Warp, thanks for the Hays piece. My historical lesson is a
bit different from his, though. His comments and mine:
Today’s economy and stock market is not even close to being like 1929-32, when there was not an effective Federal Reserve, or Department of Commerce, or Securities Exchange Commission.
True about the economy and market (so far), but how can I take comfort in that if our tech meltdown occurred when all of those agencies were (by comparison) effective, yet did not prevent widespread corporate corruption? Given the disconnect between a sanguine investing public and pitiful investing fundamentals, all we can have confidence in here is our confidence itself. (Speaking of the tech market).
Eighty percent of those “runaway” super-star Industrial Revolution stocks were driven into bankruptcies. The corruption and moral decay of that era was rampant, but that period caused a moral reawakening in the upcoming decades.
From which I infer, by historical analogy, we have barely started our "reawakening."
So here we are having survived the last decade.
Well sure we did; it was the biggest boom ever! We are barely more than two years past the point at which the market cracked. This isn't the 1930s, or Japan of the last decade; we aren't predestined to molder for 10 or more years. However, given our current state, I would only place small and ST bets on a 2 year end to what would be about a 20 year round trip (dating the bull start to 1982).
The “runaway” super-stars of 1999-2000 have been brought back to earth, and many, many of them have been driven into bankruptcies.
I think of "back to earth" as something akin to historical valuations. Don't know what Hays is looking at, but I struggle to find any techs to buy on a fundamental basis, even with my too-often-proven willingness to be forward-looking. #$@$%^% expensive trait, I can tell you! I agree with you and MH and others about buying sound but badly beaten-down tech companies, using tight stops. I assume Hays preaches stops too, but for most people mental stops aren't practical and physical ones get run.
And the bubble that was fostered and applauded while it was expanding so dramatically has now been deflated. We have experienced a round trip.
If so it would be one without precedent, with tech valuations at the "bottom" being much closer to historical valuations at a top. And make no mistake, he is talking tech, not broader market, since his commentary is explicitly about the "runaway" stocks. I was expecting a bigger, earlier summer bounce, and I expect we'll still get one of some kind from some point. For the intermediate term, and possibly LT, I think it is precisely Hay's comparison to history that cuts against his optimism. |
