Loving the up and up of markets these days

[NW-Bound]

From 1/1/1999 to 1/1/2000, the S&P went up a "mere" 21%. The NASDAQ went up 102%! Halleluyah! Now, that's a real bubble.

And then, after New Year 2000 (remember that New Year celebration?), the S&P climbed some more to claim another 4% on March 24, 2000, but the NASDAQ climbed another 27%.

I have been keeping a diary since Dec 13, 1999. It shows that from Jan 1, 2000 to that fateful day on March 24, 2000, my portfolio climbed 16.5%. And I was never fully invested, but had perhaps 70% in stocks. I held a lot of tech stocks, not dot-coms, but they all went ballistic.

I was losing sleep over that much money. It could not be right! Yet, I did not sell until I lost all of that gain, and some more.

 

[NW-Bound]

To see why investors were so complacent and did not sell when the bubble burst, one has to look back further to see why they were so used to making easy money.

From Jan 1, 1990 to that NASDAQ top on March 24, 2000, a $10K invested in Vanguard S&P would have grown more than 5 times to $55K.

Invested in the NASDAQ? $210K! Yes, 20x times in 10 years. It went straight up.

It's the "new economy". Halleluyah! It's the new millennium. Everything is different now. Nobody has to work anymore. All we do is to buy stocks. The Internet will change everything. It's all about bits and bytes. Everything is digital. Brick-and-mortar businesses are dead meat, who wants them?

 

[sengsational]

I was told what I was doing at work in 1999 was "old cheese". Then, after the bubble burst, they all wanted to nibble on my old cheese, lol!

 

[NW-Bound]

Thanks for reminding us of the "cheese fable".

I looked at my diary again. No, I never had investment gain in a month that was large enough to exceed one annual income. Not even during those roiling 3 months in early 2000, though the month of Feb 2000 came close.

I guess my portfolio has been one of an undersaver, or I did not pick good stocks. But what could be hotter than semiconductor and broadband infrastructure stocks in those days? I had them all. Every day, there was a company or another announcing a new superduper chip or transistor made with GaAs, or some exotic semiconductor, or a new fiber that could transmit an entire encyclopedia in seconds, etc...

 

[RobLJ]

I remember it well--in '99 (or was it 2000?)--the S&P hit close to a 30 PE; the NASDAQ was probably horrifying.
I looked at it and compared to small cap/midcap value, which were sitting at around 10 PE and moved gains from Fidelity Contrafund to LowPrice. The rocket kept blasting for a while, then it hit the fan, and LowPrice went up 27% from Feb 2000 to Feb 2001 while Contra went down 11% (which actually was a triumph for the Contra fund manager Danoff). It was similar the next year.
I got lucky--but it did reemphasize the importance of diversification. The problem now is that all sectors are more correlated.

Also, I think the market over the last few months is counting in corporate tax reform in the future particularly for large caps, which could be counting chickens before they hatch. We'll see.

To see why investors were so complacent and did not sell when the bubble burst, one has to look back further to see why they were so used to making easy money.

From Jan 1, 1990 to that NASDAQ top on March 24, 2000, a $10K invested in Vanguard S&P would have grown more than 5 times to $55K.

Invested in the NASDAQ? $210K! Yes, 20x times in 10 years. It went straight up.

It's the "new economy". Halleluyah! It's the new millennium. Everything is different now. Nobody has to work anymore. All we do is to buy stocks. The Internet will change everything. It's all about bits and bytes. Everything is digital. Brick-and-mortar businesses are dead meat, who wants them?

 

[marko]

This just feels so 2007.....

You mean the moment just before the biggest buying opportunity in a generation, right?

But I do have to disagree. It IS a little spooky right now but my take is that there had been sooooo much money sitting on the sidelines for quite a while that's starting to come back into the market.

My personal belief is that the market is returning to where it should have been all along.

I seem to remember a chart from Fido's Timmer last week (I had just glanced at it) that --I think-- showed money moving into the market that was NOT just coming from bonds.

 

[MichaelB]

This just feels so 2007, with a hint of 1999.

So true. Still, an important difference. Both '00 and '08 were recessions, and right now all economic indicators point to continued expansion. In fact, the NY Fed just published a bit of good news. The rate of home equity withdrawal is still very low, which means equity is not being used to fund consumer spending. Houses as ATMs No LongerÂ*Â* Liberty Street Economics

 

[NW-Bound]

2007 and 1999 are fine years. 2008 and 2000 are bad years.

Bring out the champagne bottles. We still have time. Heh heh heh.

 

[Amethyst]

I would like to sell, but the tax hit would be awful. Guess we'll wait it out...again.

 

[street]

Some great insight and knowledge once again. Thanks

 

[audreyh1]

To see why investors were so complacent and did not sell when the bubble burst, one has to look back further to see why they were so used to making easy money.

From Jan 1, 1990 to that NASDAQ top on March 24, 2000, a $10K invested in Vanguard S&P would have grown more than 5 times to $55K.

Invested in the NASDAQ? $210K! Yes, 20x times in 10 years. It went straight up.

It's the "new economy". Halleluyah! It's the new millennium. Everything is different now. Nobody has to work anymore. All we do is to buy stocks. The Internet will change everything. It's all about bits and bytes. Everything is digital. Brick-and-mortar businesses are dead meat, who wants them?

