re: crazier and crazier:
A small number of stocks dominate QQQ. If you take any one of those stocks, pick a valuation yardstick, and look at the longterm range, there is a clear pattern. It doesn't matter whether you use AMAT or YHOO or CSCO or QCOM. It doesn't matter whether you use price to sales, price to earnings, price to cash flow. The story is the same. In 1999, those valuations have soared far above their historical ranges.
You can't predict the future if something is happening that has never happened before. I shouldn't say "never". These manias have happened before, but the last time in the U.S. ended 70 years ago. And so much has changed since then, it's hard to draw useful analogies.
Stock prices (at least for the QQQ stocks) have become totally divorced from their fundamentals, and are now driven entirely by liquidity and sentiment. No one can predict when that group emotion will change from fear (of missing the party) to fear (that the party is ending). The turn will be sudden, and, by definition, most people will miss it.
If the market can ignore 3 fed raises (how many were ignored in 1987, before the crash?), it can ignore Y2K easily. Can the market ignore an unemployment rate below 4%? A 4th fed hike? A 5th? Oil at 30$/B ?? The answer depends on group psychology, not reproducible economic statistics.
The above is a long-winded way of saying: I don't know, and I don't think there is any way to know. |
