|Dow||-85.26 to 18,203.37|
|S&P 500||-9.61 to 2,107.78|
|Nasdaq||-28.20 to 4,979.90|
|10-YR Yield||+0.038 to 2.122%|
|Gold||+$5.80 to $1,202.40|
|Crude Oil||+$0.75 to $50.34|
As I started banging out this column, CNBC decided to run TV clips from early 2000. Those snippets chronicled the dramatic rise … and then the epic fall … of tech stocks long since dead and gone, as well as those still alive and kicking today.
The hairdos look a lot different. The anchors look a lot younger. But those are hardly the biggest differences between CNBC’s coverage then and CNBC’s coverage now (or the print and online stories back then versus the present day). The biggest difference to me? Despite the strong and steady market gains over the last couple of years …
Stock mania is completely MIA!
Think back to just before the turn of the millennium. There was a whole different attitude toward stocks, and a whole different American frame of mind!
|Nasdaq celebrated 5,000 again but without the insanity that hit markets last time.|
Dot-bomb stocks like Pets.com were flying on a wing and a prayer. Online brokerage commercials featured executive assistants driving Ferraris. Analysts were slapping $1,000 price targets on stocks like Qualcomm (QCOM, Weiss Ratings: B), and they responded by surging tens or even hundreds of dollars in a single day! Party chatter was all about how much money everyone was making in tech stocks and little else.
None of that is going on today. If anything, average investors STILL aren’t going hog-wild pouring money into stocks or bragging about their gains at the country club. They’re dog-piling into bonds – even at the lowest yields and highest prices in history!
A few facts to consider: Stocks have been on fire since 2009. But investors didn’t even start putting net new cash into stock mutual funds on an annual basis until 2013. Then after putting $160 billion into the stock market that year, they invested just $25.6 billion in 2014.
That compares with a much, much larger $316 billion in inflows in the year 2000! ETF data also shows that bond ETF inflows have more than quintupled to $300 billion since 2008, and that bond ETFs are attracting a higher percentage worth of inflows than stocks … despite the fact stocks are doing well.
|“I’d be much more worried about stocks if I saw the same kind of insanity and ridiculousness I saw in dot-coms in the late 1990s|
Does that mean it’s all blue skies ahead? No, of course not! There are challenges facing equities, from geopolitical and debt problems in Europe to unrest in the Middle East to earnings pressure stemming from the heretofore strong dollar.
But I’d be much more worried about stocks if I saw the same kind of insanity and ridiculousness I saw in dot-coms in the late 1990s, or housing in the mid-2000s. That mania is still MIA, and that could be one of the main reasons this rally has staying power!
So what do you think? How is today’s stock market environment different – or similar to – what we saw in 1999-2000? Do you have a different attitude toward investing in stocks now than you did then? Do you see signs of manic behavior that I’m missing? Or do you think the lack of that kind of craziness means stocks have further to go to the upside?
These are incredibly important questions, and the answers to them could determine whether 2015 is a successful year for all of our portfolios. So please do share your thoughts over at the Money and Markets website.
|Our Readers Speak|
In the meantime, a few of you already weighed in on the Nasdaq 5,000 milestone in the last 24 hours.
Reader Fred1 said: “I mentioned a couple of weeks ago that the Nasdaq appeared to be in an ending triangle and appeared ready for an upward thrust. And so it is now doing it. The bad thing … triangles in that position at a 4th wave are an ending formation of an upward trend. After this thrust….the entire upward recovery from March 2009 should come to an inglorious end.”
Reader Books also weighed in with a cautious message, saying: “Lost in all this hoopla is the fact that if you had all your money in techs in 2000 you would have waited 15 years to get it all back.”
Bottom line: Even on our feedback page, it doesn’t seem like investors are going nuts jumping on the tech bandwagon – and that’s a huge difference from how investors were behaving the last time we were at these levels.
Meanwhile, Reader Troy said the latest round of M&A does make sense from a strategic standpoint. His view:
“The NXP purchase of Freescale will prove beneficial to both companies. Freescale is a very good semiconductor company which was held back by the private equity investors who continued to own the majority of the company’s stock. These investors only cared about turning a profit on their mistimed purchase, not about investing to make Freescale competitive. With proper investment, Freescale will dramatically boost NXP’s future profits.”
Thanks for the input, Troy. Anything you (or anyone else) would like to add about the HP deal? Or the many deals we’re seeing in health care? Or the Nasdaq 5,000 move in general? Then don’t forget to hit up the website and comment when you have a chance.
|Other Developments of the Day|
The relationship between the U.S. and Israel is increasingly strained these days, and today’s speech before Congress by Israeli Prime Minister Benjamin Netanyahu isn’t helping things. Netanyahu accepted a speech invite from Congressional Republicans, something that has rubbed President Obama the wrong way. The two leaders disagree over how to prevent Iran from obtaining nuclear weapons, with Netanyahu favoring a much tougher negotiating line than Obama.
Frustrated when you shop at Costco (COST, Weiss Ratings: A-) and can’t use anything but a debit card or credit card from American Express (AXP, Weiss Ratings: B)? Well, that’s going to change as of April 1, 2016. The warehouse store company will start accepting credit cards from Visa (V, Weiss Ratings: A) rather than Amex on that date. Citigroup (C, Weiss Ratings: B+) will offer the co-branded cards.
Didn’t Greece just get a bailout? Well, yes. But now it’s running out of cash again anyway. That’s because the indebted country can’t get access to another tranche of bailout money until it passes a package of reforms … something that will take more time than it has because it has to repay several hundred million euros back to the International Monetary Fund later this month.
The holidays were good to electronics retailer Best Buy (BBY, Weiss Ratings: B) … so now, the company is going to be good to shareholders! The firm said it would pay a special dividend of 51 cents per share, boost its regular quarterly dividend by 21 percent to 23 cents a share, and buy back up to $1 billion in stock over the next three years.
Any thoughts on these stories? Or other news items I might have missed? Then use the website to share them with your fellow investors.
Until next time,