For some perspective on the current state of the stock market, today’s chart presents the long-term trend of the Nasdaq. Today’s chart illustrates the degree by which the tech-laden Nasdaq plunged during the dot-com bust (2000-2002). The Nasdaq then rebounded sharply into 2004 whereby it continued its uptrend (albeit at a relatively modest pace) during the real estate boom. Beginning in late 2007, the trend turned sharply to the downside as fears of an outright collapse of the financial sector took hold. As it became apparent that the financial sector would survive, stock prices rebounded sharply with the Nasdaq currently trading fairly close to what was once pre-crisis support (green line). It is worth noting, however, that the post-crisis rally has been slowing over time and is currently approaching resistance (red line).
Notes:
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Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.