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Nawar Alsaadi
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Nawar Alsaadi is an independent investor with a background in finance & marketing; his investment philosophy is focused on value growth or special situation investing based on profiting from dislocation in assets prices caused by behavioural factors. He is also interested in the financial... More
  • Nasdaq 5000 0 comments
    Apr 1, 2010 3:13 PM | about stocks: QCOM, AOL, BRK.A, ALA, LEHMQ

    Last month, was the Nasdaq 10 years peak anniversary, thus for this occasion, I thought about going back and checking some of the media coverage at the time. Unlike articles dealing with historic events, reading articles from that historic era makes the experience more authentic; granted looking at matters in hindsight makes it easy for us to look like “geniuses” since we are armed with the knowledge of the aftermath; however this doesn’t diminish much the apparent foolishness of what written/said at the time:

    This is what Ethan Harris had to say to the BBC in March 10th, 2000 as the Nasdaq crossed 5000 point:

    Ethan Harris of Lehman Brothers told the BBC: "Our feeling is that the move towards new economy stocks is really going to be a long-run sustained process.

    "It may ease off here and there, we may find the Nasdaq being a little overvalued at some point, but in general its the way of the future. This is a legitimate structural shift in the economy and it will continue."

    “A little overvalued”  this had to be the understatement of the decade; a thought occurs, where the hell is Lehman anyways?

    Here is another comment at SmartMoney, this time it is from Ben Marsh at Adam Harkness & Hill:

    "The Nasdaq 5000 is smacking people across the face and saying, 'I don't care if the Dow is down. There is money going into stocks and they're real stocks,"' says Ben Marsh, director of equity trading at Adams, Harkness & Hill. "The money will continue to go into these Nasdaq companies. The drop to Dow 10000 will wake up some common person and he'll say, 'Berkshire Hathaway isn't the only way to play. There are other ways to make money right now."'

    The Nasdaq smacked people in the face alright! But not the way Ben expected it!.

    Here is what Thomas McManus had to say in the LA Times as the Nasdaq crossed 5000:

    "I'd be surprised if it takes too long before the Nasdaq catches up to the Dow [in point terms] because of the underlying growth rates of the companies in the indexes," says Thomas McManus, market strategist at Banc of America Securities in New York.

    I must say Thomas must be VERY surprised right now!.

    Finally, we can talk about the tech bubble without our dear friend Ralph
    Acampora, this is what he was telling investors at the time:

    A lot of people are tired of hearing about the new economy vs. the old economy, but that's where it comes down," said Ralph Acampora, director of technical research at Prudential Securities.

    Acampora, one of Wall Street's most relentlessly bullish analysts, said he expects the Nasdaq to reach 6,000 within 12 to 18 months.

    "If you're an astute observer, your portfolio will reflect what's new and exciting and dynamic," he said. "A lot of those are the companies that are in the Nasdaq."

    I am sure all those “astute” observers have exciting portfolios filled with the likes of America Online (NYSE:AOL), Lucent, eToys,, or even Qualcomm (Nasdaq:QCOM) at $600 a share!.

    Nawar Alsaadi

    An individual investor who learned an expensive lesson from the tech bubble!.











    Disclosure: No positions in any of the stocks mentiond
    Stocks: QCOM, AOL, BRK.A, ALA, LEHMQ
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