Ouch. Nothing is safe these days, or at least nothing associated with growth. It used to be (back in the good ole days, 12 months ago) that growth was the only requirement of the Street. Wise analysts even developed new metrics to measure growth because earnings were non-existent. I know, I know, this is not news. But what is the news? Is the economy going down the tubes? Have we messed up the capitalist system? Is the entire coffee crop genetically ruined? The panicked state of the market sure makes it feel that way. With the Nasdaq cut in half, what are investors to hold on to?

I'll admit, I have been questioning my own holdings. I look at them in a different light -- a black haze surrounds them now. I question my reasons for buying and for not selling when Cisco (Nasdaq: CSCO) was valued at nearly half a trillion dollars or when Sun Microsystems (Nasdaq: SUNW) was trading at 130 times future earnings. What was I thinking?

Even these blue chips weren't spared from the carnage. The so-called, new economy blue chip companies like Microsoft (Nasdaq: MSFT) and Cisco as well as old economy stocks like Walmart (NYSE: WMT) and Home Depot (NYSE: HD) have taken beatings. Wall Street is suddenly convinced that we are going into a recession. Yet, 10 months ago you could not find an economist with a bleak projection. Are these guys nearsighted or just stupid? Neither, they're just human.

As I stated in a recent article on the downfall of the eConsultants, during the nine years I spent in the real estate industry, I never saw a projection of lower rents in a forecasting model. Not once. People tend to extrapolate the current situation and apply it to the future. If things are rosy, things will be rosy down the road. If things are bleak, well, you get the point.

The financial community is no different than the rest of us. Firms like Forrester Research (Nasdaq: FORR) and the Gartner Group (NYSE: IT) have been spouting forecasts about this and that for several years now. Take this recent Forrester prediction: "Digital delivery of custom-printed books, textbooks, and eBooks will account for revenues of $7.8 billion -- 17.5% of publishing industry revenues -- in five years." How do they know that? How do they know revenues will be $7.8 billion and not $8.1 billion? How do these guys know what all of us are guessing at when we look at an industry or company and say, "Wow, that market is gonna take off!" How? They extrapolate. They apply trendlines of the current situation with estimated growth rates. I'm not knocking these soothsayers, I'm simply qualifying their predictions.

If you extrapolate the current Nasdaq trend, all this should be over in a matter of months. By Halloween next year, the Nasdaq should be trading on par with eToys (Nasdaq: ETYS) and the doomsayers will finally be able to rest. That's what is feels like to many of us long-term investors, unwilling to sell into this slide even through many of the best companies are losing 5%, 10%, and even 20% of their value a week.

But a little perspective provides a different view of this market. First, the Nasdaq was up 89% last year. Giving back some of that is expected. For context, look at the chart below. It shows a few of the tech powerhouses and their market capitalization (total shares outstanding x share price) at year-end 1998 and as of last Friday.

             1998          2000 
           Mkt Cap       Mkt Cap
Cisco       $148.2        $295.1
Microsoft    345.1         245.3
Oracle        41.4         180.1
Sun Micro     53.4          99.8

Hmm? Only the Redmond behemoth is down in total value. Now, let's take a look at a few key economic figures then and now. For comparison sake (and to reinforce the Foolish long-term perspective), I have also included 1990 data.

               1990    1998    ytd 2000
Dow 30         2634    9181     10,500
Nasdaq          374    1949       2600
Gas price*    115.8    83.9      129.6
Productivity   94.9   111.2      119.1
Non-perf loans  n/a     0.5%       0.7%
Inflation       6.3%    1.6%       3.4%
Unempl.         6.3%    4.4%       4.0%
30 yr mtg      9.67%   6.72%      7.75%

*unleaded regular index

So, the world is not coming the end. In fact, many of the measurements are stronger than they were in 1998. The Dow and Nasdaq are up, productivity is better than ever, inflation is picking up but under control, and unemployment is still hanging around an all time low. This may be a simplistic look at the current situation, but the point is still valid. The biggest change between then and now is sentiment.