The most interesting thing about the current stock market is how pleasant it is when the market goes nowhere on a given day. No steep decline, no sharp run-up, like today's 127-point leap by the Nasdaq. Just a meandering back and forth, so that at day's end all the indices stand about where they began. We don't get too many days like that anymore. If you look at the Nasdaq and the Dow over the past month, they have, it's true, pretty much stood still. But they've mostly stood still by going down really fast and then up really fast, or vice versa. And that kind of movement tends to anger up the blood. Days like yesterday, when the Dow fell slightly and the Nasdaq rose slightly, are far more conducive to sanity.
When the market goes nowhere, it makes it seem as if prices are about where they should be, as if you weren't going to wake up tomorrow and find out that all those stocks investors loved they've suddenly decided to despise. It doesn't necessarily mean that, of course. But at these elevated levels, a few months of going sideways sounds like a good idea in a lot of ways. So next time your portfolio rises just 0.002 percent for the day, don't kvetch. Think of it as taking one for the team. And with those words of pseudo-wisdom, on to this week's Cocktail Chat!
1. "The Wall Street Journal ran a remarkable piece showing that mutual-fund giant Fidelity Investments routinely threatens the underwriters of IPOs in order to get allocations of shares that are twice as large as anyone else's. Of course, the fact that institutional investors are rolling loaded dice is 'Dog Bites Man' news. But it's still good to see in print."
2. "After Amazon.com reported a huge increase in sales in its latest quarter, and an equally huge increase in losses, a Goldman Sachs analyst praised the company's performance, noting that in the last quarter it had to 'compete at the same level as other less mature, more desperate players.' I'm confused. Would it have been easier for Amazon if its competition hadn't been immature and desperate?"
3. "UPS, meanwhile, posted a remarkable 37 percent jump in profits in the latest quarter, but its stock sold off, apparently because investors thought that it should have made even more money over Christmas. A true parable for this stock market: When expectations are limitless, even the exceptional will not suffice."
4. "After CBS won the bidding war to make a U.S. version of the Dutch TV hit (surely that's a phrase you've never heard before) Big Brother, which is a nonstop, total-surveillance version of MTV's The Real World, CBS president Les Moonves said that if Big Brother succeeds, 'It could certainly mean that there are less "normal" programs' on television. That's fine. Just so long as it doesn't threaten The View, and its ceaseless effort to infuse new meaning into the word 'weird.'"
5. "At long last, German cell-phone giant Mannesmann agreed to be acquired by British giant Vodafone, after months of resistance. What would be great, of course, is if at this point the European Commission stepped in and blocked the deal on antitrust grounds. 'We just wanted to see if you'd be able to pull it off,' the commissioners could tell Vodafone's Chris Gent. 'And hey, congratulations on that. But now you have to give it back.'"
6. "The Senate passed a hard-line bankruptcy bill that will make it significantly harder for people to get rid of their debts, but tacked onto the bill a $1 increase in the minimum wage. A lovely gesture from the 'Every little bit helps ... to make sure the banks get every single penny they're owed' school."
7. "The old rule was 'three steps and a stumble,' so that if the Federal Reserve raised interest rates three times in a row, the stock market took a serious fall. The new rule is ... ha ha ha ha! Rules! That's a good one!"