The Day Nasdaq's Music Died

Remember those days when you couldn't go to a gym or a party without hearing someone extol the virtues of a Cisco, a JDS Uniphase or an Ariba? When people equated a stock split with some mystical sign of divine approval? These days, people are marveling at what they would have been marveling at back in the late 19th century -- soaring land values.

Five years ago, the music died on the Nasdaq. The tech-laden stock index reached its all-time high on March 10, 2000, closing at 5,049. The dot-com bubble burst over the next year, wiping out $3.5 trillion of wealth. Wednesday, the Nasdaq closed at 2,061, still nearly 60% off its high.

In retrospect it's all so obvious -- the frenetic nature of the fin de siecle (end-of-millennium, for that matter) craze, the absurdity of the pie-in-the-sky dot-com narratives that passed themselves off as serious business plans and sober Wall Street analysis. It was a triumphalist orgy of hubris and revolutionary optimism. No more suits, no more gravity, no more price-to-earnings ratios. We were partying like it was 1999, which is why the Nasdaq could soar 2,000 points -- nearly its total value now -- in only four months.

Then came the crash. Prince's prophetic "1999" can just as well be read as the apologia of a Wall Street dot-com analyst.

I only want U 2 have some fun

I was dreamin' when I wrote this

Forgive me if it goes astray But when I woke up this mornin'

Coulda sworn it was judgment day

The sky was all purple,

there were people runnin' everywhere

Tryin' 2 run from the destruction,

U know I didn't even care

'Cuz they say two thousand zero zero party over,

oops out of time

So tonight I'm gonna party like it's 1999

A lot of investors did suffer grievously on judgment day, and many dreams of early retirement were dashed. But it's astonishing how resilient the overall economy proved. Unlike previous market collapses here and elsewhere, this one did not lead to a depression. Despite the bubble pop and a host of other difficulties in the last five years, real estate values, consumer spending and the banking sector held up. The old-economy Dow Jones industrial average is down only 7.8% from its all-time high on Jan. 14, 2000.