Bobby, I think it has to do with the fact that mass psychology takes more than a year to change. Last April I was arguing with Don Hays (through George Cole's "offices"), that expecting the Naz to drop to 1400 in 2000, was "too fast" (it turned out that he was too pessimistic, and I was too optimistic, I had 2950 as the bottom for 2000 and missed by a solid 700 naz points or so). At 1900 or so, the 10 largest Naz stocks (with a combined market cap of about $1 Trillion) are selling at a PE below 30, while the Dow has a PE of about 25 (probably a little lower now), thus relative to each other, the Naz leadership, is cheaper. Yes the Nas has a higher beta, but, IMHO, it will cause the rallies in the Naz to be more powerful, while the decline may get it (near future) to just around the 1900.
The relative beta of the Dow does not have to increase by much relative to the naz to breach 10,000 and even to go to 9600 (only 6% from where we are, and I am probably too optimistic here as well).
Zeev |
