Why so, Andrew? What is wrong with investors realizing that some companies are doing better than others? Or, for that matter, what is wrong with some companies doing better than others in the first place?
Nothing is wrong with either. I, too, invest in strong stocks. And of course, some companies will perform better than others.
But, out current market situation is unique. Most stocks are performing poorly, and the profit growth of most corporations is only fair. A handful of technology stocks is pulling up the indexes.
In the post-industrial US economy, technology is of paramount importance. I think, however, that we have entered a period in which euphoria has taken the place of rational investment analysis. Once the market is in this mode, it is absurd to fight it. I have profited greatly over the past year by "investing" in JDSU, CNXT, BRCM, HGSI, CMRC, and ARBA. Note that the risk premium accorded to equities like the ones I have listed is in fact negative!
Due to a variety of factors such as the prevalence of index funds, money is being directed at the largest stocks without regard to their earnings growth. This is not sustainable. I can elaborate as to why if you are interested. |
