Some, such as Intel and Microsoft, chose not to migrate to the Big Board,
as the NYSE was termed, even when they qualified to do so.
The Nasdaq Index, which is a capitalization-weighted index of all
stocks traded on the Nasdaq, was set at 100 on the first day of trading in
- It took almost 10 years to double to 200 and another 10 years to
reach 500 in 1991. It reached its first major milestone of 1,000 in July 1995.
As the interest in technology stocks grew, the rise in the Nasdaq
Index accelerated, and it doubled its value to 2,000 in just three years. In
the fall of 1999, the technology boom sent the Nasdaq into orbit. The
index increased from 2,700 in October 1999 to its all-time peak of
5,048.62 on March 10, 2000.
The increase in popularity of Nasdaq stocks resulted in a tremen-
dous increase in volume on the exchange. At the onset, the volume on
the Nasdaq was a small fraction of that on the New York Stock Ex-
change. By 1994 share volume on the Nasdaq exceeded that on the
NYSE, and five years later dollar volume on the Nasdaq surpassed the
NYSE as well.^5
No longer was the Nasdaq the home of small firms waiting to qual-
ify for Big Board membership. By 1998 the capitalization of the Nasdaq
had already exceeded that of the Tokyo Stock Exchange. At the market
peak in March 2000, the total market value of firms traded on the Nas-
daq reached nearly $6 trillion, more than one-half that of the NYSE and
more than any other stock exchange in the world. At the peak, Nasdaq’s
Microsoft and Cisco had the two largest market values in the world, and
Nasdaq-listed Intel and Oracle were also among the top 10. By 2007 Mi-
crosoft was the only Nasdaq stock among U.S. stocks ranked in the top
10 by market value.
When the technology bubble burst, trading and prices on the Nas-
daq sunk rapidly. The Nasdaq Index declined from over 5,000 in March
2000 to 1,150 in October 2002 before rebounding to 2,400 at the end of - Trading also fell off from an average of over 2.5 billion shares when
prices peaked to approximately 2 billion shares in 2007. Despite the de-
cline in the Nasdaq Index, the Nasdaq still trades in some of the world’s
most active stocks.
Although there is a lively rivalry between the Nasdaq and the
NYSE, most investors should not be concerned about what exchange a
44 PART 1 The Verdict of History
(^5) There is admittedly some double counting of volume in the Nasdaq dealer system due to the fact
that the dealer buys the security rather than acting as an auctioneer. See Anne M. Anderson and Ed-
ward A. Dyl, “Trading Volume: NASDAQ and the NYSE,” Financial Analysts Journal, vol. 63, no. 3
(May/June 2007), p. 79.