NASDAQ 5000! Why You Shouldn’t Care…
25 Mar 2015
The NASDAQ closed above 5000 on March 2nd, 2015. Why should we care? Well, really we shouldn’t. A little history lesson should help. The NASDAQ was created by the National Association of Security Dealers (NASD) in 1971. The term “NASDAQ” is used to reference the NASDAQ composite, an index of more than 3,000 stocks, mainly the technology and biotech sectors.
In 1999, the NASDAQ hit 5000. I can recall the financial pundits wearing “NASDAQ 5000” hats on TV. You can now buy those hats on eBay for $3, in case you were wondering. By October 2002, the index had slipped almost 80% to 1108. Since then, it has gradually worked its way back to 5000.
Although 5000 is a huge comeback for the index, it’s far below what it should be on an inflation-adjusted basis, a more relative number I believe. Based on this number, the NASDAQ should be worth closer to 6900.
Nonetheless, the absurdity of the media to dwell on the 5000 number concerns me. I believe the media’s fixation with this number is leading the average investor to be more concerned with the index numbers rather than achieving their personal investment goals. Personal goals should have nothing to do with any index.
In addition, as of the date I wrote this, the NASDAQ has fallen well back under 5000. Oh well, I guess the new “NASDAQ 5000 2015” hats will be on eBay for half price now. Or, we can wait for the new hats the next time the NASDAQ hits 5000.
Jeffrey Johnston, ChFC
Investment Advisor Representative
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