It is a comparison of the Dow, S&P 500, and the NASDAQ from 1994 to 2002. In this chart, the averages are normalized to zero at the starting point at June 27, 1994. Then the relative change over time is charted.
All three indices rise over the next six years to more than 2 X their starting values in 1994. However, the NASDAQ separated from the Dow and S&P in late 1998 and went up to more than 6 X its initial value in 1994. As you know, the NASDAQ has tech stocks. So, in March of 2000 the market (investors) were valuing tech stocks 3 X greater than traditional stocks. This was the peak of "tech bubble".
The market began a two year correction in early 2000 that brought down the value of the entire market. The correction hit the NASDAQ harder than the Dow and the S&P. The correction wiped out the bubble and brought the NASDAQ back to the same relative value as the other two indices.
In hindsight, this nearly two year period of time when the NASDAQ increased at three times the rate of the rest of the stock market was clearly a bubble. However, at the time many observers said that it wasn’t a bubble, but just the beginning of a new era.
This bubble benefited the public through the creation of new jobs and new technologies. It also had the effect of bringing in huge amounts of income taxes into the US Treasury. This bubble was funded by investors who paid the price for the public benefit.
