Technology stocks had their best start to a year in more than two decades, but that could actually be an ominous signal.
In case you don’t remember what was happening in 2001, it became known as the dot-com bust. After years of optimism about the path of technology took the Nasdaq to new peaks in 2000, the bottom fell out, and while there were several reversals like the January 2001 gains, the overall downward direction of the market after the tech bubble popped did not turn around completely until late 2002.
Admittedly, prior instances in which the Nasdaq enjoyed a 10%-plus gain in the first month of a year panned out better. The index’s average performance in such situations was a 14.1% rise for the rest of the year, with a boom year of the dot-com era helping to outweigh 1987 and 2001 declines.