Nasdaq Market Levels: Employment vs Labor Demand [CHART]

Nasdaq Market Levels: Employment vs Labor Demand [CHART]

Nasdaq Market Levels: Employment vs Labor Demand by Todd Sullivan, ValuePlays

All this talk of “bubbles” and “tops” is quite frankly horseshit.  Anyone with even remedial abilities can compare Nasdaq ($QQQ) market levels in 1999-2000 (PE ~100 for Nasdaq 100) to today (~23 PE) and realize the “magic” 5,000 level it hit this week is only comparable to the 5,000 at the turn of the century in that it is the same number.   By any valuation metric comparing the market today to then is solely for the media to do in a desperate attempt to stir up some badly needed eyeballs. Remember $KO selling at 80X earnings?

Anyone making the case there is even a speck of resemblance to today’s markets and those we saw during the dot com phase is a fool or worse, utterly dishonest and ought to be wholly ignored.

Doing some simple math from above, we can say the market in 1999-2000 was ~4.5X more pricey than today…or it means a comparable Nasdaq level would be ~22,500…..

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So until it hits that lets just be big boys and girls and stop running around talking about ’99-’00 comps shall we?

“Davidson” submits:

The Conference Board released their Help Wanted On Line Index:

This is only one of several employment indicators available. This month revealed 184,100 increase in help wanted ads. The chart below looks like this data series could be accelerating higher which is something we have seen in other indicators. People need vehicles to get to work, people who work need places to live and raise families. The more people employed the more houses required for them o fulfill their dreams of raising a family and having your own yard in which your children can play.

Higher labor demand, more individuals employed signals expanded economic activity. Economic expansion leads to higher equity prices/lower fixed income prices.

My two cents:

Additionally today ADP came out and the economy added another 200k + jobs in February and January was revised up 37k to 250k. Considering the weather in the Ne for Feb, that 2012 is a very strong number. Further existing wages are growing and that growth may very well be accelerating.

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Todd Sullivan is a Massachusetts-based value investor and a General Partner in Rand Strategic Partners. He looks for investments he believes are selling for a discount to their intrinsic value given their current situation and future prospects. He holds them until that value is realized or the fundamentals change in a way that no longer support his thesis. His blog features his various ideas and commentary and he updates readers on their progress in a timely fashion. His commentary has been seen in the online versions of the Wall St. Journal, New York Times, CNN Money, Business Week, Crain’s NY, Kiplingers and other publications. He has also appeared on Fox Business News & Fox News and is a contributor. His commentary on Starbucks during 2008 was recently quoted by its Founder Howard Schultz in his recent book “Onward”. In 2011 he was asked to present an investment idea at Bill Ackman’s “Harbor Investment Conference”.

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