The Nasdaq has been climbing its way back to the heights of the dot-com boom — leading to the inevitable question of whether it’s headed for another dot-com bust.
While stock market analysts have a range of views, most argue that the current surge in the tech-dominated index, which closed Friday at 4,726.8 and peaked in March 2000 at 5,048.6, is more sustainable than the frothy period that marked the late 1990s and collapsed with the Nasdaq hitting a post-bubble low of 1,108.4 in October 2002.
“Yes, the Nasdaq is real this time,” said Chris Giordano, president of investment planning firm Giordano Wealth Management. “The fundamentals in the stock market and the Nasdaq today are much better than the fundamentals we had 15 years ago.”
During the dot-com bubble, investors flocked to plunk down bets on smaller tech companies with intriguing technologies but unproven — and sometimes nonexistent — revenue streams.
“Companies were being formed by writing down business plans on the backs of napkins,” said Jeffrey Elfont, president of Pinnacle Capital Management, an investment manager. “Now you have new technologies, biotech, connectivity, mobile, social networks. You have Google, Apple, Face book, Twitter.”
To be sure, it’s entirely possible that some tech companies are overvalued right now, but they have real, not speculative, income.
“Even if they are a bit inflated in price, revenue streams seem more tangible,” Elfont said. “Balance sheets are better. Companies have actual income or solid potential income.”
But despite the steady rise in the past four-plus years in the index, not all experts are convinced the surge will be sustained.
