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The Almighty Buck

Nasdaq 4000 — This Time It's Different? 241

Hugh Pickens DOT Com writes, quoting USA Today "The NASDAQ has topped 4000 for the first time in 13 years, but much has changed since then. ... Tech investors in 2000 were right about the possibilities of the Internet and mobile computing. But they were dead wrong about which companies would be in the vanguard ... The recovery of the NASDAQ has been a complex tale of creative destruction, where old companies that once fueled the index have been pushed aside by new players. Back in 2000, Microsoft, Cisco Systems, Intel, Oracle, and Sun accounted for 8.9%, 8.5%, 7.1%, 3.6% and 2.6%, respectively, of the value of the NASDAQ composite. Today, companies that were just starting out or didn't even exist — think Google, Amazon, and Facebook — are in the top 10, accounting for 4.7%, 2.7% and 1.5% of NASDAQ's value. Microsoft, Cisco and Intel's weight has fallen sharply. Apple, which wasn't in the top 10 in 2000, is a behemoth at 7.9%. So is the NASDAQ enjoying a long overdue catch-up with the rest of the market, or is the broad market overpriced, with the NASDAQ being pulled along for the ride? 'The reality is that the only thing that's the same from Nasdaq 4000 in 1999 and Nasdaq 4000 in 2013,' says Doug Sandler, 'is the number 4000.'"
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Nasdaq 4000 — This Time It's Different?

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  • BFD (Score:5, Interesting)

    by Cornwallis (1188489) on Wednesday November 27, 2013 @09:48AM (#45538027)

    Adjusted for inflation the NASDAQ isn't worth any more than it was 13 years ago.

    • Re:BFD (Score:5, Informative)

      by dsginter (104154) on Wednesday November 27, 2013 @09:52AM (#45538065)
      • But did they have smartphones?

        • Re:BFD (Score:4, Interesting)

          by damn_registrars (1103043) <> on Wednesday November 27, 2013 @09:59AM (#45538157) Homepage Journal

          But did they have smartphones?

          The cell phone I had in the year 2000 could memorize more phone numbers than I could; that seemed pretty smart to me for its time. There was even a camera add-on available for it.

        • by mlts (1038732) *

          Sorta... For some Motorola flip-phones, there was a PDA that snapped on the back which gave some primitive capabilities over an addressbook.

          That is one thing I don't miss... the IT "bat belt" and carrying a cell phone, a PDA, a Blackberry (it was for text messages at the time), a satellite pager, and a MP3 player like a Nomad Jukebox. No, a smartphone isn't as good as each individually, but just one device to worry about is a lot easier than five.

        • Re:BFD (Score:4, Informative)

          by samkass (174571) on Wednesday November 27, 2013 @10:22AM (#45538421) Homepage Journal

          The Matrix came out in 1999. Remember those switchblade phones they used? That was a Nokia 8110 []... state of the art in 2000. The PalmOS phones wouldn't come out for a few years after that, which are arguably one of the first mass-produced "smart" phones.

          • by fatphil (181876)
            Surely the n9000 communicator was the real state of the art? The 8110 was a piece of crap in comparison.
        • by gl4ss (559668)


          Yeah, x86 based too.

          though, in the 55" inch tv index we have all gotten incredibly rich in the past 10 years.

      • Re:BFD (Score:4, Informative)

        by alexander_686 (957440) on Wednesday November 27, 2013 @12:47PM (#45540045)

        And you would still have been better off investing in the NASDAQ – once you factor in dividends. The bad thing about these indexes is that forget to factor in dividends.

        For the past 13 years (11/30/2000) inflation has averaged about 2.3% NASDAQ has gone up about 3.3%. Once you factored in dividends it goes up to 4.2% which is a bit more respectable. Still lower than from the peak, but still.

    • Right, you could sell your house for an inflated amount back then!! oh wait...

    • by Anonymous Coward on Wednesday November 27, 2013 @10:12AM (#45538317)

      This runnup is mostly QE - the Fed printing money - and also the fact that corp profits are at record levels.

