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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: bearshark who wrote (40238)	2/13/2000 11:04:00 PM
From: pater tenebrarum	Respond to of 99985

bearshark, the NDX is a special case...no other index has seen as many deletions and new additions as this one. now i understand that this is a mechanical, market-cap based process, but it does skew the index. what's more, quite a few of the new entrants are new-era hope stocks, i.e. stocks the prices of which are largely a matter of faith. an ebbing of liquidity combined with an ebbing of confidence could lead to a major denouement in that index. as you say, too much gambling money has driven even the more staid components (cos making a profit) to incredible valuations. for decades the Nasdaq Composite fluctuated p/e wise between 15 and 30, roughly. in the past five years it has vaulted to over 200... if it were to return to the upper range of it's historical valuation band that would involve quite a haircut. it was priced for perfection at half it's current level...i'm not sure what it's priced for now. regards, hb