"Frank Zarb...notes that vast flows of money from ordinary people have been driving the market and extending prosperity to folks who have never bfore shared in stock market wealth. It is these people--who some on Wall Street scornfully refer to as the 'dumb money'--who are leading the charge, and they aren't playing by normal rules. And fir the market crashes now, Mr Levy [of the Levy Forecasting Center of Bard College] the effects will be all the more devastating, because a lot of surprisingly mainstream people have bought into the tech dream. Skeptics point out that when long conservative investors finally give up their caution and jump into speculative stocks, this itself can be a sign that hot stocks are getting ready to flame out."
Yet how much so called dumb money is in NASDAQ's flyers? Don't most people have their money in very widely diversified, lower risk funds? Aren't they the ones getting hit hard by Greenspan's rate hikes that hurt Old Economy companies? Is this just more WSJ propaganda to get small investors to liquidate so insiders can pick up even more undervalued tech stock? I really wouldn't have a clue. But I am here to hear what experts like Doug and Brad have to say.
Yours, Rakesh