Quite possible the Dow will reach 10,000 soon (tomorrow?). Strong economy cited as the reason. Could this possibly be due to the demand for goods (as in Y2K preparations)? Certainly not based on the global economy. The question is, once 10,000 is reached, will the bubble burst? I have been waiting to cash in the 410k but feel the time is now right. Comments?

-- lparks (lparks@eurekanet.com), March 11, 1999

Answers

Better to be a month too early than a day too late.

-- Ivan Cermak (curtistradin@earthlink.net), March 11, 1999.

lparks,

You asked about the demand for goods and Y2K preparations. I don't know if this is Y2K related, but it did catch my attention. It's a quote from an article on February's strong retail sales:

http://abcnews.go.com/sections/business/DailyNews/retailsales990311.ht ml

[snip]

In February, other strong sales gains included furniture, up 1 percent; building supplies and hardware, 1.2 percent; apparel and accessory shops, 1 percent; food stores, 0.9 percent, the most in nearly two years; drug stores, 1.3 percent; restaurants and bars, 0.8 percent, and gasoline stations, 0.8 percent.

[snip]

-- Kevin (mixesmusic@worldnet.att.net), March 11, 1999.

lparks,

The impossible bubble continues to grow, amazingly enough. The same people who cite the 'strength of the economy' are giving you Bill Clinton's popularity poll numbers though- take them all with a grain of salt. The current Dow bubble is driven by a very small number of stocks (most stocks have lost ground) and is inflated by created credit (or debt, if you'd rather) thanks to the Fed. You are seeing asset inflation without equivalent inflation in other areas of the economy. And when this turns around, bug or no bug, look out below.

The demand for goods represented by the few who are stocking up is quite modest in comparison to the massive economy as a whole IMHO. It is suffocating for some of the companies/industries involved but barely a blip on the big picture screen. A great many economically nasty things are happening globally and the tidal wave of trouble is approaching here rapidly.

If your 401k is in as safe a place as possible (US treasuries?) it will be as well off as any US dollar denominated paper promise to pay in the coming year. How well off is that? Hard to say. I've left mine in place though. There are some programs which offer more flexibility with your account, such as investing in US gold eagle coins, if you want to do that sort of thing. I personally would not have any 401k assets in the market at this time- too scary for me. The emotional peak will be reached sometime soon but the bubble may reach Dow 12000 or more before it does- too hard to tell, there's an awful lot of credit money still sloshing around as well as the transfers from savings etc. I plan to start shorting this pig at over Dow 10000.

But if you have good reasons for taking the tax hit you might want to get it out. Only you can make those decisions, and only you have to live with the results. Always the best advice is to diversify your resources wisely. Get the essentials taken care of first (water, heat/light, food, security, sanitation) and then worry about the rest. Have a couple month's expenses in cash on hand, some silver and gold coins etc. Then think about paper.

-- nobody (nobody@home.org), March 11, 1999.

If you are feeling a little bearish and want to read more I suggest:

http://www.fiendbear.com/ http://www.users.dircon.co.uk/~netking/finan.htm#tquotns and http://www.urbansurvival.com/

Some of the more bearish sites around.

-- helium (helium@avid.com), March 11, 1999.

The dollar is getting close to one ten thousandth of the Dow index. Is the Dow suggesting that big companies may be better remediated than big governments with their fiat currencies?

-- Watchful (seethesea@msn.com), March 11, 1999.

All the Y2k purhases put together are way to small to affect the stock market. The news said someting about a couple major companies the main reason today. Its just amazing, but like one of the "old timers" said yesterday, "the higher it gets, the harder the fall."

Sad but true.

-- Jon Johnson (narnia4@usa.net), March 11, 1999.

Lots of money (from 401K's, life insurance (from all those baby boomers who haven't kicked the bucket yet) and pensions) are chasing the stock of a group of companies (S&P and Dow-Jones) who real worth is about the same.

Hence - stock "inflation" of prices that people are wanting to pay for the stock - even though the actual value of the compnay is about the same.

Like tulips - it will fall hard. I recommend (as above) getting into bonds or something "safe" relatively soon - even though you may loose the chance to catch the D-J at a its exact peak. Keep it in bonds through the fall - early next spring - buy stock again whenthey will probably be significantly lower priced.

-- Robert A. Cook, P.E. (Kennesaw, GA) (cook.r@csaatl.com), March 11, 1999.

I do not think what's going on in the stock market has any relationship to y2k whatsoever. It's a bubble mania fueled by inflation and the flight of foreign money out of other countries and into the US stock market. However, once the bubble inevitably bursts and the losses start to mount, people will become worried about their financial future and will notice the y2k threat at that time. That's when the panic will begin. If the market stays up the entire year, there won't be any panic.

