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Strategies & Market Trends : Sharck Soup -- Ignore unavailable to you. Want to Upgrade?

To: just hit it who wrote (23940)	5/20/2001 8:06:01 AM
From: Jimbobwae	Read Replies (2) \| Respond to of 37746

Another Tech Bubble? washingtonpost.com This plot sounds familiar. Haven't we seen this movie before? Or is it perhaps a sequel: "Boy of Bubble." I don't want to get carried away. This could be a faux bubble rather than a real one. What's psychologically important today could be totally unimportant tomorrow. Nor am I trying to talk this market down. Having no short positions in anything, I want my portfolio to grow. But these percentages, they're just not normal, even when starting from a low baseline. They're not normal unless you look to the turn of the century, meaning 1999 and early 2000. Do we really want to return to that period piece? Personally, I crossed the nostalgia threshold a long time ago, when the Nasdaq was somewhere down around 1600. That was just last month. Now it's up around 2200. In percentage terms, the index has grown faster since April 4 than it did in the first eight months of 1999. I understand the theory behind the market's recent rise. The theory is that the market anticipates everything. The market is all-knowing. The all-knowing market now knows there's going to be an economic turnaround even before it turns around. Of course, this is utter nonsense. We're not even sure we're in a recession. Yet we're confident that if we are, we'll come out of it in roughly six months to a year? But investors are particularly susceptible to this message. They want it all to make sense. On top of that, they've absorbed all this propaganda in recent years about the horrors of being out of the market for even a split second. I've seen studies on this. And I'm sure there must be somebody out there who can document that someone who was in cash for just 15 minutes at select moments over the past 92 years would have earned just $700 over that period on an initial investment of $1,000. The hang-in-there-at-all-costs investor, of course, who stuck with the market through thick and thin, would have $10,732,896.53, adjusted for inflation, taxes, transaction costs, and World Wars I and II. The big fear is that the mythical 15 minutes is now. Or maybe Monday. Daniel S. Smith of Dain Rauscher gave a more professional explanation in a recent market commentary: "History has shown that markets tend to recover four to six months in advance of actual economic recovery. "For this reason, many investors attempt to anticipate recoveries by interpreting the earliest positive news accounts as signs of a recovery. Money that had been on the sidelines is deployed back into the equity markets, and stocks rally. Often, a second wave of buying hits the equity markets in the form of investors fearful that the final uptrend is passing them by, short-sellers covering their positions, and momentum traders. "Whether these uptrends sustain themselves long-term is usually dependent upon whether the underlying economy recovers within the anticipated time frame."