With the NASDAQ pushing 5,000 and The Dow around 9900, how does that compare to past years? In other words, How do we value the market? Is it just one, or all markets combined?

Let's say Boeing goes down (on the NYSE) because people decide to buy Cisco (on the NASDAQ), is the "market" down, up or the same?

And, what if people move their money into real estate rather than stocks? If they move money there, it's still working, just for different purposes, right? Maybe interest rate go up, so folks move their money back into banks which loan to busy construction compaines building new homes for the affluent - bad or good?

So, is "the market" really an indicatior of anything?

-- ElCoyote (ElCoyote@Wasteland.com), February 27, 2000

Answers

People who know what they are talking about don't use the term "The Market!"

-- W (me@home.now), February 27, 2000.

Dear Sir or Madam W, I'm so glad someone who knows what they are talking about answered ElCoyote. I have a lot of questions and you seem like the perfect person to answer them. First, what does one call "the market?"

-- Pam (jpjgood@penn.com), February 27, 2000.

W, Thanks for the response!

So insightful, so useful, so detailed.

You konw, if I knew the answer to a question, I probably wouldn't ask it.

Thumper put it best, I think: "If you can't say sumthin nice, don't say nutton at all."

-- ElCoyote (ElCoyote@Wasteland.com), February 27, 2000.

"The market" is an indicator of the amount of money being invested in publically traded companies. Public companies use the money to expand and upgrade operations; otherwise, they have to borrow money from a bank and go into debt. Public companies provide a lot of jobs and produce a lot of goods and services. When they fail (for whatever reason), the jobs, goods and services go away or are replaced by other companies who are financially able to move into the void.

-- Y2kObserver (Y2kObserver@nowhere.com), February 27, 2000.

The S&P500 index contains the largest NYSE and Nasdaq companies. Thus, it is the best indicator of the overall market. The S&P is down about 10% from its 12/31 closing high. The NTSE composite index hit its all-time high last July.

-- Dave (dannco@hotmail.com), February 27, 2000.

Dave,

Thanks for the S&P500 info. I wasn't aware that it was made up of both DJIA & NASDAQ.

-- ElCoyote (ElCoyote@Wasteland.com), February 27, 2000.

El Coyote: May a add two points; 1. The Nasdaq even approaching new highs has been driven higher by a few high cap stocks. The breadth has not shown a broad tech rally just desperation chasing a limited number of "names." 2. The capitalization of the market is not complete. On any given day only a percentage of most issues are traded (true in some cases these traded shares may be flipped multiple times in a day) but not ALL shares for all issues are traded. The traded shares establish the price for all those shares just kind of hanging in your fund or in the account of Joe's trust fund. As long as enough money is around to buy whatever shares people want to sell the prices move higher and the "value" of the account appears to rise. Works both ways. But the point is there isn't a repository or Trillions of dollars that stands behind each share of IBM, Microsoft or even Cisco. That paper value if the market moves against the buyers can move negative. With S&P 500 droppping 10% many have already but the negatives are chipping away and the rising interest rates will also bring down the few techs who account for the rising Nasdaq.

When that value disappears we will all feel poorer. Even if you wisely bailed out of the market if the society takes a hit a suggest you too will feel all the poorer.

-- Squid (ItsDark@down.here), February 27, 2000.