From: Max More (max@maxmore.com)
Date: Thu Dec 30 1999 - 18:05:56 MST
At 05:40 PM 12/30/99 -0500, John wrote:
>Eliezer S. Yudkowsky <sentience@pobox.com> Wrote:
>
> >This year's 80% rise in the Nasdaq index was not caused by an 80%
> >improvement in productivity.
Apart from the factors I mentioned before, consider that some U.S.
companies can grow much faster than the productivity growth of the U.S.
Profits are produced by sales (and the margin on those sales), not just by
the productivity-related buying power of a country's people. Companies
selling increasing amounts outside the U.S. can expand profits rapidly.
This is especially an important factor now, with Europe growing well, and
China probably opening up as a vast market. (The last is one reason among
several why I'm not selling my shares of Qualcomm even at these levels.
Another is their HDR demonstration--wireless video, adding to their CDMA
income in the future.)
> >Stocks are ludicrously overvalued and everyone knows it.
>
>Well, some stocks are ludicrously overvalued, but I don't buy any of those.
>My advice is only buy stocks that are going to go up, adhere rigidly to that
>principle any you'll get rich. Absolutely no doubt about it.
As John said, *some* stocks are ludicrously overvalued. Even with those,
there can be reasonable disagreements about overvaluation. Market cap
reflects the discounted current value of all future profits--a matter of
judgment and perspective. No one really *knows* whether Amazon will never
turn a profit or will more than justify it's market cap. Again, I'm with
John in that I don't invest in just *any* company. I use a combination of
fundamental analysis and market analysis, and mechanical investing screens
that take emotions out of the buy/sell decisions. I think many people make
a mistake in quickly concluding that high p/e stocks are overvalued. The
higher the growth rate, the higher the p/e that is justified due to the
geometrical increase in earnings.
Eliezer, given your way of thinking, I'd suggest investing the mechanical
investing screens, such as the ones on the MI board at the Motley Fool, or
Jon Markman's at MSN Moneycentral. This is a great time for tech investing.
It would be too bad for transhumanists to have a deep understanding of
technological trends but to miss out on building wealth with that knowledge.
Merry Millennium!
Max
Max More, Ph.D.
President, Extropy Institute. www.extropy.org
CEO, MoreLogic Consulting. www.maxmore.com
max@maxmore.com or more@extropy.org
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