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Do these words describe the new economic era that we supposedly entered about the time the present bull market was born? Or are these platitudes from a long forgotten age? Those who read the May 28, 1999 issue of Investors Intelligence will recognize this as having appeared in an excerpt from Peter Eliade’s Stockmarket Cycle. The quote was from the New York Times, dated September 5, 1929. These are very close to the exact words that the Wall Street "talking heads" are using to describe today’s internet-driven market. Yet they are right in their pronouncements, as were the writers of yesteryears. Technological advancements have caused major changes in just about every aspect of our lives. Look at what has happened in medicine, aviation, communication, etc., since the above statement was written. Today we find so many financial types dutifully extolling the virtues of one new advancement – the Internet. Yes, the Internet has caused major changes in how we do many things, as has the computer. We can order books, trade stocks, make travel reservations, buy clothes, play games and seek information on just about any subject. This is just the beginning of how the Internet will change our day-to-day living. What we are losing site of is the cold hard fact that the Internet cannot produce any of the necessities of life. It can not grow or process food, roll steel for automobiles, mold plastic for the many appliances we use daily, or build houses or apartments for our shelter. The Internet can not produce a thing. Let us not lose sight of that fact as we watch the investing public bid the Internet stocks higher and higher. So where is this market going? Who can really tell? This economy is continuing to steam ahead so earnings should continue upward. And so should stock prices. According to one of the Fed’s formula, the market is about 50% overvalued. There are only a handful of tech stocks that are moving the averages, but as long as there is a lack of selling pressure the market will move in a narrow band of 5% either side of Dow 11,200. This could go on for months. Gordon B. Lamb Jeffrey M. Campbell July 15, 1999 Back to our Past Market Views |
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