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Strategies & Market Trends : MDA - Market Direction Analysis

SPY 675.24

-1.2%

Nov 4 4:00 PM EST

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To: pater tenebrarum who wrote (54118)	6/14/2000 8:28:00 PM
From: Follies	Read Replies (5) of 99985

I find this bubble trouble. Because somedays I believe it and other days I don't. The argument for the bubble is well presented by hb and others. The argument that there isnt a bubble is rather simple. I have just read Ray Kurzweils new book "The Age of Spiritual Machines" and he stresses in his book that we are in the age of accelerating rates. He is not talking about the market, he is talking about everything. Everyone is familiar with the "power" of compounding, but imagine a bond which not only compounded the interest but compounded the rate, 5% this year, 6% next year, 7.2% the year after , etc. Now everyone would buy this bond, right? Well what if the starting rate was .1% ? At the start of the industrial age it may have been .01% but since our technology continues to build on itself, the rate has finally reached 5 6 7% AND COMPOUNDING HIGHER. The 1970's developed the first (?) industry which could sell a product (software) where the sale price and value were almost completely disconected from the manufacturing costs. The incremental difference to produce another unit was almost nothing compared to the cost of producing the first unit. The web takes this to completion. No physical product needs to be produced but unlimited benefits can be yielded by those who use it. My argument is simple. This time it is different and those shares in companies which utilize the latest advances in technology need to be valued differently. There is no bubble.

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