As Wall Street nears the 20th anniversary of the piercing of the dot-com bubble, the decade-old rally headed by a number of small players shows some similarities that cautious traders are keeping track of.
March 11, 2000, marked the start of a crash of overly-inflated stocks that might last over two years, failing investor favorites, including Worldcom and Pets.com, and take more than 13 years for Wall Street to recover from.
That bust concluded a 1,000% decade-long Nasdaq rally that had been stoked by low rates of interest and a rush to invest in the developing World Wide Web, often at any cost.
Now, after hitting a record high on February 13, the Nasdaq has reached more than 9,700 points, virtually double its high end in 2000 and about eight occasions the level of its channel in 2002.
Among the so-called “Four Horsemen” of tech shares that fueled much of the Nineties tech rally, only Microsoft’s inventory price has recovered from the dot-com model. Intel and Cisco Systems remain under their 2000 highs, while Dell, the fourth member, has since been taken private and then relisted on the share market.
Microsoft is competing with Apple or the title of Wall Street’s most valuable publicly listed firm, with its stock quadrupling since CEO Satya Nadella took over as chief in 2014 and refocused the maker of Windows on cloud computing, a technology central to the current rally in Silicon Valley shares.
With a market capitalization of $1.4 trillion, Microsoft is now trading at more than 30 times anticipated earnings, its highest valuation since 2002.