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.'"
Comment removed (Score:5, Interesting)
Re:BFD (Score:4, Interesting)
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.
Blowing bubbles again? (Score:4, Interesting)
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 [congress.gov] 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.
Re:Facebook is still overvalued (Score:4, Interesting)
Quick and dirty analysis post. (Score:5, Interesting)
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.
Macro-economics is more psychology nowadays... (Score:5, Interesting)
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.
Re:Facebook is still overvalued (Score:4, Interesting)
Facebook had $2.02 billion in revenue [fastcompany.com] this past quarter, the bulk of which is advertising, up from $1.59 billion a year ago, and generating $621 million in quarterly profits. [nytimes.com].
They have a good chunk of the worldwide digital advertising market and seek to expand further, especially through mobile. That's their plan.
Re:Quick and dirty analysis post. (Score:4, Interesting)
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.