Chuzz, are you still worried about a bubble? As a former journalist, I have observed some fine news that I think is very reassuring.
1.) the "tapping on the brakes" recent rate hike by the fed was quickly more than offset by the new scarcity of treasury long bonds put on sale. As I read it, the treasury will no longer offer these four times a year but only twice and in lesser amounts. The government has less need to borrow money. It is running a big surplus.
There is no way in the forseeable future that treasury borrowing will crowd out money that could be used to buy stocks or corporate bonds. Those days are gone, (thanks to the Clinton Aministration budget reduction law which passed by one vote in 1993.)
2.) It seems Clinton has also set terms of the debate for the future. the question now is, not if, but how much will the US reduce its national debt, not just the deficits, but the debt itself. This can be nothing but good news, reducing the borrowing needs of the government even more than anyone thought possible.
3.) Productivity numbers are telling over and over again now that we may well be in a New Era, the inflationary side-effects of rapid growth are non-existent yet again, they say.
I really do believe this New Era stuff now. I really do. The cost savings of technology, and the internet's impact on pricing of merchandise are aborting inflation when it is still a fetus.
More money is freed up to invest in tech stocks and high growth stocks or for that matter, "value" stocks.
So I ask you, why do you think we are in a bubble.
Maybe we have to evaluate good growth stocks more, for want of a better word, tolerantly, given the New Era which seems now to present new evidence of its existence every day.
We need to pay more for high growth stocks--because they are more scarce than ever!-- in this new environment .??? That would seem to be what the markets are telling us, the NAZ up, the Dow down.
why are value stocks taking such horrible hits. Look at Berkshire Hathaway's holdings. Hammered. I thought the COkes and Gilettes would be climbing, too. Is this because of the deflationary aspects of the New Era technology's empowerment of the consumer?? Could be.
I put all this in the context of CTXS (which you led me to)but you now will not own and INSP which you "steer clear of." BUt look what they have done in 30 days.
Should you consider evaluating them in a new way given the New Era?
I say this to suggest we may really be in a New Era. What is your evidence that this is not true, that, instead we are in a "bubble?"
all the best
jhg |
