TGIF 2/28/2014

Hollywood is one area that has been revolutionized over the years.  Scripts have changed.  Special effects have changed.  Even the theaters have changed with high def resolutions, digital sound, and 3-dimensional screens.  Today movies can be watched from anywhere on many devices.  So if you watch the Oscar Awards show on Sunday, think back to 1960, when Bob Hope hosted and “Ben-Hur” won for Best Film.

Some of you may remember back when there were only 3 networks, your television wasn’t in color, a mobile phone was in a booth and cost a nickel to use.  Boy how times have changed… Last year we correctly picked “ARGO” as best picture bearing in mind we are professional stock-pickers but only amateur flick-pickers! This year we pick “GRAVITY” as well as “FROZEN” by Disney as best animated film. If “Frozen” wins, Disney shareholders will have a double win since the show airs on Disney-owned ABC.  Go Mouse House!

Returning to reality, we can report the NASDAQ 100 Index has returned to levels unseen since the bubble burst in the year 2000.  Today, it’s at 14 year highs, above 4,300.  5,000 is that big, round, inflated magic number that was hit back when company profitability was deemed unnecessary because “the internet changed everything”.  Companies that had a “.com” after their name saw their stocks fly high and a bubble formed.  Some notable stocks back then were AtHome, WebVan and  They didn’t make money.  They’re no longer around.  That bubble burst in March of 2000, and finally hit bottom 3 years later, after a nearly 80% decline.  It was ferocious, but needed to happen to remove the excesses of irrational exuberance.

2014 looks much different.  In 2000, the stock market was grossly over-valued, trading at 40X expected earnings.  Today, the market is trading just above the historical average of 15-times earnings.  It’s not cheap.  It’s not expensive.  The leaders today are also much different.  Google was only 2 years old when the bubble burst.  Amazon was only 6 years old.  Steve Jobs made his return to Apple just 3 years prior to the bubble bursting after a 12 year absence from the company he started.  These 3 innovative companies have grown substantially in size and significance in the global economy, and are amongst the Top 4 holdings in the NASDAQ 100 index.

Established in 1971, the National Association of Securities Dealers Automated Quotations (NASDAQ) was the first electronic stock market.  It replaced the “over-the-counter” system.  Technology made it happen.  Today’s NASDAQ represents the fastest growing companies in the US, dominated by Tech.  Companies within have developed products and systems that have forever changed our lives.  They’ve impacted how we communicate; how we bank, how we manage health, how we travel, and how we entertain.

Have a nice weekend.  We’ll be back dark and early Monday.

By: Mike Frazier

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