Forum Archive Index - September 2000

[Brian Gale <brigale@i4free.co.nz>]

Hi Jesse
               Yes I know I was generalizing and I don't have your 
knowledge of the NASDAQ.  I could be completely wrong but I was thinking of 
all those mums who have heard from their girl friends that XYZ is a good 
share to buy and in they go - bit like NZ pre 87 when every man and his dog 
was into the sharemarket and bought into Equitycorp, Ariadne, Capital 
Markets etc.,  which all turned out to have no foundations and collapsed 
like packs of cards. Just driven by price.

I can't accept the challenge Jesse - to jump into the NASDAQ pool - too 
long in the tooth I'm afraid - maybe 20 yrs ago if we had had all the info 
available then that we have now. Today I'd end up a complete nervous wreck 
instead of just partly a nervous wreck.

Yes I know any downwards movement in the US is reflected in our marketplace 
because we are so vulnerable and in that way there is a connection.  But I 
was trying to get at the basics of our market workings compared to that of 
the US which are so different.

Good luck Jesse I hope you are doing well over there.

Regards
Brian


At 19:54 18-09-00 +1200, you wrote:
>Hi Brian
>I know your not a big Nasdaq fan but youve generalized things a
>bit...eg...'That market is driven by price and I suggest that the
>majority of private investors/traders wouldn't have a clue as to P/E or
>any other indicators.  If the price is going up that is a good share to
>have -nothing else.'
>I'd say Nas traders know more about their stocks (including p/e) than
>NZSE investors do about their NZ stocks, simply because more info is
>available and Nas traders usually have a core of stocks that they move
>in and out of frequently, and know them in detail.
>Now if you said Nas traders dont put much weight on P/E when selecting
>stocks, thats closer to the truth, but they still know it. I know quite
>well if I want to trade EBAY that its P/E is over 1000, or CSCO about
>140, thats why I trade it and dont hold it. And not just trading on
>momentum, could be a host of reasons, earnings, split, news, futures,
>charts etc.
>As far as other indicators, come on Brian, you know that most traders
>use technical analysis over fundamentals, so a Nasdaq trader will be
>more familiar with a stocks indicators than a long term holder.
>Brokers pumping stocks...happens everywhere.... sure, probably moreso in
>US, more brokers, more cowboys.
>Nasdaq coming back....theres actually two questions, when and by how
>much?
>Agree you cant compare our market with US, but, one can still impact on
>the other and, IMHO does. Just look at the sell off in April, did we
>brush it off or fall with it? The fewer offshore investors we have in
>our market though, the less effect they have on NZ market. Most
>investors Ive chatted with, with offshore stocks, say that when things
>get tough, they reign in their offshore assets first. I see Nasdaq has
>been off last 2 weeks and maybe  just a coincidence that NZSE is
>drifting back to 2000.  Trouble is, when foreigners sell and dont come
>back in, our market struggles to regain losses. Think thats holding back
>NZSE for sure, we need more offshore $, like it or not. Speculators or
>traders, provide liquidity. Same in any other market, currency, bonds,
>whatever. Take away the traders and you have a predictable, slow moving
>market. Unpredictable markets help attract additional traders, more
>liquidity and so on.
>Its that same unpredictable, uncertain element driving Nasdaq prices.
>When you get a big swing in opinions on future earnings, your going to
>get variances in values, expectations etc. Its the perfect recipe for a
>volatile market. Every now and then some analyst will say stocks are
>overvalued and things cool off...then its oversold so it rallies and so
>on. You should dip your toe in the Nasdaq waters Brian, you'd love it,
>frayed nerves, knotted stomach, etc etc. HaHa. 10% of your portfolio in
>US growth stocks would compliment the more divi style local stocks
>nicely.
>jesse
>
>
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