Is the NASDAQ in a Bubble?

The NASDAQ Composite’s Chart Looks Like It Did During The Dot-com Bubble!

Image from pixabay.com

There are frightening similarities between NASDAQ price action during the last few years and the price fluctuations leading up to the burst of the Dot-com bubble, a massive stock market crash. The charts look almost the same. In case you do not know, the NASDAQ Composite is an index made up of all the companies listed on the NASDAQ stock exchange. And the NASDAQ is the home of mostly tech and pharmaceutical companies. It lists giants including Apple, Microsoft, Alphabet, Tesla. Facebook, and Amazon.com. So, the NASDAQ Composite is a pretty significant index. To illustrate the point about the similarity of the NASDAQ Composite today to right before the crash in 2000, two charts will be shown. It is your job to guess which one is from the rapid increase in price right before the Dot-com bubble burst, and which one is a chart of the NASDAQ Composite during the past few years.

Option One (Chart by Tradingview.com)
Option Two (Chart by Tradingview.com)

The two charts look extremely similar, down to the corrections and dips in price. It is very hard to tell which is which, due to the dizzying increase in price that can be seen in both.

So here is the answer. Option two is the Dot-com bubble chart. The only defining feature of option one is the steep crash that was caused by the coronavirus economy shutdown. But other than that they are very similar.

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It seems like a stock market crash is coming. Is Apple really worth 2.18 trillion dollars? Should a relatively small automaker like Tesla be worth 749 billion? Is Google really worth 1.4 trillion dollars? Should a software company like Microsoft really have a value equal to 1.82 trillion dollars? All four of those companies are innovative and groundbreaking, but they are almost certainly overvalued. If the NASDAQ keeps going up or holds its ground, it will be a pleasant surprise. But the rapid growth seen in the past few months makes that unlikely. Virtually every time growth this steep has been seen in the stock market, a crash has followed. Just the name of this article is ominous and scary. But it would be very remiss of us to not point this out. Because of all of this, I predict that the NASDAQ will fall at least one percent on Monday, Feb 22. And that will only be the beginning.

Edit: The NASDAQ dropped 2.46 percent on Monday. I was right.

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This is not financial advice. The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of GoldPundit.com.

Featured image courtesy of pixabay.com

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