that was the dotcom boom of the late 90’s, especially for me as I was wrapped up in this at the time setting up a dotcom in mid 1999.
So I am happy to see the NASDAQ back to some form of life, growing 16% this year alone and outperforming all other major share markets, mainly buoyed by the exploits of Apple, which makes up 11% of its value. However, even without Apple, the NASDAQ would have grown 14% so far in 2012. What’s most pleasing is that this is on the back of real earnings results, with the average P/E of NASDAQ companies being 24 (Apple alone trades at the rather conservative 11 P/E). Apple just can’t stop making money. Real business is growing here, and leading the US out of recession. When I was in San Francisco last summer, there was a confident buzz about the place.
Contrast this to the mad cap days of early 2000 when NASDAQ companies traded at P/Es of 200+ and 2001-2002 when the total NASDAQ companies did not make a profit.
Plus the DOW is also over 13000. Happier (tech) times ahead?
