… While the memory of the tech bubble and its crushing collapse was followed by the moreabrupt 2008 collapse of the real estate bubble, many advisers still view 2000 as the first big wakeup call that while diversification counts, the ‘set it and forget it’ strategy doesn’t really work.
“There’s something to be said for diversification, but diversification alone won’t save you,” said John Fowler, a wealth manager with McElhenny Sheffield.
Although he acknowledges that the 2,579stock Nasdaq of today is a far cry from the index of 2000, when barely profitable startups traded at 200 times earnings, Mr. Fowler said the tech bubble is still a good reminder of how downside risk can unfold.
“When you have a defined stoploss policy, it can help you avoid those cycles where it takes 15 years to break even,” he said. “As far as the Nasdaq finally getting back to where it was in 2000, I think it’s a nonevent.”