We've got housewives daytrading internet stocks, 12 year old penny stock gurus, wide public participation in the form of mutual and index funds, TV networks dedicated to stocks, tow truck drivers buying islands, and that's just a start..
This is certainly been evident for some time now.
We've had 20-somethings managing 100's of millions of dollars who have never seen a bear market (I haven't really either.. :0)
But then again we have seen technological productivity and new technologies that didn't even exist 5-10 years ago, like the internet (yeah, yeah... I know, the internet is a Tulip Scam). The Internet is not the "radio bubble" of the 20's. Radio was a one-way medium strictly for advertising to the masses and TV was greatly anticipated as a result.
The internet is a two way interactive medium which will quite likely push most bricks and mortar retail outlets into bankruptcy or restructuring to a cyber-retail business plan(like EGGS). If will be deflationary as it efficiencies are realized and non-essential middlemen are cut out of the "action" and price competition becomes even greater.
I do subscribe to the creative destruction concept and I think electronic commerce will make continuing inroads over the present marketing/distribution model. That means that the concept is real, profitable, and more efficient than the model we currently have. But we do have a few internet stocks out there that are HUGELY overvalued.
You also can't discount the possibility of more Fed rate adjustments.
The US economy is not overheated, especially when factory utilization % are analysed. Greenspan knows this, but is trying to spook the stock markets from irrational exhuberance. He has let the bond market deflate some of the excesses of the past several months since he last lower rates.
However, he, above all other persons, knows the importance of maintaining the US economy as an engine of global recovery. He has plenty of wiggle room available to lower rates and stem a stock market crash.
I know it sounds naieve, but look what happened after the autumn crash. Don't rule out the power of the Fed to meddle in a market and distort traditional analyzes.
Regards,
Ron
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