Monday, March 2, 2015

Blowing Bubbles: NASDAQ Cracks 5000... Again!

Money Daily stopped being a daily post blog in March, 2014. While the name remains the same, the posts are now on an intermittent basis, as conditions warrant, though it is advised to read the archives (from 2006-2014) regularly, even daily, for insights and historical perspective.

It took nearly 15 years, but the NASDAQ Index finally has clawed its way back above the magical 5000 mark, closing today at 5008. The last time the NASDAQ closed over 5000 was on March 27, 2000, but, back then, it was going in the opposite direction, as the tech bubble was popped and investors were scrambling to hold onto gains in companies with no earnings, like, Alta Vista and NetZero.

Today marked a 295% increase from the lows seen in March, 2009, so, conceivably, if one had the patience to hold the QQQs from then until now - just six short years - a near-quadrupling of one's money could be in hand at the close today. Of course, not even the most savvy investor, speculator or degenerate gambler could have been so lucky; stocks in the NASDAQ have been churned and turned, so the index looks quite a bit different than it did in 2009, even more so from 2000.

The NASDAQ of today is not quite as zippy as it was in the late 1990s. Volume is down dramatically and ten stocks - such as Apple, Google and Netflix - have provided more than 75% of the gains overall, so, it's likely that many investors were still stuck with moribund returns while the HFT algos ground higher for the one-percenters who control the market.

This nominal event evokes thoughts of the tech bubble and housing bubble, and shows some comparable characteristics. Special to the most recent rally of the past six years has been the incredible amount of liquidity provided by the Federal Reserve, an effect to which many ascribe the totality of the gains since 2009.

Whether we are once again in bubble territory remains not to be seen, but only to be verified. Talk, being the cheap commodity that it is, says loosely that stocks today are much better values, though recent macro data on the general economy, plus geo-economic conditions, seem to be pointed in a completely different direction.

Money Daily, convinced that we are once more headed for a collapse of astounding proportions, will resume regular daily postings with this writing.

Stay tuned. More information on the deformation of the markets is forthcoming.

No comments: