The NASDAQ continues strong despite weakness elsewhere as folks sell investment quality stocks (profits, dividends, that sort of thing) and buy speculative technology stocks. Presumably on the theory that they are cheap.
The problem with tech stocks is that almost all of them are born, live and die without paying investors a nickel. They take in money and build businesses based on a single idea which is often very profitable. Rather than paying out the profits, they hoard cash which they then expend trying to find a second idea. The first idea has its day, and then technology moves on. Many ideas are tried. Inevitably, they are unsatisfactory and a slow, agonizing death ensues, usually finishing in an acquisition by someone who wants the customer base, or sometimes a even quiet liquidation. Few tech companies pay dividends at all, and those that do usually pay only a nominal amount so that institutions which are limited to investment-quality stocks can buy their shares. Yes, they will sometimes buy back some stock but usually only because it has been handed out to employees at a discount under their option program and they want to limit the dilution of their shareholders. Speaking of which, the widespread use of employee stock options as “free” compensation is a further abuse of the shareholders whether or not they buy back shares. The net result is that these stocks have no investment value whatsoever and are only of speculative value, never for “buy and hold”. But “buy and hold” is exactly what the Wall Street shills recommend. “Hold the bag” is what they are saying. Without the willing participation of retail “investors”, the game wouldn’t work for the insiders who sell to them and make all the money. Hence the propaganda. What a racket.
Financial Reality 