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Define "forever." Define "overvalued" Stocks have been generally
rising, with brief retracements, throughout most of the history of the
US republic. Lately, they have been accelerating that most have
erroneously concluded as an asset bubble.
I define it, however, as a fundamental economic paradigm shift; a
transition from the old industrial economy to a new high tech one.
Since the high tech economy is more efficient than it's predecessor,
wages are higher due to greater intellectual demands and higher
technical skills. Those higher wages, in an attempt to avoid taxes,
go directly into 401K's and IRA's, where they'll remain as "savings"
for the next 15 to 20+ years, until retirement. These investment
vehicles feed the stock market by automatic deductions from paychecks
that go directly into bond or stock mutual funds.
The so-called asset bubble is nothing more than supply and demand; as
more money chases fewer stocks. But this excess supply of capital
will also help fund the newer technologies that are highly R&D
dependent and capital intensive, thus adding more fuel to the stock
market fire down the road. Companies with innovative products that
are highly desirable by the consuming public will be the new
investment "darlings" of the new millennium.
And then, I could be wrong.
TJ
may you live in interesting times
---Michael Paauwe wrote:
IMO it's more of a MYTH to think the bull market will last forever.
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