Not to speak for the other Dave, but I think he is expecting another 50% drop from these levels. To his credit, he did call the drop that already occurred and when the Nasdaq was still above 4000 he was saying that we'd see the Nasdaq below 1000 at some point. Of course he didn't participate much on the way UP though, from what I can tell.
Now, he could be right, if the economy doesn't get going again Nasdaq 1000 is possible and maybe likely. However, that's a big IF in my opinion. If the economy does heat up and gets some real momentum going we could see equity prices strengthen quite a bit, IMO. Low interest rates, good demographics, a technology revolution that's still got plenty of room to go, ever increasing productivity due to technology; all these things equate to demand for equities.
I don't care how difficult it is to evaluate valuation of growth stocks, if there's more demand for them then there are sellers, they go up.
$2 trillion in money markets, another $2 trillion in savings accounts and I don't know how many $trillion in bonds, that's a lot of pent up demand for equities.
However, if the economy doesn't recover like equities are now predicting, look out below.
IMO,
Dave |
