Remember when the Internet stock bubble — one of the great periods of investment delirium — helped send the market’s leading measure of technology companies and other go-go businesses to a scary record high at the turn of the century?
Anyone who recalls that also remembers the epic plunge of the Nasdaq Composite index that followed, so fast and steep it seemed to blot out any hope for the future. Nearly 15 years later, we’re almost back to record territory.
The Nasdaq index has gained more than 4 percent so far this year and posted its ninth straight daily advance on Monday to close at 4,960.97. The index now stands less than 2 percent away from its record high of 5,048.62, set on March 10, 2000.
Just like old times? Well, yes and no.
Growth and innovation are certainly back in favor again. As was the case in 2000, there is lots of venture capital to fund developing companies and new enthusiasm for initial public stock offerings. Some younger companies are commanding jaw-dropping valuations, prompting renewed talk about investment bubbles.
But there are big differences, too. Even though the index is approaching its old high-water mark, it’s really much less expensive now because most of the companies it tracks do more business and earn bigger profits.
That’s faint praise — the Nasdaq of 2000 traded at about 150 times annual earnings of the companies it represented. Think of today’s Nasdaq as expensive and probably overpriced at about 30 times profits, but it’s not completely nuts in the way it was 15 years ago.
The Nasdaq index plunged nearly 80 percent from its 2000 peak to a low reached in 2002. But its return to glory days has been more incremental — mostly achieved with average annual gains of about 24 percent over the past six years, including rebounds from the financial crisis and the Great Recession.
Over those six years, investors have been more inclined to pay for performance over promise, and the companies that delivered rose to prominence in the Nasdaq index.
“The current environment is still being very much influenced by 2008 and 2009,” said Michael Mufson, a managing partner at Redwood Investments in Newton who was running an emerging growth fund at Putnam Investments in 2000. “There is more of a demand for profitability and a return on investment capital. That’s opposed to 2000 and a decade of 20 percent annual returns” that preceded it.
The stocks driving the Nasdaq are far different from the 2000 movers. The index tracks 2,568 members, but the top five — Apple Inc., Microsoft Corp., Google Inc., Amazon.com Inc., and Facebook Inc. — account for nearly 24 percent of its total value. Apple alone represents more than 10 percent of the index.
In 2000, the top five included Microsoft at number one, followed by Cisco Systems Inc., Intel Corp., Oracle Corp., and Sun Microsystems Inc.
That shift says a lot about the way the world has changed in 15 years. The old list was dominated by companies that made hardware and software to support the world of desktop personal computers. Some of them helped build out the Internet’s infrastructure long ago.
The new index leaders are mostly known for the online services they provide to billions of increasingly mobile consumers. Apple may make hardware, but it is a consumer products company in a class by itself. Facebook has been a public company less than three years.
Look a little closer at the Nasdaq and you will uncover other changes. New industries have grown up over the past 15 years, none more than the life sciences business. Four biotech stocks, including Biogen Idec Inc. of Cambridge, are currently counted among the Nasdaq’s top 15 stocks today.
Rob Kaplan, now a professor at Harvard Business School, was overseeing investment banking at Goldman Sachs in 2000. He views innovation funded both by stock investors and venture capitalists as broader and deeper than the advances Wall Street put its money behind at the end of the 1990s.
“I think it’s more manifestly affecting everything we do,” Kaplan said. “This strikes me as more substantive than 2000. Individual companies may not survive, but what they do will.”
The Nasdaq index of 2000 wasn’t about innovation affecting everything. It was mainly about the Internet.
Mufson recalls how investors thought of the Internet itself as the place to put their money. But the real value was created by companies that figured out how to use the Web to connect with their customers.
The Nasdaq index may reach a new apex soon, perhaps by the anniversary of its old peak in two weeks. But it’s a more dramatically remade collection of stocks than the index that shot the lights out 15 years ago, and that’s good news.
Steven Syre is a Globe columnist. He can be reached
at syre@globe.com.