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Nasdaq 4000 — This Time It's Different?
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.'"
Adjusted for inflation the NASDAQ isn't worth any more than it was 13 years ago.
Everyone into the bubble! It's never going to stop growing!
Even tho it's growing because we're cutting everything we can...
stifling innovation blah blah wealth gap something something system is rigged
Now it's bound to trickle down to us, right?
The cow says "Moo." The dog says "Woof." The Timothy says "Thanks, valued customer. We appreciate your input."
Amazon was 6 years old in 2000. How would that be considered "just starting out"?
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.
Damn_registrars has no butt-hole. Damn_registrars has no use for a butt-hole.
There's still gullible investors (Mom & Pop and professional both) out there now throwing money at anything Web 2.0, and there is a tech bubble out there that will burst.
So no, not much is different. The only question is how far it will climb and how much money Mom & Pop will lose this time around per capita.
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.
...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:
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.
Is "social" a trend, or are we only experiencing its infancy?
Back then I had a CD that earned 5 bills a month that now earns less than $50. Savers were valued to some extent. Now they want me to put my money on the current flavors of the month like facebook.
I cashed out of the equities the afternoon that putz dubya signed the tarp. I doubt I'll ever be back.
If it makes you feel good that your portfolio numbers have been goosed up by the fed, enjoy yourself. Despite what they say, qe will never stop until their arms get ripped out at the sockets. Enjoy the happy days.
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.
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. youve altered the system on a fundamental level that should render nearly every analyst suspect in their evaluation or prediction of it. at best, what we have is a run-flat tire posing as an economy. at worst, nearly every performance metric and return at any exchange level is completely without genuine meaning, no better than a fraudulent lottery ticket.
Good people go to bed earlier.
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.
XML is like violence. If it doesn't solve the problem, use more.
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.
Nasdaq is a stock market, just like Wall Street.
No matter if it's a tech company like Google or Microsoft, or if it's a car company like Toyota or GM, or a food related company like Kraft, or a hygienic item company like Colgate - they will have their ups and downs, and some companies such as Kodak will find themselves redundant by the marketplace.
Just because the Nasdaq index is now headed by Google / Amazon does not mean the current company lineup is that much better than the Microsoft / Cisco era.
I am an investor, although I still hold some stocks, I prefer to focus my investment towards the startups - at the very least, the ones that I invest in are in possessions of very exciting ideas and/or innovative.technology.
The other reason I prefer to invest my money in the startups because I want to give the young people the chance to prove themselves.
Muchas Gracias, Señor Edward Snowden !
It just like Nancy Pelosi said, they had to pass it to find out what's in it. Kind of like when Adam and Eve ate from the tree of knowledge only to gain the knowledge that they shouldn't have done that.
Do you even lift?
These aren't the 'roids you're looking for.
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!
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.
XML is like violence. If it doesn't solve the problem, use more.
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)
If the US dollar hyperinflates there will be no question of it. It'll be as if the currency were made of high radioactive nuclear waste. No one will want to hold US dollars even an hour longer than they have to.
*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.
When they say we can defy the laws of economics. Valuate a company with no revenue.
The NASDAQ topped 4000. The Dow Jones topped 16,000. The trickle-down should begin at any time now. Corporate America is awash in cash. Everyone can have a good job! All those poor starving corporations can now afford decent group policies, rendering the hated Obamacare moot. If this doesn't happen it will be because corporate taxes are too high, and they don't have enough say in government relative to their taxation! They will be struggling if they have to pay taxes!
C|N>K
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.
putting the 'B' in LGBTQ+
If they say it's not a bubble this time, it's probably a bubble.
The one thing keeping the dollar from hyperinflating is the fact that oil transactions are done in USD. A move to the basket system by OPEC... and there will be a world of hurt.
I wonder if BitCoin may end up being the world's "lingua franca" currency, sooner or later. The downside is that all transaction chains are public, but that can also be an upside to show that a business's books are legit.
The one thing keeping the dollar from hyperinflating is the fact that oil transactions are done in USD.
And that 350 million people have to pay their taxes in US dollars.
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 confederate states of the U.S civil war, and recently Zimbabwe). We love it when a problem and solution are straightforward, that one 'pure' philosophy is the correct thing (e.g. inflexible 'money' supply is a popular cause for people to rally behind), but the truth is that there is a lot more subtlety and a middle road must almost always be sought.
XML is like violence. If it doesn't solve the problem, use more.
There are plenty of big name stocks that have gone down or stagnated over the past 12 months. I own several of them. No need to assume someone is too conservative just because they don't match your gains.
My God can beat up your God. Just kidding...don't take offense. I know there's no God.
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.
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.
I swear to God...I swear to God! That is NOT how you treat your human!
They get profits. You get to go on Medicaid when your insurance policy is cancelled due to ObamaCare.
Enjoy...
You can't base your economy on consumer consumption when 99% of consumers have no extra money in their pockets to spend.
Hopefully Fox can keep the plebes distracted from the growling in their bellies by getting them riled up about abortion or the prospect of some black person getting healthcare.
Isn't "NASDAQ's value" an oxymoron? This is just speculative value. It was never realized in 2000-01 as company after company went bust despite having "value" that was mostly hype. Now it will never be realized. Amazon has never (more than a quarter here or there) made money and never will (it's whole purpose is to destroy the thin margins of retail). Google and Facebook have yet to convert potential into actual value, and rely on fickle advertising (ask the NY Times how fickle advertising revenue is!). None of these companies today have any real value, just like the pet food company in 2000 didn't.
