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.

Good Luck!!

Jeffrey Johnston, ChFC
Investment Advisor Representative

Securities offered through Registered Representatives of Cambridge Investment Research, Inc., a Broker/Dealer, Member FINRA/SIPC. Advisory services offered through Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Cambridge and Premier Investments of Iowa, Inc. are not affiliated. Investment decisions should be based on an individual’s goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate with changes in market conditions and when redeemed, may be worth more or less than their original cost. Past performance is not a guarantee of future results.

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Jeffrey Johnston

Jeff has over 30 years of experience in the investment industry. He currently holds his FINRA Serices 6, 63, 66, 7, 24 & 51 licenses with LPL Financial as well as his health and life insurance licenses.