Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : WCOM -- Ignore unavailable to you. Want to Upgrade?

To: Jeff Hayden who wrote (6286)	4/5/2000 11:53:00 PM
From: jackrabbit	Read Replies (1) \| Respond to of 11568

Re: It may be an objective fact that the market has long since passed all time record valuations. What makes you think that's unsustainable or bad? There have been some real crazy swings in the market of late, to that I'll agree. But you know, if you average the Dow with the NASDAC, the rising market is pretty well tempered. It IS rising though. I think the totally unsustainable market mania is a subjective perception of yours and chinton's. Where is all the IRA money going to go if not to the market? Right now that money stream is a fire hose. and it won't abate for quite a while. When it does - then maybe the market's in for a dive. Jeff -- In a sense I agree with you -- the baby boomers are entering into their high income, low expenditure years and are slamming everything into stocks, without regard to valuation. Also everyone is now participating in 401ks which are all invested in stocks. This could be offset somewhat if market volatility causes some of the hot money to leave the market. Also a lot of stock has been bought on margin over the last year and may be sold to satisfy margin calls. But all of these arguments are based on money flow and supply/demand, not valuation. Eventually, the laws of economics will govern and stocks will be valued based on their earnings (not revenues). Here is a simple example -- if you pay $100 for a stock with a 100 p/e, that stock will give you $1 in earnings in a year. If you use the same $100 to buy a government bond, you would get ~$6 in earnings (note this is an example and I am not advocating govt. bonds as an investment). Investors are not being compensated in earnings for the risk they are taking. Maybe not today or tomorrow, but eventually people will figure that out. Regards, JR