backyard room additions easy house additions home addition with basement third lake home addition construction buffalo grove md kitchen and bath buffalo grove .. Chicago Drug testing

Again With the Bubbles?

A few years back ? it seems like an eternity today ? the U.S. stock market experienced a severe bubble burst. Legitimate stocks rose beyond reasonable valuations and ideas merely in the germination stage sold for prices far beyond those of real proven companies. When the bubble burst, billions of dollars of shareholder value evaporated. One would have thought we'd learned our lesson.

Today, Yahoo and EBay, the two leading internet companies, again sell for prices beyond reasonable value. Again, people seem content to listen to a good story and place unrealistic valuations on companies that have no earnings or real prospects. Google's recent IPO is proof positive that the market is still bubble-icious. Even stocks like General Electric are selling at prices above what the market should bear. What's the story?

The story is, very simply, that we don't learn lessons very well. Also, if you think about it, a lot of people actually made money back in the late 90's during the bubble. So, there's a case to be made for gambling on another similar adventure. If we can survive the "greater fool" theory, and find someone willing to pay more than we are, it almost doesn't seem dangerous to buy a stock that has little or no intrinsic value, as long as there's a belief that someone else might eventually pay more. So much for value investing!

No, the "experts" are now convinced that stocks and markets do not move in line with actual events, but instead move along with emotions and trends. Thus, the big money is chasing itself, going where it goes simply because it is going there. Does that make sense to you? I hope not.

We've held firmly to the seemingly outdated position that value does matter. We differ from some value investors, such as Warren Buffett, who avoids technology and new ideas: we do believe such stocks can have merit. We also hold firm to the idea that stocks will eventually return to their real value?or at least move toward that point in the end.

In these days when emotion seems to dominate reason, it is not unlikely for the whipsaw effect to be stronger than the reality effect. But we believe that, even in the midst of such insanity, having a focus on reality is worth something?even if no one else believes it.

For questions or comments, Scott Pearson can be reached directly at Scott@valueview.net or by visiting www.valueview.net

Scott Pearson is an investment advisor, writer, editor, instructor, and business leader. As President and Chief Investment Officer of Value View Financial Corp., he offers investment management services to a wide variety of clients. His own newsletter, Investor's Value View, is distributed worldwide and provides general money tips and investment advice to readers both internationally, and in the U.S.

In The News:

Top 25 Growth Funds

On Monday, November 25, 2000 Investor's Business Daily listed on... Read More

Money, Insanity and Wall Street

Money: the most charged word in the planet. It means... Read More

Small-Cap Stocks: The Beginning of the Journey

When an individual investor wants to roll up his sleeves... Read More

Mindset

In 1960 an engineer working for a watch company in... Read More

Precision Money Management

This article describes the model of a natural relationship between... Read More

How to Read an Annual Report

Every publicly traded company is required by the SEC(Securities and... Read More

How To Buy And Hold

One of the most believed bits of conventional wisdom from... Read More

A Funny Thing Happened on the Way to the Stock Market

On the 40 year journey through the turmoil of a... Read More

Intervention

Intervention. Now don't let that big word scare you. The... Read More

Peer Groups

Whenever I see mutual fund comparisons in the trade publications... Read More

Buy and Hold Investment Strategy

"Buy and hold" is one of the most heralded investment... Read More

Dividend Reinvestment Plans: Investing on Automatic Pilot

If you're like many investors who squander those small dividend... Read More

True Investment Road Maps

If you don't know where you are going any road... Read More

A Stock Market Investment Plan that Never Lets You Down

The bulls and bears of the stock market are both... Read More

Trading Education: The Best of Both Worlds!

I made my very first investment in the stock market... Read More

Protect Your 401K

Checked your 401K lately? Going back to about a year... Read More

Investing in Trash Company Stocks

Refuse is a serious issue in any society, about as... Read More

Investment Capital Gains

Have you bought any mutual funds this year or late... Read More

Analyzing Growth Stocks: An Important Focus For Any Investor

Analyzing growth stocks is an important focus for any investor.... Read More

Attitude Is [Almost] Everything

I often play a little game with myself when I... Read More

Kick The Tires

Before you buy another car you walk around the lot,... Read More

Complacency

During the month of January the Dow Jones Industrial Average,... Read More

Stuff

I continually hear from economists, talking heads, other market letter... Read More

Starbucks Stock is Up

Starbucks earnings are up again and so is their stock... Read More

KISS Formula

There are formulas for just about everything, but it has... Read More

induction street high bay led lighting fixtures Pete's produce ..
induction street high bay led lighting fixtures Pete's produce ..