Monday, March 2, 2015

Nasdaq at 5000!

Well, the most discussed topic of lately has been the Nasdaq hitting the 5000 milestone after nearly 15 years, the last time it hit the mark.

The reason for the discussions has been whether stocks that are included in the QQQ ETF are in bubble. Some analysts, and experts see it as a bubble, some other don't. Personally, I don't see the reason why the QQQ might be in the bubble territory, because the companies that are included in the QQQ are different than the last time.

On the other note, it should be perfectly sensible that QQQ is reaching higher valuation marks, as the companies in the index are making more money. Their earnings, cash flows are growing, as well the balance sheets of these companies are in better shape than before, Capitalism is a system of adaptability, where each economic agent learns something new after each crisis and recession. Hence, tech companies have grown and matured since the times of dot com bubble in the late '90s.

Finally, the issue that this milestone is being talked actually shows that people are concerned and anxious. This in some ironical way, actually proves that markets in general and QQQ in particular is not in the bubble territory. Because, the bubble form when the state of euphoria sweeps so much that even people who shouldn't be trading stocks start doing it. Analysts start picturing even rosier pictures for companies. However, I am not seeing such action at a current time.

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Why Companues Go Public: Rationality Comes First

This is a post that was written as a response to the post on FB. Here is the link: