Comparing Financials and the Nasdaq

 |  Includes: IYF, ONEQ, QQQ, XLF
by: Bespoke Investment Group

Many people have compared the decline in Financials during the most recent bear market to the decline in the Nasdaq when the Internet bubble burst in 2000. Below we highlight a chart showing the decline from their peaks for the Nasdaq and the S&P 500 Financial sector. The x-axis shows the number of trading days following their peaks. The Nasdaq peaked on March 10th, 2000, while the Financial sector peaked on February 20th, 2007.

The Nasdaq bottomed 647 trading days after it peaked for a total decline of 77.93%. The Financial sector bottomed 515 trading days after its peak and declined 83.96%. As shown in the chart, the Financial sector has bounced back more quickly than the Nasdaq did immediately following its bottom. After the Nasdaq bottomed, it traded in a solid uptrend for the next five years before it entered another bear market when the crisis hit in late 2007. If the Financials take the same track as the Nasdaq did, there will be a lot of happy investors out there.

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