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This market reminds me of late 2002: every day market was down, down, down. People fled out of the market and rushed into money market funds, and even its return was as low as 2%.

PowerShares QQQ (QQQQ) holds all the stocks in the Nasdaq-100 index, which consists of the largest non-financial securities listed on the NASDAQ Stock Market. Its P/E is 14.3. As you can see from the chart below, the volume was much higher in June/July 2002, before it reached its all time low in September 2002. As a comparison, Sep/Oct/Nov 2008’s volumes are much higher than rest of period. Does it mean the worst is over? Can history repeat itself? Your guess is as good as mine.

click to enlarge

Don’t get me wrong. I am not calling a market bottom, because nobody knows. However, I do realize that QQQQ has a very strong balance sheet. As shown in the table below, the top 5 holdings in QQQQ have total cash of over $100 billion, more than enough to bail out financial companies such as Citi (C) or Bank of America (BAC).

Can we live without the products those companies provide: iPhone/iPod, SmartPhone, PC/Laptop, VPN or Web search? I doubt about it. They are changing our daily life. For example, Google (GOOG) isn’t just a superior search machine anymore. In recent years it has launched a dizzying array of new services and advanced into whole new businesses, from the introductions of its controversial Book Search and Google Earth, to bidding for a slice of the wireless-phone spectrum and purchasing YouTube. By broadening and deepening its results better tailored to a particular user, Google might have enough personal detail about each of its visitors that it could provide a customized answer to the questions such as “ What shall I do tomorrow?” and “What job shall I take?”, according to Randall Stross, author of “Planet Google”.

The company I work for corrects daily real time data from different search engines and shopping portals such as Google, MSN (MSFT), Yahoo (YHOO), BizRate, etc. The amount of data and speed available to users are incredible. Companies can adjust a keyword ad they placed in Google very readily, in a matter of hours, based on data corrected.

Guess who bought a piece of Facebook? You get the idea: these QQQQ companies are preparing for Web 3.0.

Disclose: I have long position on QQQQ.

Source: QQQQ: Lots of Cash and Prospects