JRI, IMO the 1987 PSE Tech index chart is very relevant today. It shows how the hottest group, which is very cyclical, can give no sign of collapse. (If you'll recall, the market did give several warning signs before the crash in '87). It was also very clear then that technology growth was inevitable. And virtually all portfolio/hedge fund mgrs are much more heavily exposed to tech now then they were then.
The I-N-T-E-R-N-E-T is simply networking writ large, and as much as other breakthrough technologies spurred manias followed by crashes followed by more efficient allocations of capital, so it shall be this time. The key to the markets (and to economics, which is why most of the dismal scientists fail to predict important trends with much if any accuracy) is H-U-M-A-N N-A-T-U-R-E. The market is nothing more than than a pricing mechanism with mob psychology the primary determinant in the short-term. I do not dispute the potential growth of the Internet, just the valuations of today's "sure winners" along with the various "lottery tickets" that will never turn a profit.
I enjoy reading Drucker, but don't subscribe to Atlantic Monthly. I'd like to read what he has to say if you would be kind enough to provide a link.
I'll end with a quote from John Kenneth Galbraith (A Short History of Financial Euphoria): "Past experience, to the extent that it is part of a memory at all, is dismissed as the primitive refuge of those who do not have the insight to appreciate the incredible wonders of the present." Perhaps you're right, and this is the ever elusive "New Era", but I very much doubt it. Good luck. |