      But it can't continue forever. I don't see in the fundamentals how corp profits can continue their upward trend. Corp America has cut expense to the bone and getting anymore productivity increases out of their employees just won't happen.

      As far as QE is concerned, that money is being borrowed by the hedge funds and other institutional investors very cheaply and funneled back into the market - among other investments like housing. But whenever "tapering" is mentioned, you always see a sell off.

      But that's the market.

      As far as the economy in general is concerned, we are not recovering - we are recovered. This is all there is, folks and the policy makers are too chicken shit to admit it.

      So, what does that mean? As soon as corp profits slide, expect a bit of a sell off but not a crash because all of this QE has inflated asset prices Although, if interest rates spike, there could very well be a huge (20%) correction.

      • There's no production capacity problem. There's a demand problem. There's no scarcity of labor. Obviously, the solution is to create money and use it to empower individuals, instead of corporations.

        • by lgw (121541) on Wednesday November 27, 2013 @01:21PM (#45540471) Journal

          There's no production capacity problem. There's a demand problem

          Nope, we're past that now. This is business-cycle-as-usual, and heavy industry is doing capacity build-out. Other goods and services will follow in the years to come (the usual business cycle is 10+ years).

          When coming off the bad times, the first areas to improve are big-ticket consumer items, from cars to washing machines. Stuff people have been fixing (or just working around) instead of replacing for years, but finally the annoyance has exceeded fear of things getting worse. So right now there's demand for those items, and energy/raw materials are at the very bottom of the cycle, price-wise, so heavy industry is gearing up.

          Right now energy companies and raw materials have demand ramping up and prices are starting to follow (up from 2009, but not really high yet), but in a while (not this Christmas) we'll see the next leg up, where demand comes for more "fun" consumer items and people finally start to admit to themselves the recession is over.

  • by TWiTfan (2887093) on Wednesday November 27, 2013 @09:51AM (#45538057)

    Now it's bound to trickle down to us, right?

    • by i kan reed (749298) on Wednesday November 27, 2013 @09:53AM (#45538077) Homepage Journal

      Pretty on the nose there. The headline asks "This time it's different?" The answer is "yes, this time the employees aren't seeing any of the money"

      • Well yes and no.

        The problem during the Tech Bubble, was the industry was Employee Driven. In order to get employees you needed to offer them a lot to get them. Hence the 6 Figure Web developers, and all this other stuff.

        The bubble popped, and it became Employer driven. So the Employees want these jobs and will follow the demands of the employer.

        So right now trickle down isn't working, because we still have an Employer market.
        That said they are hiring more as their companies grows and that does trickle dow

        • Except that, you know, in the face of absurdly high corporate profits, employees still eat the bullet because that's made up nonsense. Trickle down never works. It has never worked. And trying just leads to abuse and human suffering.

          • by TWiTfan (2887093) on Wednesday November 27, 2013 @11:53AM (#45539449)

            I think trickle down has always been premised on the idea that rich people and CEO's would voluntarily do the right thing with their money and increased profits. It's premised on the idea that a CEO would act in the best interests of the company and invest his profits the company's long-term future--not just go for the quick short-term profit, use it to pay himself a big bonus, and then bail with his golden parachute when the long-term problems hit. It's premised on the idea that a rich individual is going to share his wealth (hiring more servants, buying more stuff, and spreading it around)--not just horde his money and be a cheapskate fuck to the illegal immigrants he hires on the cheap to do all the work around his mansion.

            In other words, the premise that trickle-down is based on is complete bullshit, as has been evidenced by over three decades now in the U.S. of watching money NOT trickling down for shit.

            • No it's based on the flawed assumption that companies hire employees based on available resources, not the amount of work they have to get done. If you lower their tax burdens(and their investor's) then they'd hire more people. The reality is that companies will perform layoffs with record profits(mine sure did).

          • by lgw (121541)

            I don't know what "trickle down" even means, but life sucks for everyone in a recession, and is better for everyone in the boom times.

