Ash Rajan, a Prudential market seer, is now on Neil Cavuto's show. He just said an investor in this market should think about buying high and selling higher. The old rule of "buy low, sell high" is out according to Ash.

If you ponder his statement you can easily understand why there is little public Y2K concern. There is so much optimism and confidence among our people that we can't envision any negatives. Volker is scared, Greenspan is nervous, the Fed has raised rates twice and is threatening more, Russia is in chaos, Japan is in a depression, hardly anyone believes what the Govt tells us, and the market still doesn't break. Maybe it's denial or maybe optimism, but investors are more focused on Dow 36,000 than Dow 5,000.

We haven't had an investor mindset like this since the 30's or the 50's, neither of which ended happily for investors. Unfortunately, both of these periods of excessive exuberance ended with decade-long bear markets.

Stocks were up around 3% this week while most stocks were down (the cumulative Advance Decline line dropped between last Friday and yesterday). Amazing!

-- mike (maples@voy.net), October 09, 1999

Answers

Yes, it seems that a lot of people keep buying stocks just because they know that a lot of other people are going to keep buying stocks, based primarily on speculation that all of these businesses will continue to grow, even though their productivity is not impressive enough to support these assumptions.

In many of the recent mergers and buyouts taking place shares of stock are being used to purchase companies instead of actual dollars. That's because most businesses these days are not even close to being worth in real dollars what their stock values are saying they're worth. When some of these exaggerated-value businesses start crumbling under the stress of the Y2K environment, it will probably wake a lot of investors up to the fact that confidence alone is not enough to support a market. I'm certainly not an expert like Ash Rajan, but in my view it sure looks like an awful damn risky scenario to be involved in.

-- @ (@@@.@), October 09, 1999.