Nasdaq Selloff: A Make-Or-Break Moment (Video)
The Nasdaq 100, of which Apple represents 14%, fell off the bunk bed on September 3.
After reaching all-time highs on Wednesday, the tech-heavy index dropped by roughly 5%. These corrections off the very top have been rare historically. Since the creation of the Nasdaq 100, in 1971, the index fell in a single day by more than 3% from a peak level only a few times: twice in 2020 and again only a couple of months before the start of the sharp March 2000 correction.
Generally speaking, long-term investors should not worry much about dips along the way. Over time, stocks tend to climb. But bubbles can be highly distructive of a portfolio’s value. Check out the graph below.
Following the bursting of the dot-com bubble, the Nasdaq 100 did not return to peak levels for another 15 years. That is, an investor that bought the index in March 2000 and held on for a long time remained under water until 2015. Therefore, yes, there is significant risk of capital loss when valuations shoot well above what could be considered reasonable.
The key question remains: is the Nasdaq 100 in a bubble or not? And are we staring into the early innings of a sharp correction? The is no easy answer here, but watch the video above for a bit more insight into the current market environment.
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(Disclaimers: the author may be long one or more stocks mentioned in this report. Also, the article may contain affiliate links. These partnerships do not influence editorial content. Thanks for supporting The Apple Maven)