Weathering the market withering
Soon this sell binge will be over. In the meantime take a deep breath and look at India.
 NEW YORK (Fortune) - Wanted to weigh in today about these withering markets. Let's start with what we know. One point that really jumps out at me is how the world is absolutely unchanged since the May 10th peak. NOTHING happened to trigger this sell-off. Sure some tiny inflation numbers, but at any other point those CPI figures would have passed us by with nary a peep! So why the meltdown? One of two reasons come to mind. Either the market is acting as a leading indicator and doing so based on information that is imperceptible to the rest of us, or the market got a little to happy in early May and now is getting a reality check. So let's delve here a little. Sure there is plenty to worry about in the world ... of course the possibility of rising inflation and interest rates, the housing market, oil prices, the war on terror. But none of that is new. Does the market know that these issues are going to worsen? Well, rates will likely rise, but again we know that. So I say "nada" there. Let's move over to the latter point then. Did the market get overextended? Why yes it did. We almost broke the record on the Dow! Why? As Gertrude Stein said: "There's no there there." When the market hits a new high like that, sentiment is almost always overblown. Although if you draw a trend line on the Dow long term, the period from 1995 to 2000 is way above said line, and we are now just about dead on it. So I say, pretty soon the selling will be overdone, but I also say we don't break the new record until 2007. (Oh thank heaven.) INDIA!: What? Have I lost my mind? Eaten too much Vindaloo? I'm talking about the India Fund (IFN (Research)) here. Now in case you haven't noticed the Indian stock market has completely gone gaga. First going to the moon ... it's more than tripled over the past two years ... and now falling back to earth, off 20 percent since May 10! Same old Serwer question: Has anything changed in India? Answer: No. Growth is explosive there. Government policy somewhat accommodating, and stocks not very expensive there either. Don't beat me up if this one gives you a bumpy ride, but for the long haul, I think she's a good one! EXCHaNGE STOCKS: So what about stocks, like NDAQ (Research) (NASDAQ), and the NYX (Research) (the NYSE)? I know there is much action here, but I'd be wary. NAZ has a P/E of 53 and how's it going to grow. NYX has not been a performer since it went public, (it's pre-IPO trade history is all Archipelago)? And what's Euronext going to do for it? Make sledding tougher for a while.... LOOSE CHANGE (STOCK OPTION SCANDAL EDITION): This from an in the know hedge fund manager: "This stock option scandal is mostly outrageous. But there's also a level of more mundane moronic ineptitude. I talked to a now ex-CFO of one of these companies a few months ago. He joined his company after the bubble, and found that they'd just been sloppy or even forgetful about option grants. For example, he told me about a head of sales who was hired, signed his employment letter which included the number of options he was to receive, and the then-CFO ... distracted by Dot Com craziness ... never got around to writing a separate option grant. So my guy backdated an option grant to the day of hire for this sales guy. When the SEC called, the feckless board of directors instantly dumped my guy." _____________________________________
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