NASDAQ Still Has Room to Run

Financial Planning, May, 2004

Recent speculation that a new bear market is developing for technology stocks may be premature. Yes, the tech recovery has been impressive. At the end of February, the NASDAQ was up 82% from its Oct. 9, 2002, bear market low. Based on NASDAQ history, this is ahead of typical recovery performance. But the 2000-2002 bear market was the longest and deepest since the index's inception, and the 82% gain still leaves it down 60% from its 2000 peak.

As the table shows, the NASDAQ's 78% decline is unprecedented in terms of magnitude and duration. So it isn't surprising the gain from the 2002 low is greater than the average of the eight previous recoveries.

Measuring from the March 2003 secondary low, the recovery has nearly matched past recoveries. At the end of February,...

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