Back on Dec. 29, 1999, its first close north of that milestone, Nasdaq 4000 served as a launching pad for a euphoria-driven bull run. The dot-com-stock-fueled Nasdaq rose 24.9% in a 50-session span -- on top of a record 85.6% return in 1999.
That 50-day melt-up -- and the biggest bull market in history -- ended March 10, 2000, the day the Nasdaq closed at its all-time high of 5048.62.
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In early trading Monday, the Nasdaq topped that big round number again, climbing as high as 4007.09, hitting its highest level since Sept. 7, 2000, before pulling back below the key milestone. Will 4000 prove magical again for the boom-and-bust Nasdaq? Is the old record, still a 21% climb away, finally within striking distance?
Sure the Nasdaq is generating excitement again, thanks to stellar gains from names like electric-car maker Tesla and online entertainment provider Netflix, 1990's throwbacks Amazon.com and Yahoo, and social media players like Facebook.
But the level of exuberance today, while on the rise as witnessed by the Nasdaq's 32% gain this year and Twitter's 73% gain on its first day of trading after its IPO, is no where near the irrational pitch of the go-go 1990s, argues Drew Nordlicht, managing director at wealth management firm HighTower. And that, he says, will slow the climb back to 5048.62.
"The euphoria," says Nordlicht, "just isn't there on a mass scale today."
In 1999 investors were as smitten with tech stocks as the Dutch were with tulip bulbs in the 17th century. Time magazine named Amazon.com CEO Jeff Bezos its "Person of the Year. The Y2K computer bug was the worry du jour. And chip maker Qualcomm rose 2,619%, making it the No. 1 performing Nasdaq stock.
That doesn't mean the Nasdaq won't make a new high eventually, just not as quickly as it did after hurdling 4000 back in early 2000.
Other reasons why the Nasdaq will have a tougher time breaking out to a new record:
* Tepid growth. An economy growing at a "sub-par rate" of below 3% will act as a headwind, says Dan Veru, chief investment officer at Palisade Capital Group. In a market where investors are trying to pinpoint winners, it will take more than just a handful of tech names growing at super-fast rates or those with high growth potential to goose the Nasdaq.
Unlike 1999, the rally has been fueled by companies like Google that have real business models, fresh social media innovators like LinkedIn, and an investor base that will only snap up a stock like Facebook once the company can prove it can bring in revenue.
"This time the market is differentiating between business models that are working and those that are not," says Veru.
* Main Street apathy. Mom and pops who got burned buying dot-com stocks in 2000 and who were hurt by the botched Facebook IPO are not "all in" like they were in 1999. "The public is looking at the market more warily and they are not making big commitments of cash to stocks," says Veru.
* Policy drag. The Federal Reserve will eventually start to dial back its bond-buying program, which will act as a headwind for all stocks, says Veru. Add the fact that current government policy is hurting growth and another 1990's-tech-stock mania seems unlikely.
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Indeed, with tech stocks flying high and the broader market at record highs, there are less bargain-priced stocks to buy, which could also dampen buying, says Bill Mann, chief investment officer at Motley Fool Asset Management.
"There's almost no companies out there that I find attractive from a valuation standpoint," Mann says.
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