It's been a banner year for stocks. The Dow and S&P 500 have been in record territory since March, while the Nasdaq has been trading at its highest levels since 2000.
Though the robust gains have ignited some worries that stocks may be overvalued, most experts believe that a dose of skepticism is actually healthy and predict that stocks will continue to rise next year, albeit at a more modest pace.
Still, the fact that the Nasdaq is back at a level it last traded at during the tech bubble worries some investors. But experts say the Nasdaq is a completely different animal than it was at the start of the millennium.
"The Nasdaq has really grown up over the last decade. It's a lot more mature now," said Kim Forrest, senior equity analyst at Fort Pitt Capital.
For one, the Nasdaq is no longer as tech-heavy as it used to be.
Tech stocks still make up about 42% of the Nasdaq composite, but it was nearly 60% at the height of the tech bubble, according to the Nasdaq OMX (NDAQ). And the exchange has welcomed more companies from the retail sector, health care, and financials. Energy, materials and utility companies, which virtually had no presence on the Nasdaq a decade ago, are also now a small part of the exchange.
"The Nasdaq is definitely not nearly as lopsided as it used to be," said Ryan Detrick, senior technical analyst Schaeffer's Investment Research. "Having more diversification gives the index a whole different feel, and helps its safety factor."
Even the top 100 companies in the Nasdaq are a lot more diverse, said Detrick. He pointed out that one of the companies that is slated to join the Nasdaq-100 (which is the largest non-financial firms trading on the Nasdaq) this week is Tractor Supply Company (TSCO), the country's largest farm and ranch supplies chain.
Overall, the most heavily-weighted companies in the Nasdaq have changed pretty significantly. Apple (AAPL) now makes up nearly 13% of the Nasdaq-100, compared to just 1% at the height of the tech bubble.
Amazon (AMZN), which was publicly traded in 2000, and Google (GOOG), which was around but still private, have become more dominant. Older tech titans like Cisco (CSCO) and Intel (INTC) no longer have as much influence over the index.
Biotechnology companies Gilead Sciences (GILD), Celgene (CELG) and Amgen (AMGN) have also grown more prominent in the Nasdaq as the industry has matured. The biggest biotechs are all profitable companies that now rival Big Pharma firms.
"Biotech companies are now making money, which wasn't so much the case a decade ago," said Detrick. "And with the way the demographics are changing -- aging baby boomers -- biotech will continue to be one of the strongest sectors."
And of course social media companies like Facebook (FB) have added a whole new dynamic to the tech sector in recent years.
Not only have the companies at the top changed, but they're trading at much more reasonable valuations.
Back in early 2000, Cisco traded at levels that were more than 100 times earnings estimates for the coming year. Today, Apple trades at less than 15 times earnings expectations for 2014.
While most experts agree that the Nasdaq overall is not in bubble territory, they warn that some particular sectors may be over-hyped.
"It's pretty clear to me that 3-D printing companies are overvalued," said Forrest.
Forrest said that while people are in love with the idea of being able to design something and print it out, 3-D printers will only really be useful to organizations that design products just before the prototype phase.
"The reality of what these products can do, should do and will do are way different than what people think," said Forrest. "Will we have 3-D printers? Yes. Will they be in everyone's homes? No."
It was a bloody day for technology stocks on Wall Street, as investors punished the entire sector after Google and Microsoft both delivered disappointing earnings results.
Microsoft (MSFT) took the worst beating, plunging more than 11% -- its worst one-day drop since January 2009. The company badly missed Wall Street's profit forecasts after taking a huge write-down on its Surface tablet last quarter.
That bad news as was a hot topic among MOREHibah Yousuf - Jul 19, 2013 4:01 PM ET
The Securities and Exchange Commission approved Nasdaq's plan to pay $62 million to trading firms that incurred losses during Facebook's botched public debut last May.
The four major trading firms -- Knight Capital (KCG), Citadel, Citigroup (C) and UBS (UBS) -- lost a combined $500 million due to technical glitches at the Nasdaq during Facebook's initial public offering.
And while the accommodation plan won't compensate the firms in full, the SEC said it MOREHibah Yousuf - Mar 25, 2013 12:32 PM ET
Norwegian Cruise Line (NCLH) sailed more than 30% above its initial public offering prices when its shares debuted on the Nasdaq (NDAQ) Friday.
The third largest cruise ship operator in North America sold 23.5 million shares for $19 apiece -- slightly better than the estimated range of $16 to $18.
Norwegian Cruise Line plans to use part of the $446 million it raised to pay down some of its $3.1 billion MOREMaureen Farrell - Jan 18, 2013 11:49 AM ET
The battle for the hottest IPOs among stock exchanges is fierce, and it looks like the New York Stock Exchange has won first prize.
Early in the year, it looked like Nasdaq (NDAQ) would be a shoe-in, after it landed the Facebook (FB) listing.
Of course, the Facebook IPO was an epic flop, and the New York Stock Exchange (NYX) ultimately edged ahead of its rival.
The NYSE landed the majority, or MOREMaureen Farrell - Dec 27, 2012 3:19 PM ET
SolarCity (SCTY) is shining on its first day of trading.
In its debut on Nasdaq (NDAQ) Friday, SolarCity closed 47% above its $8-a-share initial public offering price.
To get that pop, SolarCity was forced to scale back its expectations. The company had originally tried to price its offering between $13 and $15, which would have given it a valuation close to $1 billion, and raised $141 million.
Even though the company upped MOREMaureen Farrell - Dec 13, 2012 12:50 PM ET
Facebook will make its way into the Nasdaq-100 (NDX) next week, but the social network could find itself in the even more widely tracked S&P 500 (SPX) soon enough, too.
According to Standard and Poor's methodology, "initial public offerings should be seasoned for 6 to 12 months before being considered for addition to an index." Facebook (FB) just celebrated its six-month birthday as a public company a little over two weeks ago.
While MOREHibah Yousuf - Dec 6, 2012 1:41 PM ET
Facebook is joining a new social network -- the Nasdaq-100 to be precise.
The California-based social media company will join the elite index on Dec. 12, replacing Infosys, an Indian tech company that is moving its U.S. listing to the New York Stock Exchange.
The move is not exactly a surprise. The Nasdaq-100 includes the 100 largest non-financial securities trading in the market. And with a market capitalization of around $60 billion, Facebook MORECharles Riley - Dec 4, 2012 11:41 PM ET
YY, the first Chinese company to brave the U.S. initial public offering market since April, was expected to meet a wary investor base Wednesday. Yet YY's (YY) stock managed to rise 10% in its debut on Nasdaq (NDAQ).
A Chinese Internet social media platform with a focus on gaming and video chats, YY, priced its offering at $10.50, the low end of its expected range. The company raised $82 million for MOREMaureen Farrell - Nov 21, 2012 11:04 AM ET
IAC/InterActiveCorp shares took a tumble Wednesday, amid confusion surrounding the company's 2013 forecast.
Prior to the market's opening bell Wednesday -- IAC, which runs sites like Ask.com, Dictionary.com and Match.com -- issued third-quarter earnings that topped Wall Street's expectations. Following the release but prior to its earnings call, IAC said it expects to report an operating loss for its "media and other" segment in 2013 in a filing with the Securities and Exchange MOREHibah Yousuf - Oct 24, 2012 6:11 PM ET
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