Right, that was the point I was aiming at although I didn't get it across too well. Let's say that some events occured that made oil double in price. Stocks in all of the alternative fuel cell co's would rocket and then the hype would start. Some of them would get worked into the NDX and before you can say irrational exuberance the Index is getting lifted up again. Or a biotech that finds a real cure for AIDS, or a genome co that finds a cure for cancer etc etc. So those that voted for Nas 5k in 5 years are really saying that they believe in technology and not necessarily in telecoms or whatever.
A stock can only go down 100% but it can go up 1,000s%. Also, stocks are valued on forward looking basis so earnings expectations are extraploted. At the moment they are still pricing in negative earnings (or vastly reduced) over time. If that reverses and the future yield goes back the other way then prices will do the same in the opposite direction. I remember the house price boom of the late 80's early 90's in the UK. Every expert said that we would never see the same levels again for decades. Some areas recoverd in 3 years. Of course, the experts said they hadn't allowed for sustained low interest rates, but then there is always some that experts don't allow for.
Tech is not dead. But the real question is how is a tech company going to make a higher than normal or even a normal profit? IT technologies (esp internet tech) seem to actually increase competition and lower profit margins. Great for customers who can buy these cheap, very fancy machines. Bad for stockholders.
right. of course a stock might go up 1,000% in a few years (or even months, whatever). but indexes won't.
Considering the fact that the NASDAQ leaders like MSFT, INTC, QCOM etc. are facing so bad times, in particular I think that MSFT cannot sustain its price above 50$ considering LINUX advances and the FLOP of XBOX. There are chances in my opinion for the NAZ to drop below 500 points. But obviously I don't have a crystal ball.
Notice that the % for getting back to 5k within next 5 years has jumped up today. Do people feel more positive when the market is going up rather than down even for a long term view?
"Tech" has become a synonym for "IT" or "computers" or "networking" in the past 10 yrs due to the personal computer revolution and the Internet. In the next 5 or 10 yrs that can all change. Nanotechnology didn't even exist ten years ago and now IBM is already making prototypes with it. Like somebody mentioned before, anything that causes a jump in energy prices or even an attack on the power grid will cause alternative energy production and storage to shoot up just like it did during the california crises except it will last much longer. Basically there will be a new definition of "Tech". IT has not really been bleeding edge technology for years anyway, it has been coasting on past success. Is there anything that you can do with a $2,000 pc today that you really could not do at all 2 yrs. ago? Its not really anything new, its just cheaper and less profitable for the producers. The way this could massively change the indexes is by the new tech companies replacing the old tech companies in the indexes at a rapid pace. I am not aware of any limits on how many stocks can be dropped or added in any time period. The old stocks do not have to go up or even stay in business, they just have to get dropped in favor of things that are going up. This is especially true in the nadaq where they always love a momentum stock. I'm not expecting this to happen in the immediate future, but over the next 2-3 yrs it seems very likely to me.
If you look at the composition of the Nasdaq 100 index, it is still heavily weighted to PCs. http://dynamic.nasdaq.com/dynamic/nasdaq100_activity.stm icrosoft Corporation MSFT 13.46 Intel Corporation INTC 5.72 Dell Computer Corporation DELL 3.24 Applied Materials, Inc. AMAT 2.1 Intuit Inc. INTU 1.76 KLA-Tencor Corporation KLAC 1.34 Electronic Arts Inc. ERTS 1.21 Apple Computer, Inc. AAPL 1.19 Sun Microsystems, Inc. SUNW 0.95 Adobe Systems Incorporated ADBE 0.86 Symantec Corporation SYMC 0.68 Novellus Systems, Inc. NVLS 0.6 NVIDIA Corporation NVDA 0.39 Integrated Device Technology, Inc. IDTI 0.21 These total up to almost 34% of the Nasdaq 100 with the three PC bigcaps MSFT, INTC, and DELL making up 22.4% of the Nasdaq 100 Biotech is another large chunk of the Nasdaq 100. Everyone that made big $$ today, go out and buy a DELL PC with Intel 2.4 Ghz P4 with Microsoft XP Professional and Microsoft Office XP!
Generally, the list of annual additions and deletions is publicly announced via a press release in the early part of December. Replacements are made effective after the close of trading on the third Friday in December. Moreover, if at any time during the year an Index Security is no longer traded on the Nasdaq Stock Market, or is otherwise determined by Nasdaq to become ineligible for continued inclusion in the Index, the security will be replaced with the largest market capitalization security not currently in the Index and meeting the Index eligibility criteria listed above. I took this from the Nasdaq corporate site. There are explanations on de-listing and replacements. A clever person could actually work out in advance delists and potential additions. Here's the link......http://www.nasdaqnews.com/ Interesting.
say 3:1 reverse split, small rally, we cross near 80, then keep going, and spike over, say 100 or so. Hey, 2 years tops. Have fun with that one. While at these depths, it seems almost hopeless to wish upon a 120 star for the Q's, its more than just a long way out, beyond 10 years+. What gave us such a rally was an administration that had two terms to stoke the flames and run the economy at full blast. We are so far from that, even on the horizon, that we will all probably be retired before coming even close to such a market again.