Jeff Cox, senior writer for CNBC, devises a good argument this morning in his article on the Nasdaq and its quest for 3,000 points. Cox argues that the Nasdaq Composite's ascent into territory that was only previously touched during its grand and terrible "irrational exuberance" era, is one that is both more noteworthy than the Dow's 13,000 touch, but is also more fundamentally essential to a recovery.
He continues on to explain that the Nasdaq, being a broader composite, and one comprised entirely of technology companies, is a better gauge and measure of technology, and thereby, global activity, which, much moreso than the Dow, is able to foretell what the future will look like in comparison to the Dow's aggregate of what has already happened. Cox asserts that during the era of the technology bubble, the multiples were out of whack and the investments weren't based off of fact and earnings, but instead off of sheer glee and dull-witted stupidity and exuberance related to the seemingly boundless end for internet companies during the early boom of the internet revolution. What's different this time around, Cox says, is that there are things like handheld devices (phones, tablets, e-readers, etc.) which are driving the market higher and the rest of the world is entering into an internet-based and technology-based marketplace driven mostly by many of the companies found in the Nasdaq; so seeing their numbers triple and quadruple is only a positive sign of what the future will hold.
In agreement with Cox, I tend to stray from putting too much hope into the Dow's number and instead look at the S&P as a broader gauge of worldwide business and look to other factors such as rates, bond auctions and sentiment reading to gauge how the "outside" world regards where the future is heading, which, at times, is more important than where companies themselves think they are headed. I buy his argument into the importance of the Nasdaq and can sense a shift in the direction of the Nasdaq from "recovering" lost points to "entering" into new territory.
I also buy that, despite these new numbers being repetitive of an era in which "irrational exuberance" ruled the game, these Nasdaq gains are representative of a better mentality, a healthier technology and internet marketplace, and a safer bet for internet companies.
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