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The end of the internet bubble
The Nasdaq peaked at 5,048 on March 10, 2000 and fell 78% over 30 months. The S&P 500 fell 49%. Recovery to the Nasdaq high took 15 years (2015). This remains the longest recovery in tech history.
Editorial commentary written by ALAN analysts. Figures cited below are analyst-authored context — they are not derived from the chart above and may reflect different windows or sources.
At the peak, the Nasdaq traded at 175x trailing earnings. 80% of IPOs were unprofitable. Revenue multiples exceeded 100x for companies with no path to profitability.
Because the S&P 500 had lower exposure to speculative tech, its recovery (2007) was much faster. Diversification beyond tech was the key differentiator.
The 'Magnificent 7' of 2024 collectively earn $300B+ in annual free cash flow. The dot-com leaders (Cisco, Intel, WorldCom, Pets.com) generated a fraction of that. Valuation context matters.
Cap any single theme, however convincing, at a weight you could watch fall by three-quarters and take fifteen years to recover without derailing your plan; diversification beyond the era's favorite sector was what separated a 7-year recovery from a 15-year one.