Published January 15, 2026
The magnitude of the drop depended entirely on which index you were holding.
1. The Epicenter: NASDAQ (Tech Stocks)
This is where the bubble actually was. The crash here was catastrophic.
- The Drop: -78%
- The Numbers: It fell from a peak of 5,048 (March 10, 2000) to a low of 1,114 (October 9, 2002).
- The Recovery: It took 15 years (until 2015) for the NASDAQ to return to its year 2000 peak.
2. The Broader Market: S&P 500
Because the S&P 500 contained both tech stocks and regular companies (Banks, Oil, Retail), it fell less, but was still cut in half.
- The Drop: -49%
- The Timeline: It peaked in March 2000 and didn’t hit bottom until October 2002.
3. The “Safety” Trade: Dow Jones Industrial Average
The Dow held up the best because it was filled with “boring” old-economy companies (like Caterpillar, 3M, General Electric) that investors fled to for safety.
- The Drop: -38%
The “Wealth Destruction” in Specific Stocks
To understand the pain, you have to look at the individual giants, not just the index. Many companies that survived still lost almost all their value:
- Amazon: Dropped -94% (From $107 to $6).
- Cisco: Dropped -86% (It was the most valuable company in the world in 2000; it still has not returned to its 2000 highs in inflation-adjusted terms).
- MicroStrategy: Dropped -99% (From $3,330 to $4).
Why this matters for 2026: We are currently seeing a similar “split” market. The S&P 500 is highly concentrated in AI tech (NVIDIA, Microsoft), much like the NASDAQ was in 2000. If the “AI Bubble” were to burst, you would likely see a similar dynamic: a massive 70%+ drop in the pure-play AI stocks, while the broader “Old Economy” stocks (like the Canadian banks or Energy names we discussed) might only drop 30–40%.
The TSX (then called the TSE 300) suffered a massive drop of approximately 50%, essentially cutting the value of the entire Canadian stock market in half.
However, the “Canadian Crash” was unique because it was driven almost entirely by the collapse of one single company.
Here is the breakdown of the TSX drop compared to the U.S. markets.
1. The Numbers
- The Peak: On September 5, 2000, the index hit an all-time high of 11,423.
- Note: The TSX peaked 6 months later than the U.S. markets because our tech giant (Nortel) kept rallying even after the NASDAQ cracked in March.
- The Bottom: By October 9, 2002, the index had crashed to 5,695.
- The Total Drop: -50.1%
2. The Villain: The “Nortel Effect”
You cannot talk about the 2000 crash in Canada without talking about Nortel Networks.
- The Concentration: At its peak in 2000, Nortel alone made up 33% to 35% of the entire TSE 300 index.2
- The Implosion: Nortel stock fell from $124 to eventually pennies (and bankruptcy).
- The Result: Because Nortel was 1/3rd of the index, its collapse mathematically dragged the index down 30% by itself.
- The “Other” TSX: If you excluded Nortel, the rest of the Canadian market (Banks, Oil, Rail) actually performed reasonably well during that period, dropping far less than the headline number suggested.
3. Comparison to US Markets
The TSX performed “in the middle” of the U.S. indices.
| Index | Drop (2000–2002) | Primary Victim |
| NASDAQ | -78% | Pure Tech (Amazon, Cisco, Pets.com) |
| TSX (Canada) | -50% | Nortel (plus JDS Uniphase, BlackBerry) |
| S&P 500 | -49% | Broad US Economy |
| Dow Jones | -38% | Old Economy (Caterpillar, 3M, GE) |
Relevance for 2026
This history is critical for you right now because of the XEG ETF we discussed earlier.
- Then: Nortel was 33% of the TSX.
- Now: Canadian Natural Resources (CNQ) and Suncor (SU) are 50% of the XEG ETF.
- The Lesson: When an index is that concentrated, a problem with one company becomes a crash for the entire fund. If CNQ were to have a major regulatory or operational disaster, XEG would suffer a “Nortel-like” drag, even if oil prices stayed high.
