Market Review and Trends
Don’t get caught in a bubble – Part 2
By Eight percent per annum  •  June 5, 2008
By: Jay The 2nd bubble that we will talk about is the one that is most familiar to many of us. This bubble goes by many names, the dot com bubble, tech bubble, IT bubble etc but I shall call it the TMT bubble (as some in the financial industry calls it). TMT stands for Tech, Media and Telco (I think), and it is named as such bcos these are the sectors that rallied the most during those days in 1999 and 2000. The index representative of this bubble is, of course, the NASDAQ, where most of the tech stocks are listed. Names like Microsoft, Cisco, Oracle, Amazon, Yahoo! etc. At the peak, NASDAQ was roughly at 5,000+. Again today it trades more than 50% discount of its peak at 2,200+ (though it is a good 100% up from its bottom at 1,100) So again even if you had bought 30% below its peak, you would still be under water today. It remains to be seen whether the tech stocks will suffer the same fate as Japan, ie never surpassing the previous high. It is now 8 yrs after the bubble bursted, and the NASDAQ has since risen 90% from its low. If it takes another 8 yrs to rise another 90%, this will bring NASDAQ close to 4,200. So perhaps those who bought at 5,000 can actually breakeven after 16 yrs. Read more... Don't get caught in a bubble series Don't get caught in a bubble - Part 1
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By Eight percent per annum
8% Value Investhink is a value investing / critical thinking knowledge platform with the goal to share knowledge, help understand investing and finance, and help develop critical thinking skills. One important objective would be to help others understand the concept of value and avoid overpaying, especially for property.
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