
Nasdaq Index Reaches 5000 for First Time Since 2000 - antr
http://www.bloomberg.com/news/articles/2015-03-02/nasdaq-composite-index-reaches-5000-for-first-time-since-2000
======
gmays
I don't think this is correct. Sure, it reached the "same number" but I don't
think the indices are inflation adjusted, so the value isn't the same.

Edit: Here's a brief explanation using the DJIA as an example
[http://www.npr.org/blogs/money/2013/03/05/173515767/the-
dow-...](http://www.npr.org/blogs/money/2013/03/05/173515767/the-dow-isnt-
really-at-a-record-high-and-it-wouldnt-matter-if-it-were)

~~~
ChuckMcM
On one channel it was asserted the inflation adjusted number would be 7000.
And of course had you been an a NASDAQ index 'fund' it means you would still
be negative from 2000 as you're 15 years of fund fees would still have been
subtracted. Mostly it is a pretty robust signal that the 'stigma' of Tech has
largely past. So we're ready for another bubble!

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adambratt
It's been really interesting watching the media constantly trying to predict
the "End of America" over the last 7 years since 2008.

As far as I can tell, the only reason this saga continues is because of the
marketing hype it builds. Most of the people I know who watch only mainstream
news all believe that we are going to have a massive crash that will
completely kill our country in a few years.

When you actually ignore the hype and look at purely the numbers you'll see
that the US is doing incredible compared to the rest of the world right now.
The Euro is crashing, Russia is in ruins, Saudi Arabia's OPEC squeeze is now
hurting all of the other "US enemies" while the net effect of the oil crisis
on the US is mostly zero-sum.

I'm incredibly bullish on the US right now. Sure we'll probably have another
small crash in the next few years but we'll recover quickly and keep on
surging for the foreseeable future. That's the nature of market cycles! It's
super easy to be negative and for some reason that's the cool trend for people
to take right now but frankly the macro-view of the facts say differently.

~~~
Shivetya
The US will be fine until the promises of the governments, more state and city
oriented, come to fruition. The pension debts are so high; think Greece times
almost a hundred; that cities will have to bankrupt to avoid them and even
then some may not be able to without changes to state Constitutions.
(estimates are near four trillion dollars)

All this happens in the background as the can gets kicked down the road again
and again but courts are starting to push back forcing cities and states to
pay.

Then you have the Chicago experiment, where the public unions are ganging up
to put one of their own into the mayor slot so they can pay their members what
they are "owed". As in, the power of the public employee unions may come to
the point where they run their cities top to bottom and the payout will damage
the economy.

So be bullish, Europe is already suffering through their own pay the piper
with Greece as the first in line. Liberalism will collapse like communism for
the same reasons, you cannot promise people everything and not pay up.

A market crash may or may not happen on its own, there is definitely some very
overvalued companies out there; Uber and Tesla come to mind; but watch
carefully the play in courts as the tax man will be coming hard and businesses
are the first to pay because they are easy to brand as evil

~~~
unabridged
The public unions are just a tip of the entitlements that need to be paid out.
Public union retirees were people with steady employment for 20+ years, they
probably have houses and other investments. What about all the other people
hitting retirement age who were bounced around many jobs and never even got a
pension?

This is how basic income will begin, a critical mass of retirees who either
lost pensions through company fraud, municipal bankruptcy, or who never even
had a pension in the first place. All it takes is a few southern populists to
throw off the chains of fiscal conservatism and the money will flow.

Greece will never happen here, because we can print as much money as we want.
We have spent trillions in Iraq and interest rates haven't even gone up. We
could easily put trillions into the hands of the poorest Americans and the Fed
would still be able to sell debt below 5% interest.

~~~
innguest
> We have spent trillions in Iraq and interest rates haven't even gone up.

That's because they're set by the Fed and not allowed to fluctuate according
to market pressure. Surely you knew this?

It's the same reason why, some argue, the Fed _can 't_ raise rates now
(because of leveraged derivatives).

~~~
adventured
Rates, and more importantly inflation, haven't soared because the US controls
the global reserve currency, and printing a trillion dollars is barely
relevant to that scale.

The rest of the world absorbs a sizable portion of US inflation because of
that reserve standard. Fair or not, that is how it works and will continue to
for at least several decades. Every other country on earth is partially
subsidizing US fiscal irresponsibility.

The Fed can raise rates, and the US Govt can afford to pay another $500
billion on interest that would be incurred. It wouldn't be pretty, spending
would either have to be frozen for five years to allow tax revenues to catch
up, or the Fed would have to pay the bill for an extended period of time
(again, at part cost to the rest of the world reliant on the dollar).

~~~
innguest
Yes, this is correct. This system is called Petrodollar (if anyone wants to
understand why the USD is the global reserve currency).

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chollida1
I don't want to ruffle too many feathers here but people often ask why someone
would invest in alternative investments like a hedge fund or private equity
fund rather than hold an ETF.

