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March 08, 2005

Nasdaq's 5-Year Anniversary

Amey Stone

Was it really only five years ago that the Nasdaq peaked at 5,048? To me it seems like a century ago, a more hopeful and happy, yet naive time. My world view has changed since then -- more due to the events of 9/11 and its repercussions than the tech bubble bursting.

But how much has the perspective of investors changed since then? Quite a bit, a new study from Schwab finds. See, "Has anything changed when it comes to picking stocks?"

In the study performed this month, Jeff Ryan, senior research analyst at Schwab Center for Investment Research, compared the traits of the highest performing stocks in the period just prior to the Nasdaq peak with the traits of the highest performers currently.

At the peak the top-performers were high beta (or risk), small-cap, and predicted to grow fast. In contrast, today's best-performers, finds Ryan, are "larger companies with reasonable valuations, strong and growing free cash flows, and stable sales. It appears that investors have at least partially lost their appetite for high levels of risk."

Ryan's bottom line: "The lessons of the bubble were not completely lost on the investing public."

Tomorrow I'll share another retrospective on the Nasdaq's peak from one of my smartest sources: Peter Cohan, an author and management consultant in Marlborough, Mass.

11:59 PM

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