March 2000. Nasdaq has risen 400% in 5 years. Pets.com and Webvan are going to change everything. P/E ratios don't matter — this is the New Economy. Over the next 2.5 years, the Nasdaq will fall 78%, multiple 'this is the bottom' rallies will fool you, and Enron and WorldCom will shatter trust in corporate America entirely.

What This Scenario Teaches

NASDAQ 5,048 — ALL-TIME HIGH. 400% gain in 5 years. Pets.com, Webvan, eToys — 'the internet changes everything.' Price-to-earnings ratios are 'irrelevant' for the New Economy.

First major sell-off: -16%. Analysts say 'healthy correction in a bull market.' The internet IS the future. Buy the dip?

Dot-com IPOs slow. Companies burning cash fast. Webvan has $1.2B but loses $35 per order. 'Path to profitability' becomes the new question.

Nasdaq -37% from peak. Hundreds of dot-coms folding. Pets.com shuts down 9 months after IPO. Are profitable tech companies being unfairly punished too?

Fed cutting rates aggressively. Tech layoffs hit 100K. CISCO writes down $2.2B inventory. Recession confirmed. -51% from peak.

Relief rally on rate cut hopes. Analysts: 'Tech valuations now reasonable.' Many call a bottom. S&P 500 just -15% — Nasdaq still -47% from peak.

9/11 attacks. Markets close 4 days. Worst week since 1933 when reopened. -20% this month. -59% from peak. Economic shock compounds tech bust.

ENRON COLLAPSE. $60B in value destroyed overnight. Accounting fraud. Arthur Andersen indicted. Who else is hiding losses? Trust in corporate America shattered.

WORLDCOM: $11B accounting fraud. Largest corporate fraud in history. Sarbanes-Oxley legislation being drafted. Every quarterly report is now suspect.

Continued sell-off. Global Crossing, Adelphia, Tyco — fraud everywhere. Market confidence near zero. -70% from peak. When does it end?

NASDAQ BOTTOM: 1,114 from 5,048 peak = -78%. 2.5 years of pain. Berkshire Hathaway has $10B cash waiting. Warren Buffett: 'I told you so.'

Iraq war tensions. Markets drift sideways. Nobody wants to call a bottom after being burned so many times. -81% from peak still.

Iraq war ends quickly. Bush tax cuts signed. Tech gradually recovering. Still -75% from peak. Is the long nightmare finally over?

Strong year-end recovery. GDP growing. Housing boom beginning. Nasdaq +50% from Oct 2002 low — but still -68% from March 2000 peak.

Survive the longest and deepest tech crash in modern history

The Dot-Com Bust