NEW YORK (AP) -- The mystery is that most stocks are down, and that includes lots of companies whose earnings are strong. But you can hardly tell that to most people.
Why should they believe such a thing when popular averages have reached so many record highs? Don't stocks reflect the economy's health?
Generally, they do. And forecast its direction too. And the economy is so strong the Federal Reserve has been raising interest rates in an attempt to slow it down. And planning more hikes too.
Meanwhile, consumers hardly could be happier, if you can judge from surveys. Until recently, they've been buying and spending -- on cars, houses, stocks -- at a phenomenal rate.
The popular stock market indexes reflect this. True, but how do you account for so many stocks being down 10 percent to 50 percent over the past couple of years? Stocks of good, solid companies.
The answer, perhaps, lies in the bullish emergence of the new communications economy that is rapidly tying the whole world together -- business, government, consumer -- via cable or thin air.
It and its productivity-enhancing miracles grow larger by the day. But even larger and louder is its ability to promote itself, even to proclaim that you've seen nothing yet.
The argument is very convincing. And, since the stock market anticipates the future, it is attracting buckets of money to the instruments of change, the new (and some old) high-tech companies.
Through 401 (k) plans and Individual Retirement Accounts, the billions of dollar pipelined into the stock market are earmarked for these fast-growing and ingenious enterprises.
Some of them, and the big gains in their shares, already are being measured in the popular market averages.
The vital question now is whether the new economy has been perhaps overdramatized, or at least the timing of its full impact, or the popular understanding of what it will do.
Some e-commerce companies that seek to sell you anything have become household words. Even children know their names. But, you might say after examining the evidence, so what? It's a big country.
The latest Commerce Department report confirms the rise in sales of electronic merchants, relating that in the fourth quarter of 1999 they sold about $5.3 billion of goods and services.
There's no arguing that it's a big number, until it's related to the whole. In the same fourth quarter, overall retail sales amounted to $821.2 billion. Electronic sales had 0.6 percent of the market.
Something else about the new economy may not be fully appreciated. It's that the really big action isn't so much in the consumer sector as in the business-to-business part of the market.
The realization is sometimes startling: The new economy's biggest customer is the old economy. Look at some of the customers: General Motors, Ford, Sears, WalMart -- and on down through the ranks.
Down through those ranks you'll find the shares of those old-line companies, profitable companies, that have been almost forgotten in the frenzy to buy Internet companies with no earnings.
As investment money drains into new-economy companies, shares of many old-economy companies sink. No matter that they're still growing and earning more money -- and that corporate earnings are supposedly the engine of the stock market.
These old-line companies have spokesmen, and they've been known to create a lot of noise of their own, but nothing compared with the loud roar emanating from the folks who claim to be the future.
Some of the latter may indeed be the future. In fact, many of them already are creating the present and will do fantastic things in the not-distant future. Yes, there is a new economy.
But there's an old economy still. It still dominates the economy, and many of its companies are likely to be dominant in the future too.
They're hardly sitting by idly. They're joining the new economy. They're it's biggest customers, and the new economy can't succeed without them.
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