Newspaper article THE JOURNAL RECORD

Some Things to Think About

Newspaper article THE JOURNAL RECORD

Some Things to Think About

Article excerpt

NEW YORK -- All year long, night and day, you could hear the sound of the economy, a humming sound of electronics rather than the old grinding of gears.

The new-era economy didn't even wait until the old century had spent its days, but raced ahead in a burst of activity that created stock market giants and new billionaires, and new anxieties too.

The borrowing, spending and investing was very pleasant for those who participated. But they were so busy keeping up with the present they overlooked a lot happening right under their noses.

* That triumphant stock market. Did prices of all those brand new, untested, profitless high-tech companies erupt simply because investors thought the companies would transform the world?

Not likely. More likely they saw them as a means transforming their own little world, or at least their portfolios.

The reason being something called momentum. Many thousands of professional and amateur investors saw a free ticket. If high-techs were charging ahead, just get aboard for the ride.

Economist Ed Yardeni describes how conservative old investors were forced to trash their valuation disciplines, their instincts, what they used to call common sense, and play the momentum game.

"You got to be in it to win it" one told him. And it didn't particularly matter which stock you picked so long as you knew others were ready to pounce in and give it a ride.

"Forget valuation, earnings, fundamentals, market share, competition. Just buy any stock that goes up $30 or more in a day." That's okay when the train is moving.

What happens when it slows and the winners hop off?

* The new marketplace was often extolled for the vast variety of options that were being offered, especially by the newer Internet sellers. But an opposite trend also was occurring. And ignored.

That trend was consolidation and centralization, not in government, where it had come to be expected, but in the private- sector marketplace. …

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