The Nasdaq Composite Index's all-time high, reached five years ago, may become the United States sharemarket's version of the 1980 peak in gold or the 1989 high in Japanese shares.
The index would have to more than double to surpass its record close of 5048.62 on March 10, 2000, even after climbing 85 per cent since October 2002.
Shares such as Intel, the second-largest Nasdaq company by market value, and Cisco Systems, the third biggest, will need to more than triple to exceed the peaks they reached during last decade's internet bubble.
"Unless the world falls apart, we'll get back to those highs," said Chuck McQuaid, whose US$14 billion ($19 billion) Columbia Acorn Fund has returned 12 per cent on average in the past five years, compared with a 16 per cent average loss for the Nasdaq. "But who knows how long it will take?"
Gold reached a high of US$873 an ounce in January 1980 after more than doubling in 1979, reflecting concern that inflation would accelerate. The metal's price dropped below US$300 in June 1982 and has not risen above US$510.10 since.
In Japan, the benchmark Nikkei 225 Stock Average rose for 12 consecutive years as the economy surged as much as 8 per cent annually and real-estate values soared.
The benchmark peaked at 38,915.87 on December 29, 1989, and dropped in nine of the next 13 years. Last week, it was 69 per cent below its high.
The Nikkei's plunge from its record and the Nasdaq's slide were similar, as both followed five-year stretches in which the benchmarks at least tripled.
In the 1990s, speculation that the internet's emergence would spur demand for computer-related companies' products and services fuelled the Nasdaq rally. Computer-related shares account for about 40 per cent of the composite index's value.
The bubble burst as the optimism proved to be excessive. Companies such as At Home, a provider of internet service over cable-television lines, went bankrupt.
Stocks including JDS Uniphase, the world's largest maker of parts for fibre-optic networks, lost more than 90 per cent of their value.
More than US$7.6 trillion in wealth was wiped out.
Merrill Lynch's Henry Blodget, an analyst who made his reputation by predicting a surge in Nasdaq-listed Amazon.com's stock price, was banned from the brokerage industry.
"When you get a major bubble, it takes a very long time to recover," said John Bollinger, founder of BollingerBands.com, from his office in Manhattan Beach, California.
"People lose interest. They forget about the stocks."
The Dow Jones Industrial Average needed a quarter of a century to regain the peak that it reached in 1929, the year of the Black Tuesday crash.
The benchmark plummeted 90 per cent before hitting bottom in July 1932, and did not close above its high until November 1954.
The Nasdaq's drop rivalled the Dow average's.
The composite index skidded 78 per cent before bottoming at 1114.11 on October 9, 2002, more than 2 1/2 years after its peak. It closed during last week at 2061.29.
In 2003, the Nasdaq rebounded 50 per cent, about double the Standard & Poor's 500 Index's gain of 26 percent. The composite index rose another 8.6 per cent last year, trailing the S&P 500's 9 per cent increase.
This year, the Nasdaq has lost 5.3 per cent and the S&P 500 has dropped 0.4 percent.
The Dow average is up 0.2 percent.
The composite index may have an advantage over the Dow industrials in attempting to return to its record highs, said James Bianco, president of Bianco Research LLC in Chicago.
"A lot of the big companies went out of business and we can bring in a whole new class of stocks," he said.
The Nasdaq-100 Index, composed of 100 of the market's largest non-financial companies, has 42 different members now than at the end of 1999.
"If you delete all those 2000 busts, the new companies with new outlooks can power the Nasdaq higher," Bianco said.
By contrast, after 1929, the Dow's members "didn't disappear, and investors had to suffer through a restructuring of those companies. That took 25 years."
James Oelschlager, president of Oak Associates in Akron, Ohio, expects internet companies like Google and EBay to spur a rally in the Nasdaq. He says the index will eventually reach a new high: "It's just a question of when."
- BLOOMBERG
* Business editor Richard Inder's column returns next week
Pining for the glory days
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