I agree with a lot of what you've said. I am as guilty as the next in the valuation 'mirage'. However, I believe in the old rule that PE = growth rate, and believe that are least the GOOD tech companies can justify this equation.
On the 1/4 point: that was my point. Greenspan could have thrown in an 1/4 point now, and it won't have changed his plan in the least. He could have taken than 25 bp back in a later increase. It was the PSYCHOLOGY that was important; the market wanted to know that Uncle Al would be there to catch them, as he said he would back on Jan 3rd. But he let them down. The market interpreted this in a number of ways:
1) Uncle Al is out of touch.
2) Uncle Al is scared.
3) Uncle Al is punishing us.
Possibly all irrational thoughts, but I actually believe a little of each.
The question is: does the market have to experience the direct opposite feeling from the high to the low in order to reverse? Who made up that rule? Who says that the fear must equal the previous euphoria? If it did, you're saying that we NEED a depression, that we NEED 25% unemployment, soup kitchens, and desperation. I don't think we do; I think the fear is there, and any more fear will do permanent damage.
I think the U shaped bottom is needed, now. I don't want to see it zip back up, but I certainly don't want a 2000 Dow and 500 Nasdaq. So I guess I also hope you're wrong, but still fear you might be right. |
