All About The Nasdaq 100 Composite

Are you invested in the US or the Canadian stock markets? If so, is your portfolio in RED right now? One things for sure, there’s absolutely no need to panic. Patience is the key here, as long you are investments are in good blue chip or fundamentally strong growth company stocks

Before we begin, stocks are in a downtrend this year, be it in the US or the Canadian markets. The reasons are obvious interest rate hikes and inflation. People are increasingly finding it hard to save money, given the price hikes, hence the negative returns of the stock market. 

First things first, since the beginning of 2022 to date, Nasdaq 100 has returned -29%.  In this post, let’s take a deep dive into the Nasdaq 100 Index, and analyze the returns it has provided over the years. This way, we can better gauge the market returns moving forward once this recessionary scenario/inflation is done. 

Below is the Nasdaq 100 Annual Returns over the years – 

Nasdaq 100 Returns by Year

Year Return
2022 -29.00
2021 26.63
2020 47.58
2019 37.96
2018 -1.04
2017 31.52
2016 5.89
2015 8.43
2014 17.94
2013 34.99
2012 16.82
2011 2.70
2010 19.22
2009 53.54
2008 -41.89
2007 18.67
2006 6.79
2005 1.49
2004 10.44
2003 49.12
2002 -37.58
2001 -32.65
2000 -36.84
1999 101.95
1998 85.30
1997 20.63
1996 42.54
1995 42.54
1994 1.50
1993 10.58
1992 8.86
1991 64.99
1990 -10.41
1989 26.17
1988 13.54
1987 10.50
1986 6.89

So What Is The Nasdaq 100? Or Why is it called the Nasdaq 100 Composite? The Importance

Nasdaq 100 was launched in 1985 and therefore full year returns start with the year 1986. The index consists of the top 100 companies that trade on the Nasdaq stock exchange.

In addition, The Nasdaq 100 company weights are listed from largest to smallest. The index is heavily concentrated on technology companies but also includes companies from other sectors. It is often used as a barometer of the health of the technology sector. The largest twenty companies comprise most of the weight in the Nasdaq 100 Index.

Below is the list of the top 15 companies in the Nasdaq 100 Index and the weight of the individual companies to the overall index. 

Nasdaq 100

As you may notice, Apple is the king of the cream here with a weightage of more than 1/10 at 13.43% followed by Microsoft at 10%. These two tech behemoths alone contribute about 20% of the overall index. If that can really mean anything to you. The next on the list is Amazon at 5 odd percent, which is less than what Apple weighs. 🙂 That’s how precious Apple stock is valued by the overall market. 

The price movement of Apple and Microsoft stocks has a direct impact on the Nasdaq 100 composite and the overall US stock markets in general. 

One more thing, when companies are removed and added to the Nasdaq 100 index the membership list may temporarily show both the removed company and added company.

Now let’s quickly take a look at the below S&P 500 Index returns data – 

S&P 500 returns

As with Nasdaq 100 Composite, even the S&P 500 has been extremely volatile this year, since Jan, with the returns fluctuating from extremely high negative single digits to high positives almost in the immediate next month. 

It’s best to invest very carefully, with just one month left in the current calendar year. 

My Personal Take On the Stock Market and Blue Chips In General 

Let’s keep it plain and simple here. 

Please note, the stock market is the place where you make money. Especially with equities. You cannot find a replacement here. You only tend to lose money in the stock market if you sell your stocks. Or else your portfolio is either in “RED” or “GREEN”. But unless you click on that sell button, your portfolio has every chance of recovering back.

My investing mantra is pretty simple right – Stay invested for the long haul, by investing in good cash flow generating and growth companies. 

In addition, even during this financial crisis and recession times, by far from what I witnessed is that Apple stock is one which has not seen a heavy downfall in the stock price, and so is Microsoft. 

You and I might be foolish in investing or want to make a quick buck to buy that luxury house/car but time and again the market is never wrong, the markets know exactly how to value the companies and the price movement accordingly. Sometimes when the PE is really high, for stocks such as Amazon, correction is inevitable. 

stock market investment

While Google, Amazon, NVIDIA, Tesla, and AMD have all corrected to almost 40%, investing now will definitely give you the returns once the markets are positive again, that’s how wealth is created. You need to invest while the market is in a panic and sell while everyone else is buying on the highs wanting to make more. 

The simple take here is to dollar cost average in the best blue chips and patiently wait for the price to jump up. Apple and Microsoft for example will be very quick to bounce back once the markets will start to move in the uptrend. It’s just a matter of time. Remember the COVID times market fall, the 2008 recessionary scenario, and remember the recovery? Maybe the markets will move sideways for the entire 2023, but don’t panic, keep DCA’ing in the stocks and companies you truly believe in. It’s just the same, the markets will move back out of this zone. 

Thanks for reading, happy investing! Stay happy and safe.

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