The NASDAQ Composite index has been introduced in 1971 at the base level 100. It has over 3,000 components.
NASDAQ has been growing from one peak to the other, and the trend seem to continue after a short pause. (It’s latest peak is almost 5 times higher than it lowest low in 2008.)
People often say that long term investments carry less risk than short term ones.
Well, NASDAQ is a quite good example of that – at least in the past 5 years.
- As you can see, 3 years yield curve is more volatile than the 5 years curve.
- The 5 year yield curve seems to be positive in most of the days – though the annual profits were not too high all the time.
- Index value has grown from 2970 to 5910 throughout the past 5 years which equals 14.75% annual profit.
(Actually, NASDAQ has been constantly growing with short pauses for 5 years.)
What can you see on the chart?
You can calculate NASDAQ’s 1 month return from NASDAQ’s value today and NASDAQ’s value 30 days ago. You can also do the same calculation for yesterday and NASDAQ’s value 31 days ago etc. If you do this calculation for each days, you will get a curve of NASDAQ’s 1 month yield. The same applies to other yield periods from 3 months to 5 years.
This chart shows the three and the five year yield curve in the past 5 years.
Treshold marked with red shows 0% return.
This chart shows NASDAQ’s relative change against the US customer price index in the past 5 years.
NASDAQ has seriously outperformed the US CPI.
*charts are not updated on a daily basis but you can prepare similar charts for yourself by using Chartoasis Sesame. If you feel like analyzing NASDAQ’s historical price, you can do that for free at www.chartoasis.com/sesame . You will also need to download NASDAQ historical data. This step-by-ste guide will explain you how to do it.