Seven and a half years after the start of the great recession, the stock market has recovered and then some. The Dow has crossed over 18,000 and the S&P 500 over 2,000, both well above their pre-recession records. But as well as the markets have done, there is one index that just this week has surpassed its all-time high from the year 2000: the Nasdaq composite.
The Nasdaq composite is the index that tracks the progress of all the stocks that trade at the Nasdaq exchange. The Nasdaq exchange was created in 1971 and was the world’s first electronic marketplace for stocks. It was basically a system of computers that were hooked together to connect offers to buy and sell. Every other exchange depended on people to make the trades for investors. Over time, the Nasdaq became the preferred exchange for the internet and computer sector and companies that were on the cutting edge of technology.
In the 90’s, the internet was the latest and greatest thing out there. Everyone wanted a piece of the action. Internet companies that had no earnings or revenues or, sometimes, even a business plan, were raising hundreds of millions of dollars through the IPO (initial public offering) market. This is how companies generate capital and start trading on the stock market.
By the late 90’s, the Nasdaq was clearly in a bubble. From August of 1999 to May of 2000, the composite doubled to reach its all-time high of 5,048.62. And then it all came crashing down. Over the next two years, a myriad of internet related companies were in bankruptcy or totally shut down. By October of 2002, the Nasdaq had lost almost 80% of its value and bottomed out at 1,114.11. I remember this anxious time in the market, and much talk that the Nasdaq would never again hit 5,000.
Fast forward to last Thursday (4/23/2015). The Nasdaq composite, which had flirted with a new high earlier this year, closed at 5,056.06. This tech heavy index, which boasts such members as Apple, Google and Microsoft, finally had reached the level it had achieved fifteen years earlier. But this time it’s different. Today’s Nasdaq has actual earnings and companies with real products and businesses. Long gone are the companies with internet sounding names, but no viable business plans, such as Pets.com. (You may remember them from their mascot: the sock puppet dog with the microphone). Also gone are the days when a company could simply add “.com” to their name and get a ridiculous stock valuation.
Today’s Nasdaq is a very different animal than the one in the 90’s. Many of its members are worldwide leaders in their industries and produce products we use every day. So, comparing Nasdaq 5,000 today with Nasdaq 5,000 fifteen years ago, is definitely apples and oranges. And, to answer a very popular question, no, we are not in another tech bubble.
Non-deposit investment products and services are offered through CUSO Financial Services, L.P. (“CFS”), a registered broker-dealer (Member FINRA/SIPC) and SEC Registered Investment Advisor. Products offered through CFS: are not NCUA/NCUSIF or otherwise federally insured, are not guarantees or obligations of the credit union, and may involve investment risk including possible loss of principal. Investment Representatives are registered through CFS. Verity Credit Union has contracted with CFS to make non-deposit investment products and services available to credit union members.
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An Investment Advisor registered through CUSO Financial Services, L.P., Gavin has 22 years of experience as an advisor in the Puget Sound area.
“I believe every client is unique and deserving of a personalized financial plan that will help them reach their individual financial goals. Before I make any recommendations, I like to get to know my clients. By asking the right questions, and developing an honest, trusting relationship I can really get a sense of what’s going to work best for them.”
Gavin graduated from the University of Washington with a BA in Business Administration and started his financial career with US Bank in the Investment Department. Prior to joining Verity in 2006, he spent eight years with Piper Jaffray.
So what is Gavin’s vision for his dream retirement?
“My dream retirement would be absolutely worry free: financially, emotionally, and in every aspect of life. My finances would be in order so expenses for travel, luxuries, and gifts for the kids, grandkids, and great-grandkids would be taken care of. My kids would be financially sound, so I would be confident in their prosperity. This would give me the freedom to travel and play and do whatever it is I want to do.”
When Gavin’s not working, he enjoys spending time with friends and family, watching Husky football, and taking weekend trips around the Northwest.
Gavin is registered to transact securities business in the states of WA, OR, CA, AZ, FL, HI, ID, IL, MN, NM, NY and VA.
*Non-deposit investment products and services are offered through CUSO Financial Services, L.P. (“CFS”), a registered broker-dealer (Member FINRA/SIPC) and SEC Registered Investment Advisor. Products offered through CFS: are not NCUA/NCUSIF or otherwise federally insured, are not guarantees or obligations of the credit union, and may involve investment risk including possible loss of principal. Investment Representatives are registered through CFS. Verity Credit Union has contracted with CFS to make non-deposit investment products and services available to credit union members.
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