Bull Market Made Final Charge Three Years Ago

Three years ago today the Dow Jones industrial average reached the zenith of its bull-market climb.

If investors had any inkling of what was to come they should have been selling stocks with abandon.

The Dow ended at 11,722.98 on Jan. 14, 2000. The index of 30 major blue-chip stocks had been an also-ran in 1998 and 1999 compared with the technology-dominated Nasdaq composite index, but in the first two weeks of 2000 the Dow was faring better than Nasdaq.

After peaking on Jan. 14, however, the Dow quickly began to slide while technology stocks launched one final giant rally that lifted the Nasdaq index 24% between Jan. 1 and March 10, when it reached its all-time closing high of 5,048.62.

On March 24, 2000, the Standard & Poor’s 500 index and the Wilshire 5,000 indexes would reach their bull-market peaks.

The New York Stock Exchange composite would peak later that year, on Sept. 1.

Will investors ever see the Dow at 11,722 again? It would take a gain of about 34% in the index from Monday’s close of 8,785.98 to hit a new high.

If the Dow were to rise 8% a year for the next four years -- a much slower rate of growth than over the last 20 years -- it would top the old peak sometime in 2006. The index’s total return, including dividend income, averaged 14.3% a year in the 20 years ended Dec. 31.

For Nasdaq, however, the road back will be much more difficult. It would have to rise nearly 250% from Monday’s close of 1,446.04 to retake the 2000 high.

Indexes of small and mid-sized stocks are much closer to their record highs because many of those stocks fared relatively well until April 2002, as investors hunted for value away from the blue-chip and tech sectors.

The S&P; index of 600 small stocks would have to rise 27% to retake its old peak; the S&P; index of 400 mid-sized shares would have to rise 25% to retake its peak.