Yes, there can be high growth without inflation. Yes, the productivity rate is uptrending due to increased innovation, Moore's law, better software, wider bandwidths and the Internet's role as the ultimate price deflator. Productivity will continue to blossom, at even higher rates, as far into the next century as your imagination can carry you. The Internet's full potential for creating a frictionless global economy with vast leaps in productivity has only recently been imagined, much less fully implemented. Business to business transactions executed over the Internet open competition up and push prices down.
Many investors realize the markets have become a momentum game.
Analysts are issuing 12-month price targets on companies like Nextel and AOL that assume their triple digit PE ratios will become the norm rather than the exception. That said, behemoth equity price spikes in the stock market have always been followed by a rapid, if partial, retracements as history clearly shows. Soon enough we'll see if this is the end of the world as we know it, or just an equity price bubble. This should lessen the impact of profit taking short term while setting the stage for the continuation of AAPL's uptrend going into January. What new investors to Apple see is a corporation that has transformed itself from a niche player into a PC market leader.