Where is that link to the article explaining how even experienced investors get sucked into new-fangled bubbles as everyone is hoping to sell to the greater fool to take maximum advantage of the huge price increases?

 

[audreyh1]

So true. Still, an important difference. Both '00 and '08 were recessions, and right now all economic indicators point to continued expansion. In fact, the NY Fed just published a bit of good news. The rate of home equity withdrawal is still very low, which means equity is not being used to fund consumer spending. Houses as ATMs No LongerÂ*Â* Liberty Street Economics

That is true, as even the ECRI folks are showing economic growth ahead and no recession indication at all. However, you can have market crashes without recessions.

Market indices and economic can run independently. And I suspect a big part of the 2009 recession was actually caused by the 2008 credit crisis and crash. Companies suddenly found themselves with no short-term cash supply and had to pull back and cut like crazy.

 

[DrRoy]

My stock AA rose a point already this year so I sold 1% this morning.

 

[DrRoy]

I would like to sell, but the tax hit would be awful. Guess we'll wait it out...again.

Sell in an IRA or 401K and there are no current tax events.

 

[NW-Bound]

Where is that link to the article explaining how even experienced investors get sucked into new-fangled bubbles as everyone is hoping to sell to the greater fool to take maximum advantage of the huge price increases?

Well, the bears have been calling us who have holdings in the stock market all fools who try to sell to each other.

We in turn thumb our nose at them saying if they are so smart how come they are not rich.

 

[Johanson]

It's the "new economy". Halleluyah! It's the new millennium. Everything is different now. Nobody has to work anymore. All we do is to buy stocks. The Internet will change everything. It's all about bits and bytes. Everything is digital. Brick-and-mortar businesses are dead meat, who wants them?

With everything getting more and more automated, I think it's even more important for today's youngsters to be in the market. My youngest will reach FRA in 36 years and my oldest in 31 years and at some point in their careers, I'm sure they'll be facing a job loss due to that fact. Well, maybe not the oldest. He's in IT and has a 2% ownership stake in his firm as of today.

Having said that, I'm loving the market! My 401K had given me a 4.95% return YTD. I also think the market is going to keep climbing at least until fall and if there is repatriation and tax reform, well into next year.

 

[jzajzz]

We definitely need to keep politics out of the discussion, please.

sarcasm

 

[REWahoo]

sarcasm

You're new here or you'd know that's not the case.

 

[jzajzz]

You're new here or you'd know that's not the case.

I know what the stance of the board is ... but I don't think the previous post was all that political...

 

[liberty53]

I can't keep myself from dreaming a little due to the market run-up.

When looking at the curves generated by FIRECalc and ********, there are tons of curves that end up with terminal values in the stratosphere - could this market run-up mean I'm on one of those great 30 year periods?

There has to be someone who croaked with 10 times more than they thought they would ever have right?

 

[NW-Bound]

I don't count on it, but will not complain if it happens.

 

[UnrealizedPotential]

I know what the stance of the board is ... but I don't think the previous post was all that political...

Whether or not it was political I take no position. That is up to the moderator. What I do know is, if a thread does turn political , anything anyone might have learned is lost because the thread will be closed.

 

[youbet]

I don't count on it, but will not complain if it happens.

Since you'll be dead, you won't be complaining either way!

 

[NW-Bound]

There has to be someone who croaked with 10 times more than they thought they would ever have right?

I don't count on it, but will not complain if it happens.

Since you'll be dead, you won't be complaining either way!

True that.

People here keep talking about how nobody on his deathbed ever says he regrets not spending more time at work. A senior engineer I worked with told me that many dying people just wish for the pain to stop, and would not think about work or early retirement.

Has a dying person regretted leaving too much money unspent? He may just regret dying and does not think about anything else.

Time for some somber music. This is one of my favorite songs, one by Jacques Brel. The well-known songs "If you go away" and "Seasons in the Sun" were originally in French and his. Brel died early at the age of 49.

J'arrive / I am coming

(The 1st stanza is difficult to understand
and to translate)

J'arrive, j'arrive / I'm coming, I'm coming
Mais qu'est-ce que j'aurais bien aimé / But really, I would have liked
Encore une fois traîner mes os / To drag my bones one more time
Jusqu'au soleil jusqu'à l'été / To the sun, to summer
Jusqu'au printemps, jusqu'à demain / To spring, to tomorrow

J'arrive, j'arrive / I'm coming, I'm coming
Mais qu'est-ce que j'aurais bien aimé / But really, I would have liked
Encore une fois voir si le fleuve / To, one more time, see if the river
Est encore fleuve, voir si le port / Is still a river, to see if the port
Est encore port m'y voir encore / Is still a port, to see myself there again

J'arrive, j'arrive / I'm coming, I'm coming
Mais pourquoi moi pourquoi maintenant / But why me why now
Pourquoi déjà et où aller / Why so soon and to go where
J'arrive bien sûr, j'arrive / I'm coming sure, I'm coming
N'ai-je jamais rien fait d'autre qu'arriver? / Have I done anything except to be on my way?​

 

[street]

NW-Bound >>> those are some interesting thoughts. I remember my mom saying many times " at my age I don't save any more and buy what I want". That was when she was in her 80's. Lol