            The average man's wage is always going to buy an average amount of stuff. When the economy as a whole stumbles, we make less stuff, and during the boom times we make more stuff. The total dollar value of that stuff is largely irrelevant.

      • It seems like every two weeks my employer transfers money into my bank account. But maybe you're right and I'm wrong.

        • Hope you don't mind that it's less than the average developer was getting in 1999 even before inflation adjustment.

          • I actually dropped out of college in 1999 because I was offered a job as a developer. Salaries were *ridiculously* overinflated. A 21 year old who doesn't know shit about anything should not have been making $45k/year in a medium sized city.

      • Pretty on the nose there. The headline asks "This time it's different?" The answer is "yes, this time the employees aren't seeing any of the money"

        Meaning they're actually getting paid instead of getting worthless stock options that supposedly will be worth a bazillion dollars when the firm IPOs (I've got lots of pretty wallpaper from the previous bubble to remind me NOT to go for stock options).


    • by David_Hart (1184661) on Wednesday November 27, 2013 @10:36AM (#45538585)

      Now it's bound to trickle down to us, right?

      Only if you put some skin into the game. You did invest in the stock market after the real estate crash, right?

      I was fortunate enough to have some spare cash to invest. My only regret is that I didn't put more in over the last two years. It's my opinion, though, that we are near the end of the bull market. I'm thinking that interest rates will go up and the shift will be to the bond market once Quantitative Easing ends. But, I am not a professional analyst, it's just my personal opinion...

      • by lgw (121541)

        Heh, the best investments I've made so far in life were in real-estate-related companies back in the darkest times. Half of my picks failed, the others gained 5-10x in just a few years. Sadly, my current bet on emerging markets is proving my lack of genius in investing. Oh well, can't win em all.

        BTW, interest rates are already going up, but that means it's a terrible time for the bond market - as rates rise the price of existing bonds falls, and long-term bonds fall dramatically. I was late getting out

    • by dcw3 (649211) on Wednesday November 27, 2013 @11:50AM (#45539409) Journal

      There's no reason you can't start collecting on that trickle at an early age. At 23 years old, I had $600 to my name back in '82, and on the advice of a broker (and remembering that my grandmother had invested in the same company) purchased 60 shares of Detroit Edison. I joined their dividend reinvestment program (DRIP), which was much better back then (no fees, and 5% discount to the market price). I've long since sold the original 60 shares, and only hold onto those that were accumulated via dividends and worth about $20k.

      If you participate in a 401k, chances are that you're already in the market, and enjoying some trickle.

      Do some homework on the markets, it's much easier now than when I started. It's not only for 1 percenters.

  • by damn_registrars (1103043) <> on Wednesday November 27, 2013 @09:57AM (#45538119) Homepage Journal
    The NASDAQ won't be meaningful until the overvalued stocks are down to prices that reflect the value of their business and business plan. If you don't think Facebook is overvalued, then tell me, what is their business plan? That's OK, because nobody who works there knows what it is, either. They are rapidly approaching the end of their hype. Once the shit hits the fan and investors want to see profit they will go the way of plenty of other dot-com bombs.
    • by Dunbal (464142) * on Wednesday November 27, 2013 @10:07AM (#45538261)
      You must be new to this whole stock market thing. Seriously if you wait for stock prices to come down to earth, well, you will have to wait for the next crash. The cost over value is built in to most stocks and is only loosely tied to actual assets and earnings. And while I agree with you that some stocks are hugely, ridiculously over-valued (like FB), people are still buying them and making money from them. Don't buy it if you don't like it. Risk tolerance is highly personal. It's that simple.
    • by tjb (226873) on Wednesday November 27, 2013 @10:23AM (#45538425)

      Over the last 12 months, Facebook, had revenues of nearly $7B and profits of about $1B. You can argue that their stock is overvalued (and I'd tend to agree), but they clearly have a pretty solid business plan. []

    • by sl4shd0rk (755837)

      what is their business plan?