This is one of the reasons, and there are many more. If you held a Nasdaq ETF
from 2000 until now, you would have had to wait to 15 years to make back most
of your gains. The Nikkei has been even worse...
[http://www.bloomberg.com/quote/NKY:IND](http://www.bloomberg.com/quote/NKY:IND)

That doesn't mean everyone should try to add alternative investments, I think
most people should hold ETF's. But rather most people should not blindly
follow the dogma of holding an ETF that represents the market regardless of
market conditions.

I can't believe I'm going to recommend a Tony Robbins book, but his latest
book on investing is actually pretty good, actually you just need to read
chapters 5 and 6 to save you some time.

I'd recommend most people check out his "All Seasons" portfolio that he got
from Ray Dalio. I mean if you can get Ray Dalio's expertise working for you,
you've got a great chance of having things work out for you!

[https://www.pwlcapital.com/en/Advisor/Ottawa/Cameron-
Passmor...](https://www.pwlcapital.com/en/Advisor/Ottawa/Cameron-
Passmore/Advisor-Blog/Cameron-Passmore/November-2014/Stories-over-Science-
Tony-Robbins-Financial-Adv)

 __EDIT __Wow, based on the downvotes this struck a nerve. I don 't think I
said anything wrong here, do people just not want a balanced view?

~~~
iolothebard
This is picking a bad time horizon and acting like that's the only way to
invest.

If you'd been investing let's say starting 2000 in a 401k, you put in money at
regular intervals. So you were buying the whole way down and up.

You wouldn't simply have "held" a NASDAQ ETF.

~~~
rsync
It is indeed the worst time horizon.

However, when evaluating a course of action, I think looking at the upper and
lower bounds of possible outcomes is a very wise thing to do, so in that sense
it's relevant...

~~~
Retric
It's not the worst time horizion as you can oviously do worse than break even
ex: 1999:2002.

There are many stratagies where you would have gotten significant returns over
that time period. EX: If you held say 50% nasdaq and 50% cash and then
rebalanced your portfolio you would have been well ahead of the curve.

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antr
Just a reminder, back in 2000 Facebook, Google, Tesla, Baidu, Alibaba, et al.
didn't exist nor traded in the Nasdaq.

Add to that the fact that Apple's share price has exploded to become the
largest company on earth... and voilà, the Nasdaq reaches the 5000 mark.

~~~
minimax
Alibaba is listed on the NYSE, so it isn't included in the NASDAQ composite
index.

~~~
antr
I stand corrected.

------
mcantelon
QE -> inflation.

~~~
josu
To expand on that, QE means Quantitative Easing:

>An unconventional monetary policy in which a central bank purchases
government securities or other securities from the market in order to lower
interest rates and increase the money supply. Quantitative easing increases
the money supply by flooding financial institutions with capital in an effort
to promote increased lending and liquidity. Quantitative easing is considered
when short-term interest rates are at or approaching zero, and does not
involve the printing of new banknotes.

So if suddenly, a new player shows up in the markets buying trillions of
dollars worth of securities, due to the law of supply and demand, one can
expect price of stocks to go up. You can check out the Feds balance sheet here
[1]. Check out "Securities held outright" [2], yeah, that's 4.3 trillion with
a "t". This figure used to be on the billions before the financial crisis [3],
which means that the Fed flooded secondary markets (stock exchanges among
them) with more than 3 trillion dollars, to put this into perspective, this
the value of all the goods and services that the US produces in 2 months, or
two and a half years in the case of Mexico.

So yeah, the causality between QE and inflation of stock prices seems very
plausible.

Disclaimer: Central banking operations is not one of my main strengths, so you
are more than welcome to fact check, correct or complete my comment.

[1] Web:
[http://www.federalreserve.gov/releases/h41/current/](http://www.federalreserve.gov/releases/h41/current/)
PDF:
[http://www.federalreserve.gov/releases/h41/current/h41.pdf](http://www.federalreserve.gov/releases/h41/current/h41.pdf)

[2] The amount of securities held by Federal Reserve Banks. This quantity is
the cumulative result of permanent open market operations: outright purchases
or sales of securities, conducted by the Federal Reserve. Section 14 of the
Federal Reserve Act defines the securities that the Federal Reserve is
authorized to buy and sell.

[3]
[http://research.stlouisfed.org/fred2/series/WSECOUT](http://research.stlouisfed.org/fred2/series/WSECOUT)

~~~
nerfhammer
> a new player shows up in the markets buying trillions of dollars worth of
> securities, due to the law of supply and demand, one can expect price of
> stocks to go up.

> which means that the Fed flooded secondary markets (stock exchanges among
> them) with more than 3 trillion dollars

QE does not involve buying stocks. QE decreases bond yields making stocks
relatively attractive vs. bonds.

~~~
josu
You are right, however, the Fed did buy almost 2 trillion worth of mortgage-
backed securities which trade on the open market.

~~~
nerfhammer
The Fed virtually always buys and sells securities on open markets.

~~~
josu
Yeah, but as far as I know, they are usually repo agreements, buying MBS is
something new.

