An Interesting Look at NASDAQ Yearly Growth Behavior
If you looked at NASDAQ’s entire history, more specifically, from 1972 to the present, you’ll get something like this:
If we broke it up into yearly growth, you’d get something like this:
Notice the spacings between the red band regions. It’s almost like watching weather patterns, where if we get too much dark blue for a long period of time, we’re going to get a period of dark red, but if we temper those dark blues with a spattering of light reds or light blues to cool things off a bit, maybe the engine won’t choke so hard the next time.
Notice the longest time between dark red regions in the past was about 10 years, ending in the 2000 dotcom bubble. But notice how that 10-year period differs from the period following the 2008 financial crisis. True, it’s been more than 10 years since that fateful year, but THIS non-red span is unprecedented in appearance as well. It’s a bit more muted and slightly more colorful. The radiator is doing a better job of keeping temperatures from getting too hot or too cold.
If you look at average yearly growth, 2020 does seem to be above average:
It wouldn’t be unprecedented for the NASDAQ to continue to squeeze out a little more juice this year even though it’s already 23% YTD.
We’ve had consecutive years of above-average growth before. Sometimes it was followed by another decent year, sometimes it wasn’t.
“There’s a first time for everything” as they say, but then sometimes the “first time” never comes.
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