Dotcom bubble: What happened after the market peak in March 2000

The dotcom bubble stands for the market phase around the March 2000 peak of the Nasdaq technology exchange. The Nasdaq Composite closed at 5,048.62 points on 10 March 2000. By 9 October 2002 it had fallen to 1,114.11 points, about 78% lower. On 23 April 2015 it closed above its 2000 peak again. Past performance is not a reliable indicator of future results.

The peak in March 2000

The Nasdaq's highest close in the 2000 to 2003 period came on 10 March 2000: 5,048.62 points. The following chapters show what happened next.

Questions and conflicts of interest

A share is highly valued when its price is high compared with what the company earns. Alan Greenspan, then Chairman of the Federal Reserve Board (the US central bank), also raised the question of inflated prices in 1996. In a speech on 5 December 1996, he asked how one knows whether "irrational exuberance" has unduly escalated asset values. He pointed to sudden and prolonged declines after such phases in Japan in the previous decade. The statement was a question and did not refer to the Nasdaq.

Regulators also looked back at these years later. On 28 April 2003, the US Securities and Exchange Commission (SEC), other authorities and ten financial firms agreed a settlement (an agreement without a court ruling) of about USD 1.4 billion, without the firms admitting guilt. The authorities' allegation: from around mid-1999 to 2001 or later, investment banking, the department for stock market listings and corporate financing, had improperly influenced research analysts. These are specialists who assess shares and issue recommendations on them. Among other things, the firms had to separate research from investment banking. This is an allegation by the authorities and not an explanation for the price collapse.

The bursting of the dotcom bubble until October 2002

It took just under 2 years and 7 months to reach the low (10 March 2000 to 9 October 2002). On 9 October 2002 the index closed at 1,114.11 points. That is the lowest close between 2000 and 2003. The lowest close of 2003, at 1,261.79 points on 13 February 2003, was higher.

The US recession, a phase of weak economic activity, falls into this period. According to the National Bureau of Economic Research (NBER), which dates business cycles, the peak was in March 2001 and the trough in November 2001. The recession fell into the same period; a link with prices is not proven by this.

Source: Nasdaq, Inc. via FRED (NASDAQCOM), price index in US dollar points, retrieved on 13 November 2026.

When did the Nasdaq close above its 2000 peak again?

From 5,048.62 to 1,114.11 points is a loss of about 78% (own calculation, rounded). To reach the old peak again, it takes not 78% but clearly more. The reason: after the loss, only part of the starting value remains, and the gain is calculated from this smaller value.

For the Nasdaq Composite, 5,048.62 divided by 1,114.11 gives about 4.53. That is a factor of roughly 4.5 and therefore about 353% gain from the low to the old peak (own calculation, rounded).

On 22 April 2015 the index closed at 5,035.17 points, and on 23 April 2015 at 5,056.06. That is the first close above the 2000 peak. About 15 years passed from the peak to that point, and about 12.5 years from the low in October 2002 (own calculation). All values apply to the price index: dividends and the exchange rate between the US dollar and the Swiss franc are not included.

What the review shows

An index such as the Nasdaq Composite is weighted by market capitalisation. Large stocks therefore move it more than small ones. How strongly a few large stocks can shape an index is explained in the article on concentration risk in indices.

Three mechanisms can be read from the figures. First, the gain needed after a loss grows faster than the loss itself. Second, about 15 years lay between the peak and the close of 23 April 2015 above the old peak. Third, conflicts of interest in the valuation of shares can become a matter for regulators, as the 2003 settlement shows.

Market crashes have their own history. Black Monday 1987 shows a different course.

Risks and limitations

• One index, one period: The article looks at one US index in one phase. Other markets or periods turned out differently.
• Price index: Dividends are missing. Investors in Swiss francs also bear a currency risk between the US dollar and the franc, which is not quantified here.
• Reference dates: The close of 4 October 2002 was slightly higher, at 1,139.90 points. Anyone choosing a different reference date will therefore quote slightly different lows. The loss then also varies between 77% and 78%. Here, the close of 9 October 2002 applies.
• Index instead of individual cases: The index combines many companies. It does not show how individual companies or individual investors fared. That the index rose again does not mean that every investment made up its losses.
• Losses remain possible: A renewed rise is not a promise. Investments can stay in the red for a long time.

Conclusion

In the dotcom bubble, the Nasdaq Composite closed at 5,048.62 points on 10 March 2000 and at 1,114.11 on 9 October 2002, about 78% lower. After this loss, a gain of about 353% was arithmetically needed to reach the old peak. On 23 April 2015, about 15 years after the peak, the index closed above it again. The review shows processes of the past and makes no statement about future prices.