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Created: 2000-12-21
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NASDAQ Round Trip

J. Bradford DeLong

November 2000

  • The NASDAQ index's round trip in 1999 and 2000: it ended 2000 at about where it started in 1999--albeit at three times the average daily volume.
  • But between these endpoints, it doubled, dropped by a third, rose by a quarter, and then dropped by two-fifths: extraordinary volatility for any broad stock market index, anywhere, anytime.
  • The doubling of the NASDAQ was associated with extraordinary euphoria--wild expectations of the profits to be earned from exploiting high-technology.
  • But even though the future of the technology remains bright, the profits are unlikely to be there on a large enough scale to justify March 2000 dot-com valuations--or even January 2001 dot-com valuations.

Professor of Economics J. Bradford DeLong, 601 Evans Hall, #3880
University of California at Berkeley
Berkeley, CA 94720-3880
(510) 643-4027 phone (510) 642-6615 fax

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