Today is the scariest day for investors in 17 years
Today is the scariest day for investors in 17 years.
I remember.
Right at the very top of the tech stock bubble of 1999/2000.
It was December 31, 1999 to be precise — yes the last day of the year, the last day of the decade! The day before Y2K (remember THAT?)
That was the last time all three major stock indexes — the NASDAQ (^IXIC), the S&P 500 (^GSPC) and the Dow Jones Industrial Average (^DJI) — hit a record high on the same day.
Witchy enough for you yet?
What happened after that is well known. The markets all went to hell. But not without a few notable events — or were they telltale signs? — along the way.
First Y2K was a big bust — nothing happened. False alarm. Which maybe added to a sense of complacency.
Except for one thing. In the fourth quarter of 1999, the Fed, anticipating currency runs caused by Americans stocking up on cash because of Y2K, the Fed flooded the bank system with $80 billion in cash. (Just what the crazy markets needed: more money.)
A mere 10 days later — January 10, 2000 — AOL announced it was buying Time Warner (TWX) for $164 billion, a deal that was the ultimate symbol of tech bubble excess and which would go down in history as the worst merger in history. Still.
Three days later, Bill Gates stepped down as CEO of Microsoft (MSFT), turning the reins over to his buddy Steve Ballmer. At that time Microsoft was the biggest, most powerful tech company on the planet. After Gates stepped aside, Microsoft went on a long swoon. In fact after peaking just before Gates departed — in December 1999 at $58 — the stock dropped all the way to $17 in February 2009, and has only just now, yes this week, hit $58.
Still not scared?
On Jan 14, 2000, a day after Gates handed off to Ballmer, the Dow Jones Industrial peaked at 11,722.98. The frothier NASDAQ continued to climb, peaking on March 10, 2000 at 5048. The S&P topped out exactly two weeks later on March 14 at 1,552.87. (Indexes today just for reference: S&P: 2182. Nasdaq: 5221. Dow: 18590.)
And finally I love this one: Super Bowl XXXIV (that’s 34 for the Roman Numeral challenged) was played on January 30, 2000 in Atlanta. (Rams beat Titans 23-16.) But more significantly perhaps, an amazing 16 dot.com companies paid $2 million each for 30-second ads. The following year there were only three such ads.
Be afraid. Be very afraid.
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Andy Serwer is editor-in-chief at Yahoo Finance.
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