      Maybe aggregate a wealth of information on people for whatever purposes the highest bidder may pay. But then again, NSA and Marketing would have no need for any of that so I'm probably wrong.

      • what is their business plan?

        Maybe aggregate a wealth of information on people for whatever purposes the highest bidder may pay. But then again, NSA and Marketing would have no need for any of that so I'm probably wrong.

        Selling ads only gets you so far, if people don't click on the ads you show them (regardless of how tailored they are) or more importantly don't actually buy anything from the people the ads are for. Eventually people will stop advertising on facebook when they realize that they aren't generating enough money from the ads to justify their costs. At that point, the whole business collapses as the NSA already has all the data they need (and wouldn't pay facebook for data anyways).

        • by tlhIngan (30335)

          Selling ads only gets you so far, if people don't click on the ads you show them (regardless of how tailored they are) or more importantly don't actually buy anything from the people the ads are for. Eventually people will stop advertising on facebook when they realize that they aren't generating enough money from the ads to justify their costs. At that point, the whole business collapses as the NSA already has all the data they need (and wouldn't pay facebook for data anyways).

          Selling ads works for Google.

    • They are rapidly approaching the end of their hype.

      *Yawn* Slashdot has been predicting the imminent end of Facebook since about thirty seconds after it first became available to the general public - almost ten years on, and it still hasn't happened. If/when Facebook crashes Slashdot will crow about how they've been 'right all along', conveniently forgetting that even a stopped clock is right twice a day.

    • by xigxag (167441) on Wednesday November 27, 2013 @10:31AM (#45538541)

      Facebook had $2.02 billion in revenue [] this past quarter, the bulk of which is advertising, up from $1.59 billion a year ago, and generating $621 million in quarterly profits. [].

      They have a good chunk of the worldwide digital advertising market and seek to expand further, especially through mobile. That's their plan.

      • by rlwhite (219604) <> on Wednesday November 27, 2013 @11:29AM (#45539181)

        Facebook allows a granularity of advertising targeting that was hard to get before. For example, I've been involved in a community organizing effort that had trouble getting media attention and had no real budget for advertising, and I've found that $50 in Facebook advertising targeted to our zipcode got us about ~5000 views and ~150 clicks. That was about as much participation as we got in months of free community newspapers articles, and we largely hit a different audience.

    • by mlts (1038732) *

      There is a point where advertising has a place as a market, but right now, sites like Facebook are playing the game of offering advertisers a bit more info, notching up the intrusiveness on subscribers just a bit more.

      One can compare this to boiling the frog. But, there is a point where people will say enough is enough and move to another social network (even though VK is Russian, it functions closely enough to Facebook that the learning curve wouldn't be that difficult), or G+ (where there are actually in

      • by samkass (174571)

        This makes no sense to me. First of all, G+ is a non-starter because Google is even worse than Facebook about collecting all the data they can on everyone who touches their services and trying to sell to them. If it ever were to catch on (however unlikely that may be), you'd see the exact same thing there or worse. The rest, well, if you can't monetize it somehow, who's going to pay the developers to develop it? A bunch of enthusiasts only gets you so far, and won't be able to keep up with an organizati

        • by mlts (1038732) *

          All of that is true. However, in the past, people said that MySpace would never die. FB has some long term obstacles:

          1: Right now, they can keep expanding market by getting more and more info from their subscriber base. However, if some event happens where people start valuing privacy, people can leave in a heartbeat. There is nothing FB offers that G+, MySpace, or VK doesn't, other than being the central watering hole.

          2: FB keeps getting new advertisers because they can promise more and more info fro

    • by istartedi (132515)

      I hate FaceBook as much as the next guy (and refuse to use it) but their business plan is actually pretty straightforward. They sell ads and data about users to advertisers. They're part of the cadre that's turned the Internet into 21st Century TV.

