Has anyone figured out the Nasdaq yet?
Shares of technology companies soared last week, setting records for three straight days before closing Friday, the electronic market's busiest day in history, at an astounding 4235.40.
Weren't pundits wondering just a week or two ago whether the Nasdaq would ever breach 4000 again? Well, hello, Nasdaq 5000. At this rate the index should hit that by Wednesday. Then get ready for Nasdaq 10,000... by June.
It's now pretty clear that the stock market has divided in two: the technology haves and everybody else. They call tech companies the new economy. What's that make the Dow Jones Industrial Average? Would you believe a Third World economy?
As tech stocks soared through the roof, the Dow grunted, groaned and slowly sank into grandpa's rocking chair. It fell 471.27 points in a four-day slide to finish the week at 11,247.06.
Will Alan Greenspan please phone home?
For months, the Fed chairman has fretted about the economy. Consumers, pumped on paper profits, were way too generous at Christmas. Kids used to get a bike if they were good. Now, they get BMWs.
Inflation? Okay, inflation has a lower profile than Howard Hughes did. But the ever-vigilant Fed, which adheres to the Strangelovian doctrine of preemptive strikes, has never let that stand in the way.
In an economy with runaway growth, low unemployment, spendthrift consumers and a ballooning trade deficit, inflation can never be far behind. For weeks, the Fed chairman has been signaling a rate hike the way a minor league pitcher telegraphs a curve ball.
The geezers who run the old economy dutifully fell in line. But those upstart Stuarts just don't get the message. All they know how to do is swing away. If any more Gen-X friends call and tell me they've just shifted all their funds into tech stocks, I'm going to burn my Microsoft shares.
Well, not really.
After all, this tech stock thing could be for real. But who knows?
You know Mr. Greenspan believes tech stocks are heading for a big fall because he stopped talking about irrational exuberance a long time ago. Who says the Fed doesn't play politics? Mr. Greenspan isn't about to go down in history as the man who caused the Great Crash of '00.
If you really want a dose of cold water, just read the story on Page 16 this week. Harvard economics Professor John Campbell predicts that bonds will outperform stocks over the next 10 years.
Which brings up the old story about the farmer who slaved for years to send his son to Harvard. When the son returned with his newly minted degree, the father said, "Now, tell me son, what did you learn?"
And the son replied, "pi*r squared."
"Why, son," his father said, "everybody knows that pie are round."
Now, somebody please explain that to tech investors.
