Old-School Names Are Carrying the Market

 | May 09, 2014 | 3:46 PM EDT
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Why can't they kill it already? We all know the market should be killed, that the dross in the Russell 2000 and all of these little Internet-software-as-disservice-to-your portfolio stocks should be able to knock over the rest of the market.

But it's not.

And the reason is that the rest of the market is the antidote to fire FireEye (FEYE)-Rocket Fuel (FUEL) contingent. They simply want you to go buy more Johnson & Johnson (JNJ) and McDonald's (MCD) every time they disappoint.

You might ask, why doesn't history repeat itself, a la 2000, and again I remind you that it is. The utilities, the drugs, the foods and the industrials were all recipients of the money that came out of the Nasdaq back then.

Now the stocks that are getting the money in either have shown some real earnings power or some real dividend power. Not much is going up that doesn't deserve to. It is natural to say, "Well, it is multiple expansion," also known as the "greater fool theory" of investing. But I think low interest rates have created such a bubble in bonds that Procter & Gamble (PG) and Johnson & Johnson and their ilk represent terrific value compared with the rest of the world's assets.

If anything, I believe that while the rout in the "Internet of things" stocks is hideous, the procession into the Dow Jones Industrial Average, and into others that could equally fit into that 30, is orderly and not parabolic.

The big-caps are simply backing, filling and gently rising away from the chaos of Splunk (SPLK) and Stratasys (SSYS) and 3D Systems (DDD).

Hence the inability to kill the tape. And what doesn't kill this tape clearly makes it stronger. 

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