-- cody varian (cody@y2ksurvive.com), March 11, 1999.

My interest in the stock market is increasing in tandem with these historic gains. I never ever thought I'd see the market shoot up so fast. Greedy investors have wild dreams of potentially vast cyberspace wealth in those Internet stocks. But it's gonna crash worse than 1929. This will be one bizarre year of surprises!

-- dinosaur (dinosaur@williams-net.com), March 11, 1999.

Okay you all, where's the proof that it will crash? It will not fall, there's too much money invested in it, Clinton will not let this happen.

-- initforgood (Initforgood@initforgood.com), March 11, 1999.

The strong economy was cited as ONE of the reasons for today's upsurge. Another is that OPEC is meeting tomorrow and there is anticipation that they will cut production of crude oil....thus oil stocks were leaders in today's march toward 10,000.

-- Eye On Y2K (bugscaresme@mellinium.com), March 12, 1999.

1. The stock market is not a bubble. Period. It is a normal bull market, and, in fact, IMHO, is slightly undervalued. Interest rates are still too high adjusted for inflation. Lower rates would allow for a higher market.

2. Absent Y2K, it would be off to the races, again.

3. With Y2K...

-- Drew Parkhill/CBN News (y2k@cbn.org), March 12, 1999.

Drew. Got tulips?? or South Sea spices??

I agree that this is a normal roaring bull market. However, ALL markets must end someday, bull or Bear. In view of the problems with Japan (who holds 40% of our national debt). unrest and riots in 50% of our oil producers, the growing distrust in the Euro market of anything connected with Uncle Sam, do you really think this market can last? The interest rate for short term lending is quite high when the inflation factor is taken into account but not especially high when you take into consideration all the potentials for disruptions to our market in the next 12 months.

People that lend money do so with risk factors in mind. I do know at this point I would not want to be on say...Citibank's advisory board when they are deciding if they can afford to lend Thailand an additional XX billion dollars.

-- Lobo (Hiding@woods.com), March 12, 1999.

The current market rise is probably not related to y2k but there certainly is an increased demand for supplies as evidenced by the increasing shortage of them (i.e. generators, dried food, etc). Also, unemployment is at a 29 year low, could this be due to increased production relating to y2k? Lehman's has recently added a third shift. I believe many generator manufacturors have done the same. Also, today on MSNBC web site the Prudential Securities technical advisor expects the DOW to hit 11,000-11,500 by mid summer.

---lparks, still waiting with hands on the ejection handle. WW, get ready to call SAR.

-- lparks (lparks@eurekanet.com), March 12, 1999.

The price to earnings ratio for alot of these companies is enough to keep me wary. Some are debunking P/E ratios, claiming that this no longer applies to the new tech/Internet stocks.

-- Tim (pixmo@pixelquest.com), March 12, 1999.

Food for thought:

Last year when the market was making all time new highs in the 9300 area there were around 350 new highs on the NYSE. Today with the market close to 10,000 there are 1/10 as many new highs (35) as of this post.

Ray

-- Ray (ray@totacc.com), March 12, 1999.

I've never enjoyed following the market as I have the past 9 months or so. Ain't it been fun trying to factor Y2K into the mix along with the Asian Flu, the Euro, Russia, Brazil, etc.!

I agree with Cody in that the surge is mainly being fueled by the influx of foreign money into the U.S. stock market.

I'm completely out of the market as of two weeks ago. 401K is liquidated. I'm sitting on the sidelines for the rest of the year.

I'm passin' the dice!

-- Bingo1 (howe9@pop.shentel.net), March 12, 1999.

"The stock market is not a bubble. Period. It is a normal bull market, and, in fact, IMHO, is slightly undervalued." (Drew Parkhill)

"There should have been far more warning about the speculative splurge on Wall Street and the extent of citizen participation. That was the mistake that the Federal Reserve made in the Twenties, and the mistake that it has made again now..." -Economist John Kenneth Galbraith, interviewed in the Observer, June 21, 1998.

-- Franklin Journier (ready4y2k@yahoo.com), March 12, 1999.

Tim,

Good point. I just received a call recommending Dell computers. Howerer the P:E is 79!!! Might be a good price at present but at what risk?

-- lparks (lparks@eurekanet.com), March 12, 1999.

Doesn't look like it will hit 10K today...

-- pshannon (pshannon@inch.com), March 12, 1999.

Last fall, on one of the PBS programs, I recall one financial wizzard foretelling the coming year. He predicted that the DOW would top 10k and one reason was that it was a *phycological* goal of investors.

-- Floyd Baker (fbaker@wzrd.com), March 12, 1999.