>>You often get the most froth as the beer barrel gets near empty...<<
I only address this to you since you started this thread and hope to spur some discussion this weekend on a scary thought I had driving home tonight listening to the news about the record close today.
What if this really is a new paradigm? I will explain my reasoning... The US dollar like many other currencies used to be pegged to the dollar. The peg was discarded and we changed the rules in mid-stream to supposedly reflect our GDP and overall strength of economy. Stocks are SUPPOSED to be worth earnings, future earnings etc, you all know the theory of the "way it used to be". What if that has been discarded permanently and stocks are now really worth only what someone else willpay for them on a permanent basis. What I mean is, what if for all future time, the piece of paper stock is no longer a representation of the company but instead only a symbol of a traded issue that is either in an uptrend or downtrend and the market is moving purely on a momentum basis with people rushing to jump onto what is rising and falling regardless of what the actual company is doing.
This idea was further re-enforced as I was scanning through the earnings releases tongiht and the earnings warnings. Companies with quarterly earnings of 30-50 cents are trading at 20 bucks a share on average while companies with no earnings, or else quarterly earnings of 1-5 cents are trading in the hundreds or at least 75 bucks a share. I see growth companies that will surely explode upwards next year in revenues after the Y2K slowdowns laying dead on the road because revenues might or will slowdown over the next 6 months only to speed up again after 1 January but no one wants them because of this. This I can see despite the historical basics of the market usually looking 6-9 months ahead. What I do have a problem with is how companies with no earnings now, nor projected for years on end and in reality probably never climbing. In this same boat ae the stocks that have one good quarter for each 6-10 lousy quarters that seem to get more respect.
I am starting to believe that the hype of the stock moves this market now and not the fundamentals or future prospects of the company the stock was originally supposed to represent. I have been amazed for years with how many people that own a stock not knowing the IR phone number, when they will report earnings, how to read an earnings statement and in some cases even what the company does. I have seen news releases about an analyst upgrading or downgrading stocks and be totally wrong with what the company he/she supposedly covers actually does.
If this is indeed true, then the bubble may never pop and the discussions we have here all the time may be the same discussions that were being made in the 70s about the Dollar when it was unpegged and set loose to rise to power across the globe. Yes someday the dollar could be shorted by big money and it could crashing down as could our stock market if some earth shattering event were to make people put the glue bottole down and figure out what a stocks price is really fundamentally worth. Think about it though honestly. With all our charts, our reads of various indicators, etc., Aren't we really just trading teh momentum of the market on this thread 99.999% of the time and just jabber jawing about the fundamentals. I know I am guilty of it. I trade soley based on TA I admit. I just pick my targets based on Fundamentals so that if something goes wrong, I am not the owner of a dog company or short a good one. Heck I will even short a good company on a short term scalp when the signals line up right.
Am I off in left field with the glue bottle or is this just the capitulation of a normally bearish tilting trader?
Look forward to counter points etc.
Good Luck,
Lee |
