I'm being spoken of in my absence! I do have a view on what's happening. It's actually not much different from what I was predicting in many commentaries from November through January. Those 3 months are historically the best for the broad market, so that's the very best time for staying 100% invested in stocks. Money from year-end bonuses and start-of-year 401k, pension, and profit-sharing distributions is pushed straight into the stock market. This is in part because most investors today believe the stock market is risk-free. Now we're nearing the end of February. All the year-end/start-of-year cash has been plowed into the market. Now what?
Well, now we see the professionals taking a close look at the value of bonds versus stocks, for one thing. Bonds look great, as Tom's evaluations indicate. So, some long-term money is flowing out of stocks into bonds.
But what of the NASDAQ vs. NYSE? The average duration of holding a stock on the NASDAQ is something under 2 months (I think I read this somewhere). The NASDAQ is a speculator's market at present. The more speculative investors are surely selling the big stocks (NYSE) and buying the high-techs (NASDAQ) right now. Many more traditional investors, seeing the NASDAQ double since the DJIA first crossed 10,000 (on its way up) in the spring of 1998, while their own traditional stocks have wobbled, are selling their big company stocks to jump on the NASDAQ bandwagon.
Where to from here? What worries me is the frequently stated notion that the high-techs are immune from interest rates, so therefore their continued run-up is not a problem. But what I want to know is: who do they sell their products to? Who buys the high-tech's high-tech products? Isn't their customer base precisely those big NYSE companies whose stocks are being battered and bashed?
So, if the NYSE is correctly predicting things, are these big companies headed for a slow-down sometime in the near future? If that happens, won't they stop buying the products from those NASDAQ high-techs? And if the flimsy or non-existent profits of the high-techs fall even further, won't somebody someday take notice?
I've been pretty much constantly in cash for the past month, and in January I merely darted in and out of the market. The DJIA is down 15% from its peak. I'm waiting for the next good buying opportunity. It may come soon (our modern-day bear markets are famous for their brevity).
Thanks for thinking of me, Jack! I'm simply overburdened with job-related work lately. But I do at least update the predictions for the next day on the web site daily!
Also, I had a disk problem that wiped out my "subcriber" list. So, if you'd like to get my occasional emails, you'll need to send me your email address again (sorry!).
Hope everyone's moved to a more conservative stance, as Tom has recommended!
Kevin |
