Market Wrap-Up for Nov. 18 – Letting Go of Preconceived Notions

Since the major indices flirted with monumental round numbers this morning, and on-lookers like to obsess about these sorts of milestones, I read a number of articles explaining the significance of these stock market levels. Specifically, there were a number of posts highlighting the fact that the NASDAQ Composite was nearing the 4,000 level for the first time in 13 years.

Many long-time investors will remember that the NASDAQ soared to all-time highs–at one point, it was above 5,000–at the height of the dot com bubble, and subsequently crashed. As such, many investors are still weary of the NASDAQ and its components, believing that the tech-heavy index is for risk-taking, growth investors, not long-term, dividend investors. However, this sort of mindset can put dividend investors at a disadvantage.

“Not Your Dad’s NASDAQ”

As Steven Russolillo of The Wall Street Journal points out, the way the NASDAQ Composite is compiled now barely resembles the NASDAQ of the tech boom of the late ’90s. For one, there are many more dividend payers in the tech sector, with companies like Apple (AAPL), Microsoft (MSFT), Cisco Systems (CSCO), and Intel (INTC) now among the notable dividend paying corp! orations. Not only that, but the NASDAQ now offers a more attractive valuation than during the days of the dot com bubble, trading at 25 times its trailing earnings versus 151 in 1999. Because of this, the NASDAQ and its components may be potential and valuable investments that can help investors build wealth over the long-run. For more, see 10 Big Tech Stocks That Pay a Dividend.

Past Performance Is Not an Indication of Future Returns

The point I am trying to make is that investors sometimes need to let go of preconceived notions when making investment de