      The better criticism of FB's current valuation is that it projects too much growth. The user base is kind of saturated. Once you have a double-digit percentage of the entire planet, it's hard to go much higher. If they try to grow revenue through increasing a

      • The better criticism of FB's current valuation is that it projects too much growth. The user base is kind of saturated. Once you have a double-digit percentage of the entire planet, it's hard to go much higher. If they try to grow revenue through increasing advertising, they run the risk of alienating users.

        Spot on. Facebook is a classic example of a good company that's a bad stock, due to its high valuation. As shown by Yahoo Finance [], Facebook's trailing P/E is over 100 and its forward P/E is over 40. That's compared to a typical "growth" company that might have P/E's of 15-30. So why is Facebook worth several times what investors are currently paying for companies that still have room to grow? Just doesn't make any sense.

        However, that's not surprising for a company that has a double-digit percentage of

  • How nice is to have private bank's cartel that prints and prints the money like there is no tomorrow.
    Stocks up, profit up, US people deeper and deeper in debt.
    Perpetuum mobile for Wall Street.

    • by BobMcD (601576)

      I agree. 'Wall Street breaks record' is just a sign of the end of the bubble.

      Expect it to come down hard and fast once the QE backs off.

  • by jeffb (2.718) (1189693) on Wednesday November 27, 2013 @10:01AM (#45538179)

    ...but don't tell everyone, just me.

    If you can predict its future behavior, it's not a market. "Technical analysis" is today's astrology, and like yesterday's astrology, it works only so long as you're surrounded by believers.

    That said, there are ways to reliably outperform the market:

    • 1. Buy better (faster, lower-latency) access than your competitors.
    • 2. Buy more regulators and legislators than your competitors.
    • 3. Cheat, without getting caught -- or without regard for getting caught, if you've done a good job at point 2.

    I've got money in the market, because in general it outperforms other investments over the time horizon I'm facing. But I don't delude myself that I can outrun the pack.

    • by dcw3 (649211)

      Or, you could simply put your money into the S&P500, and do pretty well. You'd also save yourself a lot on broker fees, and the headaches of researching individual companies. Here's a chart going back to 1950. You can clearly see the "Internet bubble", and the collapse from from the housing bubble as well. But, over time, it's essentially, a continuous climb. []^GSPC&t=my&l=on&z=l&q=l&c=

      • Yup.

        You can't beat the averages. People who try always finish behind the averages because their costs are higher or they take on more risk.

        Take the pro money managers on Wall Street and track their picks over time and you will find random selection actually gets better results.

        There is no persistence in managed investments. There is no correlation year to year in actively managed funds. Major ratings agencies actually find that their ratings are anti-correlated with future performance.

        What you can do is con

  • by erroneus (253617) on Wednesday November 27, 2013 @10:04AM (#45538227) Homepage

    I think the world is starting to wise up. The idea that the market is anything but a casino has taken root. It is demonstrable that the current highs in the market have little to no effect on the rest of the economy as [real] unemployment continues to grow, as businesses continue to decline, as welfare programs grow and on and on. Is the word recession or depression? I can never quite tell the difference and it doesn't help that the media and the players making money in all of this are in complete public denial over all of this.

    The pedestrian banks are going to begin charging customers for keeping their money in accounts as interest rates are lowered to the point that lending profits are too low for operations to continue.

    All of this and they have the gall to report on the market's activities as if it represented the economic health of the nation or the world? This reality is too big to hide any longer. This is especially true as the house votes to restore the conditions which trashed the world economy [] back when things really went bad before. It has passed the house but not yet the senate. I can't imagine what these people are thinking except that they don't care about the larger economy in the slightest and that's pretty much the 99% of us.

