Tags: Chung | Nasdaq | record | 2015

Alger's Chung: Nasdaq Will Set Record High in 2015

By    |   Tuesday, 09 December 2014 05:58 PM

While the S&P 500 index and the Dow Jones Industrial Average have repeatedly climbed to record highs this year—most recently Friday—the Nasdaq Composite index still stands below its March 2000 peak of 5,132.52. 

The Nasdaq Composite ended Tuesday at 4766.47, up about 14 percent for the year to date, but about 7 percent below its zenith. 

Dan Chung, chief investment officer at Alger, thinks the peak will be breached next year. "I am very confident that the Nasdaq will reach new highs," sending "a very positive, powerful" message to investors, he told USA Today.

The Nasdaq is a whole different animal than 15 years ago, Chung notes. The index is less technology-centric, with more healthcare, biotechnology and consumer companies than in 2000, when it plunged in a massive sell-off that knocked the entire stock market for a loop.

In addition, "the valuations today are much lower, with the Nasdaq's price-to-earnings ratio based on next year's earnings estimates in the high teens," Chung says.

"The valuations back in 2000 were really 'NM,' or not meaningful. You had to do some magic, because a lot of the companies that drove the index did not have meaningful earnings at all."

Looking at the broader market, stock guru Jeremy Siegel, professor of finance at University of Pennsylvania, hasn't dropped his long-term bullishness, but he does think a 10 percent correction is on tap for next year.

"We've gone so long. I think in 2015 we'll have our 'first' [10 percent] correction," he told CNBC.

"People say, 'Doesn't that mean I should wait for that?' The answer is no, because if it's up 15 percent and then goes down 10 [percent], you're still better off buying today. You don't know when that [the correction] is going to come."

Falling oil prices and buoyant economic growth will ultimately help stocks next year, he said. Siegel said last month that the Dow may reach 22,000 next year. The average closed Tuesday at 17801.20.

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While the S&P 500 index and the Dow Jones Industrial Average have repeatedly climbed to record highs this year, the Nasdaq Composite index has lagged behind. Dan Chung, chief investment officer at Alger, thinks that will change in 2015.
Chung, Nasdaq, record, 2015
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2014-58-09
Tuesday, 09 December 2014 05:58 PM
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