On the 10th March, it will be 15 years since the NASDAQ stock peak of 5,048.62 on the back of the dotcom boom.
In a satisfying act of completeness, it closed at 5,008 points on Monday 2nd March– its highest level since the all-time high and only a few days short of the anniversary – following the first ten-day winning streak since 2009.
NASDAQ Index: Feb 2000 to March 2015
Past Performance is not a reliable indicator for future performance.
The millennium peak did not turn into a sunlit upland plateau, but almost immediately dropped below 5,000 and lost 20 per cent of its value within a month as the air was let out of the unsustainable dotcom bubble. The NASDAQ took the brunt of this and, two years later, it had fallen 80 per cent. It has taken well over a decade to recover – a slow, often painful ascent that was brutally set back when the financial crash cut its climbing ropes in 2008.
During the historic speculative bubble in the years 1997 – 2000, the equity value of stock markets in advanced nations rose steeply because of growth in the internet sector and associated fields. The period saw the founding of many new internet companies, known as ‘dotcoms’. A lot of these actually delivered very little in terms of a tangible service or product, but promised much and the hype surrounding them meant that they could dramatically lift their stock price simply by adding an ‘e-‘ prefix or a ‘.com’ to their name.
People bought into firms that had yet to achieve anything in the expectation that they would turn a profit in the future. Hype and hope can only be sustained so long – it’s performance, sales, profits, debt burdens and assets that matter – and many dotcoms crashed spectacularly, for example pet.com. Others, which had been profitable, such as Cisco, saw much of their value wiped out but survived and went on to thrive again.
Ironically, major drivers of the latest strong run have been tech stocks too. Household names (and some former dotcoms), like Apple, Facebook, Microsoft, Yahoo, Intel and Cisco. Confidently predicting a continuing rise would be foolhardy, given the recent sorry history outlined above. However, these companies are certainly ones of substance and heft that have already demonstrated considerable staying power and offer real products and services that are hugely popular with consumers and business users. This contrasts with the dotcom era, when many investors bought into a sector they didn’t understand simply because they feared not being in on a gold rush.
Today, investors are far more savvy, methodical and informed and, ironically again, rely on leading edge technology to stay on top of their game and for smooth transactions. Indeed, TD Direct Investing’s business has changed from being driven by phone trades to being 98% online in the post-dotcom period.
How our Digital world has changed
But what other changes have we seen since 2000? How different is the world of today and what are the prevailing trends?
The early web lacked depth, speed and was heavy with text only content. In 2000, mobile communications were finding their feet and the majority of people still only had four (terrestrial) TV channels to choose from. Everything was promised and ahead of us, but some elements that we take for granted now barely existed even in concept form back then, for example social media, tablets and 3D printing.
Nowadays, people struggle to keep up with the dizzying rate of change, as it accelerates and bounds forward relentlessly. A prototype breakthrough on a technology programme or innovation magazine (the modern successors to Tomorrow’s World), now becomes reality within months, not decades.
Throughout the seismic changes that have taken place in the digital arena of the last decade-and-a-half – and the changes these have brought to people’s lives – TD Direct Investing has given its customers all the leading edge tools and information platforms that DIY traders have needed to be the best informed and to transact most easily and cost-effectively.
We have been at the forefront of online share dealing for 16 years, becoming one of the first stockbrokers to offer it to self investors in 1999, when we opened a breakthrough trading site.
From these beginnings, we led the way in digital delivery for retail users – giving them the confidence and means to make informed decisions with ever greater access to market data and investment tools and driving the UK financial sector forward as other players were compelled to follow suit and adopt simplified trading, greater control and transparency.
Alongside this continuous improvement, a key tech aim has been to offer greater value for money. Our success here is marked by the fact that, in 2000, the average fee for an online trade of £5,000 in UK stocks was £26. By contrast, we have been able to reduce it to just £12.50 per trade now, with even lower rates for frequent traders.
And this has been recognised by members of the trading information website ADVFN, who have just voted TD Direct Investing ‘Best Low Cost Stockbroker 2015’.
The digital era has brought many advances and improvements and, it has to be said, not a few setbacks and disappointments. However, we have been determined to steer our customers through what can be a baffling array of options with clear information and easy-to-use trading facilities that give them all the advantages and ready access once enjoyed only by professional market players.
Helping investors to trade for themselves was our mission in March 2000 and, in a world of change, this remains true today – TD continue to help our customers help themselves to prosper. Please note any companies mentioned within the article are not personal recommendations and for illustrative purposes only.
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