Morning Report – NASDAQ 5,000 4/24/15

Markets are higher this morning on good earnings out of US companies. Bonds and MBS are up small.

Durable Goods rose 4% in March, however if you strip away transportation, they fell .2%. February was revised downward. Capital Goods orders (a proxy for business capital expenditures) fell .5% and February was revised down to -2.2%. We have seen a slew of disappointing data this quarter – Merrill Lynch is now forecasting Q1 GDP growth of 1.5%.

Comcast has officially pulled the plug on its merger with Time Warner Cable. Washington hated this deal from Day 1, and it became apparent this week that neither the FCC nor the DOJ was going to wave this through.

Yesterday was a monumental day (of sorts) for stocks. The Nasdaq finally eclipsed its high from March 2000. Back then the mentality was to buy quality stocks, don’t worry about the price, just hold out for the long term. For a trip down memory lane, remember the “four horsemen” of tech – the supposedly bulletproof stocks according to Jim Cramer were INTC, DELL, MSFT, and CSCO. Where are they now? Intel is down 57% from the peak, Dell was taken private in 2013 at $13.75, a 77% discount to its 2000 peak, If you were in Mr. Softee, you would be up 10% over 15 years, and almost all of your return would have beeen via the 2.7% dividend. Finally, you would have been much better off in the “other Cisco” – food service company Sysco (SYY) – than you would have been in CSCO, which is down 60% from its peak. No, Virginia, you cannot simply “buy good companies whatever the price, and expect to make money over the long term.”

That era’s madness was perfectly encapsulated in the stock split beeper – a pager that would go off when a company announced a stock split. Cause nothing creates value like a stock split.

In many ways, the four horsemen of tech were similar to the Nifty Fifty of the 1970s – one decision stocks like Avon and Polaroid. They worked until they didn’t. In the physical sciences, knowledge is cumulative. In the financial markets, it is cyclical.

In other words, don’t worry about a bubble in the NASDAQ. People realize that stocks are just an asset that can go up or down – there is nothing special about them. Without that mentality of investors, you aren’t going to have a bubble. Bonds on the other hand…

The NAHB is forecasting 2015 will be “slow and steady” for housing and 2016 will be the breakout year. The pent up demand of the first time homebuyer will be the catalyst, but we have been waiting for a long time for that.

10 Responses

  1. Nothing is more hilarious than ten year old stock tips. Reminds of the giant Atari logo in the opening sequence of “Bladerunner”.


  2. The funny thing is that Cramer would have probably told you “Apple sucks, stay away”


  3. Anyone else having problems posting today?


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