Just How Low, How Low Can It Go.
Q: Is it possible that the Nas might drop below 1000? Two weeks ago, I would have said "hell no", but now, I'm not so sure. Can I get some input from you guys on this one?
A:
The "historic range" for Nasdaq today would be between 1500-1900.
I suppose one could argue that we could have a "reverse bubble" that
would drive the index as far below the "historic range" as it had been
driven above the "historic range" over the past few years. Regardless
of how low it goes, it will eventually return to its "historic ra
that takes 3 years, then we should see Nasdaq trading between 2100-2700
by April 2004. If you time the bottom right, you could see some healthy
returns, but I believe that today is a better day for equities than cash for
the long-term investor.
That's just my opinion, for what it's worth. I prefer trading myself for
there is always money to be made in every market.
My motto:
'I have found that most profits come
from stocks held less than 7 days and
most losses come from stocks held
more than 7 minutes.'
Of course it "is possible". It wasn't until the Naz dropped back below
2028 (the 9807 high) quite recently that it was even within price levels
established by anything that even looked like market trading, as
distinct from fraudulent, deceptive, and manipulative practices set up
to rip off newbies suckered in by a larger speculative bubble than
was the 1923-1929 massive blowoff in tech stocks (then the technology
du jour was radio and automobiles) and financial pyramid schemes (such
as but not limited to the utility holding companies).
Just for a moment, let's look at it in terms of technical trading
standards. That 'relevant' high at 2028 is one of the parameters (the
game playing which painted a picture of Naz stocks rising above 5000
was total sham and obviously so all along to anyone with more than a
year or two of experience in the markets). The mainstream of the long
consolidation period, of which that high was the pinnacle, centered
around approximately 1750. That's the level which the Naz knifed
through in Tuesday April 3 trading. It never was a technical support
or resistance level, only the "center" of a whole lot of trading over
a whole lot of months. The nadir of that long consolidation was the
9810 low about 1357 established during the stresses of international
market difficulties and the threatened collapse of a severely over-
leveraged scam which called itself a "hedge fund".
Does any of this mean that the Naz WILL stablize in the 1357 to
2028 area? Not particularly. The frauds of the Internet mania and
Druckenmiller Blowoff which followed were so rapacious, they destroyed so
many millions of young investors - probably most of a generation of
such young people - and were so aggressively encouraged by the very
regulators and political officials whose duty it was to prevent such
thefts, frauds, and ripoffs, that the Naz could very readily over
shoot the entire consolidation period which technicians might see as
a reasonable area in which to commence purchasing.
All that observational fact reported, and theoretical folderol said
and passed on, the fact is that I myself have begun accumulating Naz
stocks. Not the individual issues, of course, because there is not
now and never has been any fair and orderly publicly accessible
continuous auction market in which to trade any of those prospective
outhouse wipes. I wouldn't touch any of those puppies with a ten foot
pole, out of certain knowledge based on my 39+ years trading stocks
that trying to do so would only get me bit by the cats and dogs and
pushers of prospective outhouse wipes involved, but I have been
accumulating some QQQ as the Naz has fallen into the trading range
described, at various levels with more planned as further expected
declines occur. It's sorta my "fourteen foot pole" for dealing with
things which I wouldn't touch with a mere ten foot pole.
Only what I think and what I'm doing based on my experience.
It could turn out I'm only getting old and foolish buying all those
book entry only shares representing units of participation in a
dedicated portfolio of NASDy junk stocks. I am of course limiting my
absolute total commitment to less than 5% of total portfolio, even if
I get all of the shares for which I've written orders in my deck. But
even so, I certainly recognize the possibility of your Naz 1000 figure
or perhaps even a lot lower.
This has been a great market for just about anyone. From April `99 to
March `00, it was easy money going up. From April `00 to March `01, it
was easy money going down. Now, as the markets flip flop like a fish out
of water, will be the real test of ones skill.
You seem to be basing your arguements on what tech has done. Many
sectors have risen over the past year. As well, many new investors,
myself included, have prospered by not blindly chasing only these tech
stocks. It was only the tech heavy Nasdaq that was grossly over valued.
The Dow was only slightly over valued due to its smaller tech weighting.
I do agree though that the markets are now back to their historic
trading ranges. This now make for some excellent buying opportunities.