    • by dcw3 (649211)

      Having played in that "casino" for over 30 years, I'll call BS. Unemployment has always been a lagging indicator of the direction of the overall economy, while the markets are forward looking. You can certainly approach it that way by placing your money on more risky companies, but that's entirely up to the individual investor. There are plenty of lower risk investment vehicles...S&P500, utilities (I have my own anecdote on that one above), etc. where you can put money down long term, and expect a de

  • No one takes this into account in america because for some reason taking into account the fundamental failures of unbridled consumer capitalism is a "bad thing"
    the Emergency Economic Stabilization Act committed $7.77 trillion to rescuing the financial system, more than half the value of everything produced in the U.S. in 2009. You dont get to pump that much money into your economy and violate the good faith and principal of an open exchange system of capital and investment without serious repercussions.
    • by Junta (36770) on Wednesday November 27, 2013 @10:19AM (#45538387)

      At the scale of the US economy, it's important how people 'feel'. If people feel like things are crashing or will crash, then things will crash. If that means 'printing money' to make people *feel* like things are good, then so be it. Obviously you can't do that indefinitely, but if you have no flexibility then things have historically proven to bubble and crash.

      It does mean that comparing most economic indicators is not necessarily apples to apples, but if people *feel* like it is, and it makes people willing to move money, then it does have some value. The key is finding the right balance between inflexible metric, mob rule economy, central manipulation of the markets, etc.

      • by khallow (566160) on Wednesday November 27, 2013 @10:35AM (#45538571)

        At the scale of the US economy, it's important how people 'feel'. If people feel like things are crashing or will crash, then things will crash. If that means 'printing money' to make people *feel* like things are good, then so be it. Obviously you can't do that indefinitely, but if you have no flexibility then things have historically proven to bubble and crash.

        I guess, if all you have is a hammer, then everything looks like a nail. The problem here is twofold. Bubbles and crashes aren't inherently bad in themselves. They're just a manifestation of imperfect knowledge and that's not going away.

        They also happen with greater severity when someone tries to game the psychology of economies. The 2007-2008 real estate crash, for example, can be traced back to nation-level policies which freed a lot of easy leverage in North America and Europe for real estate. These policies were enacted in order to recover from various economic problems of 1998-2002.

        • The danger here is that there is some speculation involved, but if not for the Quantitative easing, we may well have been on the trajectory to a repeat of the great depression. A lot of theory suggests that such moves globally might have averted the great depression. You are right that bubbles and crashes to some extent is not bad, but no one can deny that the great depression was bad.

          This is not to say governments should feel they have free reign to print money (see Germany post world war i, the confeder

      • by Sarten-X (1102295)

        This, so very much.

        The fundamental point of the economy is to let people get what they want. Ideally, if I want a product, I will be able to get it, and the person I got it from will be able to get whatever he wants, too. Volume is king.

        Ultimately, it doesn't matter whether a loaf of bread costs $1 or $100, as long as people can get a loaf of bread when they want it without too much hassle. It doesn't matter that trillions of dollars got dumped into some particular accounts, as long as those trillions are

  • by Junta (36770) on Wednesday November 27, 2013 @10:12AM (#45538315)

    Again, the answer is 'no'. Some people think the age of the companies is different, and the problem last time was too much faith in fuddy-duddy old companies. No, they were just in the position to be riding high on the influx of VC to all sorts of new, not established startups that had to buy their hardware and software from *somewhere*. The bubble popped around the new companies first, not the old. The big, 'old' companies suffered the downstream effects of that bubble going away.

    Again, we see the signs all over the place of the late 90s. Massive investment in endeavors without any sign of profitability yet and not really a good sign of how profitability will occur (hello Snapchat). Lot's of 'new blood' with money being spent under the assumption that 'oh, these whipper-snappers are refreshing, new, and might completely change the world *this* time for a long term and better be a part of that'.

    The bulk of Amazon's success is still yet predicated on operating on razor-thin margins (and you already see investors grumbling). Their EC2 unit is currently the beneficiary of the same dot-com rush that the 'old' companies benefitted from in the late 90s. Facebook I'm not quite sure about, but it does seem to be a potentially troubling sign they feel they have to shell out billions frequently in order to stay 'cool'. Google and Apple are about the only one of the mentioned three that I think has an undeniably working business model without a huge sign of long-term problems (well, except for 'growth' might plateau since there is only so far they can go). I do think in another economic downturn, Apple would go down pretty hard since market tolerance for premium brands gets hit hardest.

