The "priced in" mantra is a fallacy at this point and is becoming a poor excuse being worn out. With various numbers now putting the Nasdaq at an equivalent level to January 2000, there is no reality to this claim. Nasdaq 5000 was pricing in a fantasy economic universe that would not quit where growth and stock prices were hitting near parabolic conditions that had little room for error and could not be sustained. Unfortunately, error would eventually creep in as nothing is perfect and it did, thus giving the index a 60% haircut. Pricing in those expectations was a dangerous thing and we all saw where that led. Putting things on a pedestal doesn't make it great. I can put dogsh*t on a pedestal and you know what?...It's still dogsh*t, not art.
Now, all those poor economic numbers have significantly lowered the bar on fair market value, and once again we are way above the bar. The only thing that has changed is the perception which is an illusion based on where we've been. All people see is where the high bar used to be and the fact that we are far below it. Fact is, most people choose to ignore that the bar has been lowered and don't realize that once again, behind the curtain, they are pricing in a fantasy economic universe. There is no evidence to show improvement is on the way, and only a handful of companies dare to speculate without solid fact that things will get better.
So, what happens when the curtian is drawn and people see that this fantasy which has been "priced in" doesn't exist? Do we lose another 60% from this level? And what about the DOW? Flat for 2 years while the economy is taking a dive.
The priced in theory is fine when you price in the right things, but at this point, the market is trying to price in something that doesn't exist because they are blindly optimistic. |
