I have been trading stocks since late 2003. I don't make a living trading stocks but I have generated sizable returns with longer term holdings. I usualy don't daytrade or play options; although I am using some puts to hedge by positions in Goog and GS in the event of another selloff in china. I tend to purchase large cap, high growth, momentum stocks using a modified Canslim method but will occasionaly buy penny stocks. As for the future nasdaq bubble it will be driven by a new infusion of money funds and retail investors indipendent of a specific technology. In the 90's the bubble was diriven by information technology, while the next bubble will be driven by momentum.
That won't be for many years. However, there will be clues. For example the 90's bubble began in May 1995 when the nasdaq gained 100 points in a single month- the greatest montly gain in years. This ushered in the parabolic rally.
Thanks for responding by the way I dont completely disagree with you. I do think we are in for further highs but I still think we have one more leg down in this correction before we see them. As soon as we hit that trendline that extends back to 2003 I see us climbing to new highs. Though Im not convinced they are going parabolic. I just dont think momentum can carry us into an obscene rally like in the late 90s. Mom and Pop need to believe in something for that to happen. With tech they saw mulitbillion dollar companies ( at least on paper) being formed overnight. Its going to take something similar and not just momentum. My $.02
"As for the future nasdaq bubble it will be driven by a new infusion of money funds and retail investors indipendent of a specific technology. In the 90's the bubble was diriven by information technology, while the next bubble will be driven by momentum." new infusion of money funds... you mean liquidity that is driving the market...
To summarize- The recent corrections were due to trend lines, fundamentals are useles, and you predict we are going to ram through the roof to form a new upwards momentum not seen before since 1999. I'm not saying anything.
I believe you guys are way off base. Most bubbles go along the lines of the Dow Theory. There are 3 specific areas of theory that I will now outline. The smart money enters in the first phase when there is relatively no volume and the stock/index trades flat. Then as the stock/index moves up that is the second phase. You will see the primary trend line developing probably at a 15-25 degree angle. The third phase is where the people from the first&second phases start selling their shares to the people the third phase. The year 2000 tech bubble is a classic demonstration of the Bump N Run formation and the Dow Theory. The smart money got in pre-1996 during phase 1, then the regular investors got in between 1996-1999 phase 2, and then all was distributed from 2000-2002. Then we start over again at phase 1. At this point in time, I do not see a bubble or crash happening in the future. An argument can be made that we are in phase 1 or phase 2, but certainly not phase 3. Phase 3 is where you will see a huge noticable jump in the indexes and the chart will appear to start developing a huge speed bump as the indexes move up. The trend line will go from a 15-25 degree angle to a much steeper 30+ degree angle. In reviewing U.S. history, no one ever expects a crash or panic to occur. No one ever expects a recession to occur. I can only conclude that if we see many people expecting something to occur that it will probably not happen. I feel that such an occurence might happen in 2010. My first reason is that George Bush and the Republican party will be given the boot from the Presidential office very soon. After this happens, the market will probably develop a much steeper slope. I can see a celebratory rally after the elections. I dont see any reason to worry right now or in 2008. 2009-2010 might be different...
I agree that a recession or a steep decline in the markets is of course usually unexpected, however the many people expecting something to occur I have to disagree with, reason being is because about 85% of the articles I read and the shows I watch have every single talking head more bullish than the next. Many have predictions for the s&p to close up around 1500-1600 area by the end of 2007.
Media people are not allowed to own securities so their bullishness does not count. Similiarly, many newsletter writers dont actually trade and some do not own any securities. In any event, they only represent a few people out of the whole game and they are not actually money managers. The people that matter is those that have stakes in the game. The put/call ratios are the most important when judging sentiment in my opinion.
I think you're misinterpreting what most are saying. I havent heard anyone say we're entering a bear market or that the bubble has burst..I certainly havent. Most are simply saying this correction ( of which we get one just about every year) is not over.