On this day in economic and financial history...

At the tail end of 1989, the Nikkei 225 (NIKKEIINDICES: ^NI225) reached its all-time high of 38,915 points. That same day, the Dow Jones Industrial Average (^DJI -0.98%) closed at 2,753. It seemed inconceivable to market watchers then that the two indexes would ever exchange places. The Nikkei, with 7.5 times as many stocks in its roster, had not closed below the Dow since 1957, at the earliest stages of its postwar economic revival. But when both indexes closed on Feb. 4, 2002, the Nikkei found itself looking up at the Dow for the first time in nearly half a century (the Nikkei had traded below the Dow on Feb. 1, but American exchanges were closed). The Dow finished that day at 9,687, and the Nikkei closed at 9,631.

In many ways, the Nikkei's collapse was inevitable. In 1989, its aggregate valuation was well into the triple digits as growth-starved investors chased after fewer and fewer available shares. Japan in 1989 was like the Nasdaq chasing dot-com fly-by-nights during the tech boom, while the country's banking sector mimicked its American counterpart during the housing boom, making for a wild ride of irresponsible spending. Unsustainable valuations and lending practices created the perfect bubble-storm, and the Nikkei wound up spending decades falling off of its peak as the entire economy struggled to recover from what economist Ian Shepherdson called "a gigantic Ponzi scheme." The Dow, on the other hand, was buoyed by a decade of tech-driven economic growth, and its attendant bubbles managed to stagger themselves out long enough to avoid a complete meltdown. A more accommodative central bank didn't hurt, either.

The Nikkei quickly rebounded from its humbling fall and spent the rest of the spring and summer months ahead of the Dow. However, the Nikkei fell behind the Dow at the end of 2002 and once more in the winter of 2003 before enjoying a multiyear run at the top. This ended for good in the summer of 2010, and since then the Dow has remained in the lead.

The first day of the Nikkei's 45-year winning streak was Aug. 6, 1957. From that day to its peak in 1989, the Nikkei grew at an annualized rate of 14.6% versus the Dow's 5.5%. Then, from its peak to Feb. 4, 2002, the Nikkei lost 11% per year while the Dow gained 11.1%. In the end, the two indexes had remarkably similar performances over a 45-year period -- they just took dramatically different paths to get there.

Mark Zuckerberg wants to be your friend
On Feb. 4, 2004, a college student at Harvard created a little website that would later inspire an Oscar-winning film. It's called Facebook (META -10.56%) -- you may have heard of it. It has more than a billion members now.

When Mark Zuckerberg brought thefacebook.com online that day, Friendster was the dominant social-networking site. MySpace, which was created in the same month as Facebook, took off quickly but also peaked quickly, just more than a year after it was bought by News Corp. (FOX) in the fall of 2005. Facebook remained exclusive to college students with a ".edu" domain for more than two years, but once everyone could join, everyone did. The site grew from 20 million members in the spring of 2007 to 200 million two years later, and then it was onward to 650 million members by early 2011. By this point, the market was clamoring for Zuckerberg to take the company public, as its existing shares had been sold on SecondMarket (a trading place for illiquid assets like pre-IPO shares) for some time. The company was valued at $70 billion on SecondMarket in early 2011, and by the time it was ready for a mid-2012 IPO, Facebook was valued at more than $100 billion.

The Facebook IPO was one of the most highly anticipated and closely scrutinized public debuts in history. With an IPO-day market cap far exceeding any other company's in the long history of American stock markets, Facebook had a nearly impossible task in justifying its worth. Weaker-than-expected demand, compounded by technical errors at the exchange, ensured that Facebook's debut was a dud. Six months after its IPO, Facebook had shed 40% of its value.