Word: indexers
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Dates: during 1990-1999
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...market soared? Low inflation, cost-conscious management and endless global opportunities for U.S. companies have played a huge role. Those things will persist. But our limitless affection for technology, blind faith in index funds and grossly underappreciated sense of stock-market risk are part of the equation too. And those things will pass. It was only 10 years ago that we stretched reason to justify Japanese stocks' trading at 70 or 100 times earnings--just ahead of that country's enduring recession. Today's most popular stocks trade in that range, and tortured explanations again pass for wisdom...
...economic differences. Still, Dow 10,000 represents a similar shared trust in the system--a trust that drove Japan to giddy heights and a crushing fall. In the Standard & Poor's 500, Morgan Stanley reports that just 15 stocks (3% of the total) accounted for 52% of the index's gain last year. "The market" may be going up, but it's almost entirely on the backs of a favored few: GE, IBM, Wal-Mart, Merck--all Dow components--along with tech wonders Microsoft, Dell (which I own) and Cisco...
Meanwhile, scores of smaller stocks are "excruciatingly undervalued," as Prudential Securities analyst Claudia Mott puts it. The Russell 2000 small-stock index is down 16% in 12 months. Yet many small stocks have growth rates that exceed their earnings multiples, and the group tends to do best when the U.S. economy is strong and foreign economies are weak, as now. And small companies are ripe for a wave of premium-priced takeovers by big companies using their stratospheric stock prices as currency. Some foreign markets also look attractive. These conditions have been in place for a while; patience...
...Mention of Diana's eating disorder listed in the index of Her True Story...
...Mentions of Lewinsky's weight listed in the index of Monica's Story...