Dot-com names crowd into the Nasdaq-100 (1999-2000)
As internet stocks soared, the Nasdaq-100 filled up with high-priced technology and dot-com companies near the market peak. Index funds bought them at the top because the rules required matching the index.
The index hit records in early 2000, carried by a narrow set of richly valued tech names.
When the bubble burst, those same holdings drove the Nasdaq down nearly 80% from its peak over the next two years.
It is a reminder that index rules add whatever is rising, including stocks priced for perfection in a single hot sector.
