Is This the Nasdaq or a Dollar Store?

Okay, now I’m getting worried.

The Nasdaq Composite today got clobbered yet again, for all the usual reason: investors are still freaked out about the financial crisis, have little faith that the Congressional bailout package will accomplish anything, and now await the start of what will undoubtedly be a miserable third quarter earnings season.

The Nasdaq today fell 108.08 points, or 5.8%, to 1754.88. That was the 65th worst day ever for the index in terms of points; the 22nd worse on a percentage basis.

The index is now down 15.7% in the last 5 days, 19.6% in 7 days, 23.5% since the end of June and 33.8% for the year to date. The index today closed at the lowest level since August 2004.

In fact, the index is now one lousy point above where it closed on March 6, 1998. Today: 1754.88. Then: 1753.49. That’s right: the index has moved one stinkin’ point in 10 years. Over that time period, we’ve seen the Internet bubble, Web 2.0, almost the entire two terms of the Bush Administration, the iPhone, the Wii, Google and a million other brilliant innovations. And the Nasdaq Composite has moved one single, stupid point. How depressing is that?

Let’s take a close look at the carnage in individual names. Viewer discretion is advised.

• Microsoft (MSFT) fell $1.68, or 6.7%, to $23.23. That’s a new 52-week low; the stock now has a 2% yield and trades for under 11x estimated EPS for the June 2009 fiscal year.
• Cisco (CSCO) fell $1.62, or 7.9%, to $18.84, the lowest level in more than 2 years.
• Intel (INTC) dropped 91 cents, or 5.4%, to $16.02. That’s a 12-year low.
• Apple (AAPL) plunged another $8.98, or 9.2%, to $89.16, even lower than the panic after the fake heart-attack story. That’s a long way from the 52-week high at $202 in change.
• Oracle (ORCL) fell $1.52, or 8.3%, to $16.78, the lowest price in more than 2 years.
• Applied Materials (AMAT) dropped $1.19, or 8.8%, to $12.35, the lowest price in nearly 10 years.
• Research In Motion (RIMM) dropped $4.61, or 7.7%, to $55.05. Year to date drop: more than 50%.
• Yahoo (YHOO) fell another 73 cents, or 4.8%, to $14.58. That’s the lowest price in more than 5 years, and well less than than half of the $31 a share Microsoft had offered to buy the company.
• Google (GOOG) fell $25.20, or 6.8%, to $346.01, well under half of its 52-week high at - can you imagine? - $747.24. The stock today hit a new 3 year low.
• Sun Microsystems (JAVA) fell 69 cents, or 10.5%, to $5.91, the lowest level since mid-1995. About a year ago, when the stock was trading at about $5, the company completed a 1-for-4 reverse stock split. Now that the stock has dropped almost all the way back to $5 once again, losing about 75% of its value, will they do another reverse split?

I don’t know where the bottom is, but I will say this: if you are feeling brave, this might be one of the best days ever to start a new tech portfolio: the Nasdaq suddenly looks like a dollar store.

Comments

[Fabien Hug:]

I believe you're right. The problem is that most of us were in during the slide or part of the slide. No more money to enter.

2008 Oct 08 08:30 AM

[Smarty_Pants:]

The time to buy is when they are going up, not on the way down. There is time to wait yet. Great companies had P/Es of 5 or 6 at the end of the Depression. We might still have a long way down to go.

2008 Oct 08 11:54 AM

[DreamRaj:]

Ditto

2008 Oct 08 11:59 AM

[Socialism c...:]

@SmartyPants: WRONG!! Buy on the way down, in increasing increments!! Sell on the way UP, again in increments!!

2008 Oct 08 05:34 PM

[glacier32:]

Eric,

Google's stock price does not reflect its fundamentals. The management should do something e.g. a buy back or preannouncement like ibm did last night.

Do you know what takes GOOG to preannounce their Q3 results? CEO said in late Sept that "business is as usual even though there is drama on wall street".

2008 Oct 09 08:25 AM

[5kDow:]

Technology still has further down to go as they jacked the Nasdaq at the beginning of the year and you still have loft valuations.

2008 Oct 14 04:13 PM

[BeachRider:]

Here we are on JAVA again. Don't they have a couple of Billion in cash? Do they really have so-little appeal as a buyout target? It looks like the hedge funds are really burying this stock. It doesn't help that they have three consecutive semi-surprises. How does their management keep their jobs with this performance. The market is down 30-40%. Java is down almost twice that.

2008 Oct 21 01:45 PM