PS, where have all the bears gone????
I'm right here. The Nasdaq 100, even at their current "depressed levels," as the Bulls would describe this point in the bubble blowoff, are still wildly overvalued. I've heard various estimates of their current aggregate P/E, but the average estimates are around 100 (if this is inaccurate, please point me to a data source). That's still about 5x or more the long-term historical average. So should we be surprised if the Nasdaq index springs back to that historical average and falls to 400? Or, to put a Bearish spin on that, consider (1) that such a plummet would depress the economy, which would depress the earnings of the corporations in question, which would necessitate a lower fall, perhaps to 200, to meet the historical average P/E, and that (2) markets in motion ALWAYS overshoot reasonable values in both ascents and descents, so maybe we should be prepared for a Nasdaq average below 100!
I know, NAZ 99 sounds absurdly impossible. Why, that would be a 98% fall from its high! 98% market declines just don't happen. Do they? I certainly wouldn't mortgage my house to buy NAZ 99 options. Especially since, if the NAZ does fall below 500, the value of my house will probably be plummeting right behind it.
So anyway, the point I'm overmaking here is that the Bears are still around. We've just been spending less time watching the stock market and more time basking in the last precious moments of a superficially healthy economy.
Still donning that crash helmet,
Dave |
