The Nasdaq crash of April 2000: Yet another example of log-periodicity in a speculative bubble ending in a crash |
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| Authors: | A. Johansen D. Sornette |
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| Affiliation: | (1) Institute of Geophysics and Planetary Physics, 3845 Slichter Hall, Box 951567, University of California, Los Angeles, California 90095-1567, USA, US;(2) Department of Earth and Space Science, University of California, Los Angeles, California 90095, USA, US;(3) Laboratoire de Physique de la Matière Condensée (CNRS-UMR 6622) and Université de Nice-Sophia Antipolis, BP 71, Parc Valrose, 06108 Nice Cedex 2, France, FR |
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| Abstract: | ![]()
The Nasdaq Composite fell another % on Friday the 14'th of April 2000 signaling the end of a remarkable speculative high-tech bubble starting in spring 1997. The closing of the Nasdaq Composite at 3321 corresponds to a total loss of over 35% since its all-time high of 5133 on the 10'th of March 2000. Similarities to the speculative bubble preceding the infamous crash of October 1929 are quite striking: the belief in what was coined a “New Economy” both in 1929 and presently made share-prices of companies with three digits price-earning ratios soar. Furthermore, we show that the largest draw downs of the Nasdaq are outliers with a confidence level better than 99% and that these two speculative bubbles, as well as others, both nicely fit into the quantitative framework proposed by the authors in a series of recent papers. Received 3 May 2000 |
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| Keywords: | PACS. 01.75.+m Science and society - 02.50.-r Probability theory stochastic processes and statistics - 89.90.+n Other topics of general interest to physicists |
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