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Pastimes : The Justa & Lars Honors Bob Brinker Investment Club
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To: Investor2 who wrote (12218)3/4/2000 7:06:00 AM
From: Oblomov  Read Replies (2) of 15132
 
How long can the market keep it up????

Much longer than you may care to imagine.

The markets will continue their run until the majority of those who heeded Bob's advice (and that of other bearish pundits) finally throw up their arms in frustration and jump back into the market. There is a lot of "scared money" sitting on the sidelines, waiting for a dip in the market. As the dips become slighter and slighter, the apparent risk becomes less. Acquiring debt to invest seems entirely logical. The markets take on a new character; the markets begin a parabolic ascent like nothing ever experienced before. It is baffling for those on the sidelines, and exhilarating for those participating in the rise. And which is the preferred feeling, confusion or ecstasy?

The tech and biotech stocks have their analogy in the classic thought experiment: Imagine a table in the middle of a casino onto which people are constantly throwing money in exchange for "shares" in the pile. The pile is growing at a remarkable rate, and the "shares" you "purchased" early in the game have increased your net-worth many-fold. Intangibly, however. For to convert your "shares" back to money, you must stop participating in the game. Certainly that would not be in your interest as long as the pile is growing. But lately, the game has taken on a less sober character. People of little means are joining the game. Elderly people on fixed incomes. Those who have never entered a casino before, and who don't realize that money can be lost as well as won. At what point do you decide to leave the game? As long as the pile is growing, you are safe. But should you leave when the pile is shrinking, and fear dominates? What if you aren't able to get out in time?

IMO, the tech and biotech stocks have become gambling vehicles of this nature. There is no calculation of valuation occurring among "investors" who would buy JDS Uniphase at a market cap of $100 Billion (and no, I'm not bitter because I sold my JDSU at half its present value).

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