  • Economy is in a much better shape now. Top 10 NASDAQ companies are producing tons goods and giving 1000's of jobs to the people.
    Thanks god society is eager to buy those "likes" thingies that boost the economy. And what about those "character" things? 1 is not enough, everybody wants 140 of 'em!

    • by plopez (54068)

      "giving 1000's of jobs to the people"

      And the US still has 7.4 pct U-3 unemployment and it worse in many other places in the world. Maybe if people and corporations stopped hoarding wealth we could pay for important things, such as infrastructure, and put people back to work.

  • There are still companies that are incredibly over valued in the Nasdaq and the entire stock market (not just Nasdaq) has been inflated by the Fed QE of 85 billion a month.

    It will come tumbling down and then we'll start the whole thing over again.

    (that is when you buy)

  • When they say we can defy the laws of economics. Valuate a company with no revenue.
  • So that does not bode well. But maybe it's different this time. Or maybe I just don't "get it". Or maybe it's a new economy.

    Probably not. My advice, run for the hills while you still can.

  • If they say it's not a bubble this time, it's probably a bubble.
  • Apple and Facebook are obviously about to drag a significant portion of the index down with them as they're crashing and burning in the near future. Considering what percentage they cover, I'd pull all of your money out of NASDAQ ASAP after Christmas shopping season.
  • by GodfatherofSoul (174979) on Wednesday November 27, 2013 @11:30AM (#45539197)

    This is a Wall Street recovery, not a Working Man recovery. Keynesian is an epithet nowadays, so instead of going the 1930s route and investing in infrastructure and public works to put working stiffs back in the field, we elected to dump money on Wall Street until the investors felt happy enough to start diversifying out of their tortoise shells. No one should be surprised that the effect is great stock prices and mediocre, trickle-down improvements in the economy everywhere else.

    These index milestones are irrelevant except for the fact that the trickle down effect might raise the flow up to Babbling Brook.

    • Keynesian is an epithet nowadays? Only if you're in the Tea Party movement. This would be the second time it has "worked", with actual unemployment and general market outlook increasing as a result of federal stimulus (aka wonton spending). It actually has sent money to infrastructure. Given that the collapse eliminated trillions upon trillions of dollars of "equity," and was the biggest collapse since 1929 (which took close to 15 years of stimulus to dig out of).

      People forget that the unemployment rate t

      • I disagree w/ your comments about the "new" economy. We still need those manufacturing, agriculture, and manual labor jobs. We just decided to pay indentured servants sucking toxic fumes in Asia 1/10 and Latin American illegal immigrants 1/2 the cost to do the work.

  • This time it is being fueled by the funny money (Quantitative Easing) the Fed is pouring down the drain. That will result in an economic catastrophe. It will hit us much, much harder than it did when Japan (approx. 15-20 years ago) played around with such financial irresponsibility. Keynesian economics is the most retarded out of touch with reality theory you could use.
  • With the S&P 500 up about 28% for the year, yet corporate profits up by only a fraction of that, what I think what we're seeing is "multiple expansion", that is, higher P/Es, which indicates investors are willing to pay more per dollar of profit. I don't think that's reached "bubble" status yet, but it's hard to find bargains in the market at the moment, and the bargain stocks I bought a couple of years ago now seem to be fully valued.

    With regard to the NASDAQ, I think we're seeing a mixture of new thi

    • Corporate profits are up around 20%. There really isn't much multiple expansion.

      Really P/Es are pretty much where they should be compared to historical averages. The real question is what the end of QE will do to corp profits.

      The people I feel sorry for are those who sold at the bottom or those who don't realize that you buy stocks when everyone else is selling, not at the top of the market.

      What I do is pretty simple. Keep about 60% in low cost index funds the rest in bonds or cash. Costs really do matter o

10.0 times 0.1 is hardly ever 1.0.