Little green men, spaceship stocks
BOSTON — Yoda?
Was that you?
Did we see your adorable, wrinkled green pate poking above the anchor desk on CNBC?
Were those your pointy ears ducking into a doorway on Wall Street?
Must've been. How else to explain events of cosmic proportions in the financial markets. It must be the invisible hand of a Jedi knight.
It can only be ...
The Force - levitating stocks, vanquishing the Phantom Bear Menace, blasting caution to junkyards of the planet Tatooine.
The Dow has set so many records this year it's not worth keeping count. Technology stocks and mutual funds have shredded more barriers than a laser cannon.
The technology sector works so well that the trick now, as Guy Halverson writes in this week's cover story on the right, is for fund managers to find the new, next big thing.
The US stock market and the economy driving it have become the most exciting thing in town. This is fireworks.
This is as if the bull market that started in 1992 and took the Dow into the low 9000s was like watching the previews for the new Star Wars movie, "Phantom Menace."
Really cool stuff, but apparently not the really cool show, which is apparently just starting, with full digital sound, popcorn included, thank you very much.
There are plenty of skeptics out there, arguing that today's stock market is actually too much like "Phantom Menace," which has 1,900 special, digital effects - more than triple the number in "Titanic" - that are so good that you will believe that Gungans can talk.
The critics suggest that this stock market depends too heavily on digital trickery, supplied by too-good-to-be-true Internet stocks and overly optimistic technology companies. They see the dark side lurking within.
It would be easier to heed such cautions if the US economy did not continue to surprise and delight.
Last week's news on corporate profits, for example, showed big chunks of American business making more money - often lots more - than expected in the first three months of 1999.
At the same, the economy, which last year seemed as good as it could get, is getting better. "The economy is cruising right along," says David McLean, economic adviser to Babson United, a Boston-area investment firm. "There's no question that the current year will be better than last year."
Inflation looks about as threatening as a light saber with dead batteries. Consumers still love their malls. American labor continues to work more productively.
And businesses now find themselves with a new kind of product, says Richard Babson, chairman of Babson United. It's the opposite of Henry Ford's "any color you want as long as its black" Model T.
Technology and the Internet allow customized products, from computers to clothes. Mr. Babson calls it a "classic expansion of the business model."
"Not only do you have the new economy in terms of of gains in productivity," he says, "you have the new economy in terms of services" that expand sales and increase efficiency.
Next year may tell a different story. As other world economies start to grow, interest rates might rise. And the Y2K problem has the potential to punch a big hole in everything
But, for the moment, those prospects seem part of a galaxy far away.