Investors Hold Breath After Tumble
March 13 -- The Nasdaq roller coaster shows no sign yet of ending its plunge. Since peaking a year ago, the once-glamorous high-technology index has declined by an incredible 60 percent in value — falling to below 2,000 for the first time in 27 months.
As a spectator sport, there has never been anything quite like it. Joe Public saw the Nasdaq soar and wanted in. Today, more than half of U.S. households own stocks, compared to one-third a decade ago. Technology stocks tripled in value in the late '90s, bringing in millions of new customers to mutual funds and brokerage firms.
But $4 trillion in market value has been lost since the peak last March. Yet many observers say tech stocks are still not cheap.
"If the economy doesn't begin to recover, what looks like a cheap stock today may indeed may not be cheap at all," said market analyst Hugh Johnson.
Both the Nasdaq's rise and fall stunned investors. For many, rocketing values have been replaced by a sickening descent. The collapse to below 2,000 is yet another unhappy milestone
"Angry and disappointed" is how investor John Malones describes how he feels about his high-tech stock losses, which amount to tens of thousands of dollars.
"l feel very disappointed, frustrated," he said.
The fallout was felt around the globe, as Tokyo's benchmark Nikkei index fell to a 16-year low and the U.S. dollar also fell against the yen. The Nikkei dropped 351.67 points — 2.89 percent — to 11,819.70, its lowest close since Jan. 28, 1985.
The Japanese technology stock index fell for the second straight day, after dropping 456.53 points, 3.75 percent.
Pros See Long Wait For Next High
With many analysts saying today's high-tech stock prices are much closer to reality than those of a year ago, it's hard to find market professionals who expect the Nasdaq will be soon returns to its old highs.
"Where we are today is much more reasonable levels of valuation," said Phil Orlando, economist at Value Line Asset Management in New York. "Investors should perversely view the 60 percent correction in the Nasdaq as an opportunity, rather than something to fret about."
