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

To: DebtBomb who wrote (23946)	5/20/2001 2:04:29 PM
From: Jimbobwae	Respond to of 37746

Dale, I was just about to reply in total agreement with you then I created and started thinking about the following chart: stockcharts.com[w,a]maclyimy[pc5!c20!c30!c50!c100!c200!f][vc60][iut!Ue5,10,1!Lh5,5!La12,26,9!Lg!Li13,5] Do I believe in the long term value of technology and that this value will increase over time? Yes. Therefore, the trend up will continue. I started drawing trend lines connecting where we are now with other points on this chart and thought "what is significant and lasting about the value that has been created since the beginning of the chart?" I concur there are many excesses in the system and we are creating new ones. All will need some sort of correction to bring them back to a reasonable relationship with intrinsic value. Perhaps, we really are in a time of growth and value creation that is increasing the mean and we are not destined to "return to historical levels". IMO, we are going back down to some level that squeezes out current excess in the system. It just seems like its going to be later rather than sooner. And down to what level is the big question. The economic excesses may be getting critical and that is perhaps what Gold is trying to tell us. One question is: what is the net real value the Tech innovation bubble produced? I don't think we know yet but it appears to be a process that is accelerating and diversifying. Evidence the technological innovation driving energy, biosciences, and communications. And is this is accelerating. I am trying to reconcile the fact that while the set of macro and micro bubbles (aka growth spurts) we have created has multiple historical comparisons, is there not something unique, lasting and in greater quantity about what is being created? Historians say "well look at the tulip mania its another example of a bubble". Well, what in the end what was the value of tulips? Another comparison model is the crash of 29. Well, IMV that was perhaps a peak of pure industrialism that did not create enough new value for subsequent advances in the financial markets and why it took until 1953 for the averages to recoup their losses. More recently, is the the Nikkei bubble. IMO,that was a productivity bubble and a testament to the unique capacities of the Japanese to exploit existing technology. What were the significant values that arose from this? Taking a big picture view, our current environment is a testament to the unique Americanadian-etc propensity for building value through innovation and creativity. We are also in a period where there is now unprecedented exposure of unproven businesses to the financial markets. Dot-Coms, Biotechs, and other public companies with no earnings etc. Maybe there is room/acceptance for this risk in the markets even though it inflates the historical averages and allows for public companies with no or extremely high earnings. These to me are micro-bubbles, little capital experiments that in all likelihood will disappear. Psychological optimism and residual investor wealth permit this. Historically and currently, the rational view is that these companies are not "real" and should be subtracted from the system. Maybe we have reached a point in our economic evolution that there is enough wealth to tolerate some of this as long as value is created and cycled or captured back into the system. If too little value is produced then major corrections will appear.