Barry the Big Picture has been on tv . He also has a useful link to a piece - which also quotes him - in Business 2.0. The point in question: is the current NASDAQ mini-revival a little bit of midsummer madness?
They're back. "It" stocks--the hot issues that defy all the laws of fundamental investing--have reappeared. These are the kinds of stocks that seem to keep heading higher for no other reason than that they finished higher the day before. Search engine Ask Jeeves is up 570% in 2003. Money-losing XM Satellite Radio is up 400%. And unprofitable biotech ImClone Systems (better known for the insider trading scandal that landed founder Sam Waksal in jail) is up 300%. Sure, none are likely to surpass the 2,620% gain of quintessential "it" stock Qualcomm in 1999. But it's beginning to look as though investors are getting caught up in the momentum mania that characterized the final gasps of the bull market.
Just look at these stats: The Nasdaq has gained 29% this year (through July 30) and is up 54% from its Oct. 9, 2002 low. (Standard & Poor's 500-stock index is up about 28% from its low.) According to Thomson/Baseline, 119 companies with a market value of at least $500 million have doubled this year; nearly 40% of them are not expected to post a profit in 2003. And shares of companies (also with a minimum market value of $500 million) that don't pay dividends were up an average of 46% vs. a 16% average gain for those that do. "The companies that have run the most are the ones that have the least [to offer]," says Jeffrey Saut, chief investment strategist for Raymond James. "Speculation is back."LINK