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While the Dow Jones Industrial Average is Hitting New Highs…
By JLP | May 8, 2007
the NASDAQ Composite Index is still only worth about half what it was at its peak seven years ago.
On March 10, 2000, the NASDAQ Composite Index hit an all-time high of 5,132.52. On the 7-year anniversary of it’s peak, the NASDAQ Composite Index closed at 2,387.55 for an average annual loss of 10.36%! From the peak in 2000, the NASDAQ didn’t reach the bottom until 2 1/2 years later, when it hit 1,108.49 on October 10, 2002. Since that bottom, the Composite Average has had an annualized rate of return of over 20.16%. That said, it STILL has a long way to go just to get back to its peak. Even if it were to continue it’s 20.16% annualized tear (which is asking a lot), it would take another 3.7 years to get back to the peak.
The point of this? Diversification. While the NASDAQ has struggled over the last 7 years, the Dow Jones Industrial Average has actually had a positive annual return of 2.67% . No, it’s not a lot but it’s a heck of a lot better than a negative 10.36%!
Topics: Investing |