The only company with any real value is Apple. Apple sells a real product. And a niche, high-end product at that. Apple's only weakness is it will never do a high volume of sales like bottom-feeder companies can do with cheap knockoffs.
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.
My karma is not a Chameleon.
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 things that are overvalued and old things that may be undervalued. (Disclosure: I'm long on a couple of the old things.) As always, it pays to be choosy when investing in stocks.
I wonder if BitCoin may end up being the world's "lingua franca" currency, sooner or later
I continue to be amazed at the faith in BitCoin displayed.
No, you won't be constructing a massive large scale stable economic system out of bitcoin. History has shown at modern economic scale, *some* degree of money manipulation has to occur to counteract the realities of human psychology. People romanticize the gold standard and assume it was left because some nefarious plot by the powerful. It was left because a relatively hard fixed resource that a critical mass of people consider to be 'currency' results is incredible instability. You essentially have a mob rule economy, with all the trappings that one logically extrapolates from the phrase 'mob rule'.
'Value' is a surprisingly complex matter and no index is *perfect*, but a moderately decent one is CPI. The closer a commodity follows 'CPI', the more that commodity might be inferred as a stable indicator of the actual buying power of the one holding it. Gold and bitcoin have seen massive fluctuation, but the CPI has not. Neither an employee or employer can quote an annual salary in terms of ounces of gold or bitcoin because it's just too unstable. I keep including 'gold' because really bitcoin advocates view it as the second coming of a gold standard that is 'internet ready' and bitcoin fluctuation could be attributed to 'newness' but gold has no such excuse.
As much as people decry centralized control of currency supply without it being beholden to anything in particular as an irrational manipulation of things, the reality is the human participants in an economy are not rational actors, and some manipulation is required to manage the irrational behavior.
XML is like violence. If it doesn't solve the problem, use more.
The NASDAQ and DOW are nothing but places to dump crappy QE money.
Industrial production and technology stocks should be around 1500 on the NasDAQ and slightly over 3000 on the DOW.
Especially for a nation of FoodStamp enrollees and Walmart employees.
There is no technology growth, industrial growth that I can see that justifies those numbers except for the FED printing gargantuan amounts of money.
If you are in the stock market your an idiot and your going to get exactly what you deserve: NOTHING.
-Hack
Got Geometrodynamics? Awe, too hard to figure out? Too bad.
We have had the Greater Depression for five years now. We've just covered it up by drawing massively on credit.
Depression = 10%+ contraction in GDP.
GDP = Investment + Consumption + Gov't spending + Net Exports = ~$13 Trillion/yr
Treasury Borrowing since 2008: ~$1.4 Trillion/yr, and growing.
Borrowed money does not come from present production, so subtract the Treasury's borrowing from Gov't spending to derive the actual organic production in the economy.
Surprise! As soon as we can't keep borrowing increasing amounts (since we gotta pay interest on all of it), we realize a 10%+ contraction.
Sit back now, and watch how allergic the Fed is to rates above 3%, and why the word 'taper' causes such panic. Now you know why.
wonton spending?
You mean the economy is propped up by buying cheap chinese trinkets?
All other countries who suffered hyperinflation also had tax payers....
If I were to have my ideal currency, it would be a Chaumian one based on a precious metal or combination of metals. Gold is an OK candidate, but platinum, palladium, and others are also useful.
That way, if you get one unit of this currency, it translates to one troy ounce of metal.
Of course, this was done before (see eGold), but if done right starting from the ground up, it might be something acceptable by all parties.
There is a downside though... unlike a fiat currency which can expand to handle a booming market, a currency backed by a precious metal just may not have enough capital to flow into a new market, choking progress.
Of course, one can swap between the two currencies, for better or worse. Good times, go with a fiat currency. Bad times, one backed by material goods.
The one thing keeping the dollar from hyperinflating is the fact that oil transactions are done in USD
Why does this myth keep going? The currency futures markets are vastly larger than the oil markets. It doesn't matter in the least which currency you pick to price oil in, you can trivially buy it with any currency, and price futures relative to any currency, and it will barely be a blip in the currency futures markets.
Socialism: a lie told by totalitarians and believed by fools.
Well, you can print enough money to neutralize any advantage your currency used to have. I was merely pointing out the other big use that props up the value of the US dollar.
1) Fed policy is forcing all capital to move to stocks, as other investments are paying next to nothing.
2) Corporate profits are at a high because of cost cutting measures, delays in hiring due to the economy and health care benefits issues, and reluctance to invest in long term capacity building.
In the last century or so, whole economy crashes have thus far not been due to some fundamental resource shortages. It has instead been due to crises of faith. People saw balances and 'felt' less rich than they were and cash flow dries up because everyone becomes timid. The point on doesn't matter if the number is $1 or $100 assumes that compensation is different (e.g. if minimum wages were at $1000/hr, then bread being $100/hr would be in line with the current state since the numbers at a given point in time are arbitrary). This is not talking about a scenario where suddenly bread costs 100x more, because that *would* be catastrophic inflation. The absolute value is arbitrary, but the change over time is the part that would be scary.
XML is like violence. If it doesn't solve the problem, use more.
Let's really focus on what that means: we can no longer ignore a small fraction of the population hogging as much wealth as they do. People need money to spend in order to grow an economy.
LinkedIN and Amazon have TTM P/E's over 1,000. So investors are willing to wait over 1,000 years for return of invested capital. Over 200 stocks have a P/E over 100. Wilshire 5000 is > US GDP (think about that a moment). ERP is historically high no matter what planet Yellen is living on.