Making Financial Headlines · Page 2
The Nasdaq's history lesson comes with no answer key
· New York time
Friday's sharp Nasdaq plunge revived comparisons with the peak of the dot-com bubble, when enthusiasm for internet companies helped send technology shares soaring before a painful reversal. The comparison puts today's tech rally under scrutiny, but one day's fall cannot establish that a bubble has burst or predict what comes next. The attraction of the analogy is obvious. Investors are once again weighing high expectations for technology against the prices they are willing to pay. A fast-moving selloff makes the old charts look especially inviting, and market veterans have a well-stocked library of cautionary tales. Yet a resemblance in a chart is not a complete account of the businesses behind it. The question is whether expectations and earnings can stay in step, not whether the calendar has found a particularly dramatic anniversary. A market can become nervous without repeating every chapter of an earlier collapse. The financial industry's historical memory is at its most vivid when prices fall. Suddenly everyone has a vintage chart, a favorite comparison and a warning that the past is not a perfect guide. The chart may be old, but the demand for an immediate verdict is thoroughly modern.
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