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Technology Stocks : JDS Uniphase (JDSU)
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To: Hank Stamper who wrote (8884)4/15/2000 2:24:00 AM
From: Whistler30  Read Replies (3) of 24042
 
David;

While what you say has merit I believe it ignores one of the most salient factors in the history of the stock market - that P/E ratios have a strong demographic connection. Any time a dominant cohort reaches their middle years they exert a powerful effect on all aspects of the economy, including financial markets. This was the case in the roaring nineties, the twenties, to a lesser extent the sixties, and most recently the late seventies and early eighties in Japan. In each case increased consumer demand for equities resulted in a dramatic increase in price earnings ratios and in each case it could be equally well argued that these P/E ratios were driven purely by the simple law of supply and demand. In almost every case the "bubble" really burst only when the majority of the cohort reached age 60 and sought less volatile instruments to safeguard their wealth - namely bonds. The classic and best studied example of this was in Japan in the late eighties.

We are part of the greatest cohort (in relative numbers) in modern history entering into their highest earning and investing years. This group will not be content with a humble retirement and they have already shown, to their detriment these past few months, that they are not afraid of risk.

IMHO that is also essential to understanding this market over the longer term.

Regards,

Whistler
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