Flashing Back to Nasdaq 5000

Five years ago. Five faith-shattering, bowel-twisting and ultimately sobering years ago, the Nasdaq topped out at 5,132 -- a number that seems as elusive today as a cure for the common cold, but that on March 10, 2000, was just another stepping stone on the way to greater things.

Five years ago, investors could have looked back to March 10, 1995, when the Nasdaq traded below 800, and felt a gust of pride at all the wealth created in such a short time: Why, there were so many new technologies promising to make the world a better place that all a smart young CEO had to do was step outside his business school, open up his wallet, and the dollars would come flying in. Just chanting that magic mantra -- "Things really are different this time" -- was enough to ratchet the market higher.

Five years ago, it turned out, things really weren't all that different.

It's a good bet that anyone who was long in March 2000 probably wouldn't want to relive the past five years again. But at least we can console ourselves with the knowledge that we learned something from the whole bitter experience. And those lessons are important, right?

After all, the most painful lessons keep us from making the same mistakes again and again. How were we to know that the Nasdaq bubble would burst in 2000, just like the Japanese stock market bubble had burst in the early 1990s, or like the Southern California real estate bubble had burst in the late 1980s, or like the emerging markets stock bubble had burst in the mid-1990s, or like the -- oh, never mind.

In my own muted celebration of the anniversary of the Nasdaq peak, I went back and read a lot of news stories from March 2000. Boy, there sure were plenty of scary signs that people were acting irrationally:

Venture capitalists scrambling to find start-ups to pour money into;

Stories in esteemed publications like The New York Times touting a "Goldilocks" economy that could keep growing with low inflation for years;

Tech companies like Buy.com, many of them yet to post a profit, jamming the pipeline to reach an overheated IPO market;

Companies like GuruNet (GRU) surging 30% in a day on news of a partnership deal with a tech giant like Google (GOOG).

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