The Nasdaq composite that peaked at 5048.62 on March 10, 2000, in what turned out to be the height of the technology bubble, bears little resemblance to today's Nasdaq index. Of the top 20 Nasdaq companies by market capitalisation in 2000, only four - Microsoft, Cisco Systems, Intel and Qualcomm - remain in the top 20 today. Eight no longer exist as independent companies, most as a result of bankruptcy or acquisition, and several are shadows of their former selves. The current Nasdaq composite index has only about half as many companies as it did in 2000.

"Joseph Schumpeter was spot on when he said capitalism is all about creative destruction," said Richard Sylla, an economics professor at New York University's Stern School of Business and a specialist in the history of markets, referring to the Austrian-American economist who described the phenomenon in 1942 in "Capitalism, Socialism and Democracy."

In the intervening 15 years, a new generation of entrepreneurs, newly public companies and entire industries have emerged and seized the dominant positions in the Nasdaq index even as their predecessors faltered.

Apple, now the world's largest company by market capitalisation, barely registered in 2000, and the first iPhone was not announced until 2007. Over a billion smartphones were shipped in 2014.

Google, which now ranks third and dominates the market for Internet search advertising, went public in 2004 at $US85 a share, giving the company a market value then of $US23 billion. Today, its market capitalisation is over $US359 billion ($457 billion), and its shares were trading this week above $US570.

Facebook, now No. 5 in Nasdaq's ranking, dominates social networking, another industry that did not exist in 2000. It went public less than three years ago, and is already valued at more than $US180 billion.

Had the Nasdaq index itself not been transformed by innovation and competition, it would be nowhere near its previous peak. The stocks of many of the surviving companies, like Microsoft and Intel, have not come close to the levels they reached before 2000.

That means investors who bought and held the stocks of individual companies in 2000, as opposed to broad mutual funds tied to the Nasdaq or index funds like the QQQs, are still underwater - a cautionary note for investors who try to pick individual stocks.

Many investors have forgotten that the plunge in the Nasdaq that began in 2000 was no steeper than its rise in the late 1990s - a classic formation and bursting of an investment bubble, as a glance at a chart of the Nasdaq over the past 20 years makes clear. The plunge was so severe in large part because the index's steep rise resulted from not one, but two simultaneous bubbles - one in dot-com stocks and the companies that supplied them, the other in telecommunications.

Some of the flashier companies that attracted the most absurd valuations were consumer internet companies like Pets.com, WebVan and Urbanfetch. But investors were also whipped into a frenzy by the promise of wireless communications.

Larger telecommunications companies like JDS Uniphase, Juniper Networks, Sycamore Networks and PMC-Sierra had far more impact on the rise and subsequent plunge in the index. All four were among the top 20 by market capitalisation in 2000, ranging in size from JDS Uniphase ($US44 billion) to PMC-Sierra ($US33 billion). Sycamore, once a leader in routing Internet traffic, dissolved in 2013. The other three have market capitalisations today that are tiny fractions of their peak values.

"I never expected to see the Nasdaq at 5,000 again in my lifetime," said Jeffrey W. Smith, a Nasdaq managing director in economic research, and co-author of a paper called "The Nasdaq Composite Index, a 14-year retrospective."

No one thinks the Nasdaq composite, or any other broad stock index, is in bubble territory today, despite the prolonged rally that began in 2009.

"Today's levels are justified by the fundamentals," said Paul Wick, who has lived through both boom and bust as portfolio manager of the Columbia Seligman Communications and Information Fund, which he began managing in 1989.

He notes that the Nasdaq index trades today at a far lower price-to-earnings ratio than it did in 2000.

"The biggest company in the index is Apple," he said. "By every yardstick, it's a great company and it's very modestly valued."

Sylla suggested that investors, now twice burned by market plunges in 2000 and 2008, were far more cautious than in the late 1990s. "The dot-com bubble was just 15, 16 years ago, so just about everyone 35 or older, an age when people begin to have money to invest, remembers it," he said. "These folks have learned some lessons about bubbles, fortunately. So current valuations, while high by most historical standards, are more reasonable than they were 15 years ago."

Nevertheless, at the market's current elevated levels, he said, "caution is warranted."

Smith, of Nasdaq, said that as a group, Nasdaq companies today "are bigger, older and more mature," though still younger, on average, than those in the Dow Jones industrial average or the Standard & Poor's 500, the other leading market indexes.

They are also more diversified. Although the Nasdaq is often considered a proxy for technology companies, they now make up about 43 per cent of the Nasdaq listings, down from nearly 65 per cent in 2000. Among the non-technology companies ranked among the top 20 today are the biotechnology companies Gilead Sciences, Amgen, Celgene and Biogen Idec as well as the retailers Walgreens Boots Alliance, Costco, eBay and Priceline, and the coffee chain Starbucks.

That's not to say that what Alan Greenspan, the former Federal Reserve chairman, characterised as irrational exuberance has vanished from today's markets.

There are still companies that trade at stratospheric price-to-earnings ratios or have no earnings. Indeed, it's possible to construct an index of highflying stocks today that would not look all that different from the Nasdaq of 2000.

Such an index might include the electric auto maker Tesla (market capitalisation $US25 billion), the social messaging site Twitter ($US30 billion) and the internet real estate database Zillow ($US6.5 billion) even though they lose millions of dollars per quarter.

"You could argue that these are 2000-era stocks," said Wick, the Columbia fund manager. "To some degree, there are always people who are willing to roll the dice. They want to own companies that might be the next big thing, and they're just wired to take the chance that some companies might turn into that. They look at exponential revenue growth, and it's easy to imagine that somewhere down the road, they're going to be hugely profitable."

But there's a different tone even with these highflying stocks, Sylla said. "Unlike in 1999, when adding dot-com to your name caused your company's valuation to soar, in these more mature, more sobre times the recipe for stratospheric valuations is a promising product (Tesla cars) or fast-growing revenues and widespread product acceptance (Amazon), coupled with charismatic leadership."

"I think our markets are still doing what they long have done, namely financing entrepreneurship and innovation," he continued.

"No one can know the future, but the markets encourage investors to make bets on it and some of those bets pay off, for investors and buyers of innovative products.

"Wall Street is much more than the rich man's racetrack, as some have described it. It's what helps to move our economy and our standard of living forward."

The New York Times