Nasdaq's Surge Is Fueled by a Mere Few --- Some Say Laggards Must Shine for Gains to Continue
What comes after Nasdaq 3000: Nasdaq 4000 or Nasdaq 2500?</br></br>All the hoopla surrounding Nasdaq 3000 last week masked some interesting aspects of the Nasdaq Composite Index's rise to stock-market dominance: The advance has been going on for longer than many investors realize, but of late it has been driven by a surprisingly small group of stocks.</br></br>That raises a question: When a stock index becomes so dominated by a handful of names, how long can the gains continue? "Some of those companies are going to be worth it, but I think the majority aren't going to be worth it," says David Mead, chief investment officer at Harris Bank. "Ultimately you will have more democracy in the stock market," he adds, meaning that a wider group of stocks will start to perform better. Then, investors will realize that "many of the top companies are priced too high." He still likes networking colossus Cisco Systems, for example, but he has his doubts about software mammoth Microsoft.</br></br>The antitrust ruling against Microsoft, announced after markets closed on Friday, throws an additional cloud over the stock, which as it happens was added to the Dow Jones Industrial Average just last week.</br></br>Of course, experienced investors have been warning for years now that the highfliers could fall to earth. Up to now, it hasn't happened. And certainly, no one was worrying much last week.