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Tags: Ritholtz | Nasdaq | 4000 | stocks

Ritholtz on Nasdaq 4,000: It's Different This Time

By    |   Tuesday, 03 December 2013 07:29 AM EST

The Nasdaq Composite index broke above 4,000 last Monday for the first time in 13 years, leading some commentators to question whether a bubble is brewing.

But Barry Ritholtz, chief investment officer of Ritholtz Wealth Management, is sanguine. Much has changed for the index since 1999, he tells Yahoo.

First, there's its composition. "It used to be very tech heavy. Now it's probably about a fifth less technology than it was."

Editor’s Note:
5 Reasons Stocks Will Collapse . . .

Tech stocks account for 42 percent of the index today, down from 51 percent in March 2000, according to USA Today.

In addition, the Nasdaq now is "a lot more reasonably priced today than then [1999]," Ritholtz explains. "The last time we were at 4,000, a huge percentage of the stocks on the Nasdaq had no profits. We couldn't even talk about a P-E [price-earnings] ratio. It was essentially nonexistent."

As for stocks' future, "we've had a huge run for the past four years, so you could say this rally is a little long in the tooth," he notes. But given recent gains, "perhaps this is the beginning of a new secular bull market. I'm not quite ready to say that yet. . . . There are no alternative investments. Everybody has more or less been forced into equities."

Doug Sandler, chief equity officer of RiverFront Investment Group, agrees with Ritholtz's point that the Nasdaq index is much different today than it was 13 years ago.

"The reality is that the only thing that's the same from Nasdaq 4,000 in 1999 and Nasdaq 4,000 in 2013 is the number 4,000," Sandler tells USA Today.

Editor’s Note: 5 Reasons Stocks Will Collapse . . .

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InvestingAnalysis
The Nasdaq Composite index broke above 4,000 last Monday for the first time in 13 years, leading some commentators to question whether a bubble is brewing.
Ritholtz,Nasdaq,4000,stocks
302
2013-29-03
Tuesday, 03 December 2013 07:29 AM
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