On this day in 2000, the NASDAQ Composite Index peaked at an all-time high of 5,048.62. This marked the end of the dot-com bubble, a period of frenzied speculation in internet and technology stocks that had been fueled by the rapid growth of the internet and the belief that traditional measures of valuation no longer applied.
The dot-com bubble had been building for several years, as investors poured money into companies with little or no earnings, based solely on their potential for growth. Many of these companies were internet start-ups, and their valuations were based on metrics such as website traffic and user growth rather than traditional measures such as earnings and revenue.
The bubble burst in early 2000, as investors began to realize that many of these companies were unlikely to ever turn a profit. The NASDAQ Composite Index, which had been climbing steadily since the mid-1990s, began a steep decline that wiped out trillions of dollars in wealth.
The fallout from the dot-com bubble was significant, as many investors lost large sums of money and several high-profile companies went bankrupt. However, the bubble also had a lasting impact on the technology industry, as it forced investors and companies to focus on profitability and sustainable growth rather than just growth at any cost.
Today, the NASDAQ Composite Index has recovered from its dot-com era peak, and technology companies continue to play a major role in the global economy. However, the lessons of the dot-com bubble remain relevant, as investors and companies must continue to balance growth with profitability and avoid getting caught up in speculative bubbles.