Hi Pezz, Review of 2001 -
Question: Where are we in the Collapse sequence?
Message 15421566
<<If we do not believe that at least 25% of the headlines will come to pass within the next 18-24 months (time determined by recklessness of Maestro), we should start to accumulate stocks now, looking pass the valley of gloom.
The sooner we see some of these headlines, the sooner we can get back to buying "for the long term".>>
<<“GE Lays Off Another 5%”>> Nope, not yet, but soon, now that Jack has left
<<“GM Shuts SUV Lines”>> Nope, but Camero and Firebird are history, 50% of Mazda Japan is shut down, and SUVs seem plentiful on secondary market and soon should inherit the whole market upon expiration of zero financing in the primary market
<<“S&P Downgrades Cisco”>> Not yet, but airline and gaming/lodging industries will do for now, and Cisco’s proforma 4 cents and real negative 4 cents will show up on bond and equity valuation as certain as the sun is hot
<<“Dow Sets Record Historic Decline On Record Volumn”>> Yup, I think so, but much more records to be broken, crushed, smashed, pulverized, and then made into governments sponsored cement blocks of infrastructure spending, pumping on a pumps that are no longer operative
<<“Major Fraud Discovered at ...”>> Yup, Enron obviously fits the bill, Fannie and Freddie less obviously, for the moment, but the Italian government in regard to their budget balancing operation, certainly, via derivatives no less. We must wonder what else is “Out There”, in the words of Fox Mauder.
<<“Margin Panic”>> In some sense, yes, not with investors and speculators, but starting instead with the FED lower rates at history smashing speed, and then with the Treasury cribbing by removing the 30-year treasury from consciousness, and the Administration spending up a storm even as it lowers tax rate, guaranteeing future bowl-in-hand action, with some other governments following in the wake, doing the previously un-doable to savers, and still other governments simply defaulting. In any case, all is not well and not getting better. Yes, there are margins everywhere on the balance sheets, and only a dwindling bit on the P&L statements, and the collective THEY have panicked.
<<“Economic Cycle Rediscovered”>> Yup, I think so, or hope it has been rediscovered already; else it will simply hit us in the head again, and once more.
<<“Productivity Index Misled for The Past 10 Years”>> Nope, only mislead for 5, but crucial, years, in the US, and not amazingly but now apparently, according to the Economist Magazine, European productivity increase over the years compares very favorably against the US over the same period.
<<“Social Security Under Funding Expected”>> Yup, but more correctly, not funded at all.
<<“GE Capital Owes Up On Hidden Losses”>> Not yet, but just about every other company did, and so, GE may still.
<<“The House That Jack Left”>> Yup, he left, but we do not yet know what he left us with yet, as we are still in the polite period.
<<“Threat Of War In The Middle East”>> Yup, that was an admittedly easy one.
<<“Russia Sharply Increases Arms Export To Save Economy”>> That is a yes, and apparently everybody else too.
<<“Japan to Save Economy By Increasing Defense Spending”>> Yes, but no on saving economy but yes on trying.
<<“Global Economy Contracted 5% - Lead By US”>> Not yet, but underway, and will be quick when the Dollar implodes, taking the global GDP unit of accounting with it.
<<“FED Lowers Discount Rate to 2.5%”>> Well, gad, we got beat there by 50 basis points, and maybe more by December.
<<“Corporate Bond Spreads at Historic Peak”>> Yup, getting there, but widening still.
<<“Euro Wobbles On Economic Disunity”>> Not wobbling, because Italy cheated via derivatives, and I wonder which other country cheated.
<<“Dollar Implodes”>> Not yet, be patient, and if it does not happen, more pain all around, but epi-centered on the Dollar denominated economies, of which Hong Kong is small geographical but substantial capital one.
<<“Amazon Defaults”>> Not yet, but might as well, only a question of time; mean time, Argentina will do, soon followed by Enron, and possibly their respective counter-parties, i.e. Spanish banks and the commodities trading companies. Amazon defaulting would have done less damage for the real economy, for they only trade in non-essential books.
<<“Congress Holds Hearing On The Cause Of Doom”>> Not yet, because they are too busy.
<<“Gold Is Back”>> Nope, not yet, or back and then gone, but in any case certainly got a lot of mentions in the press, so must be soon or again, maybe, perhaps, else we are indeed in a new era of honest cash and honorable politicians.
<<“Precious Metal Reappears On Business Week Where To Invest Your Money Issue”>> We will have to see, but my bet is yes, so wait a few weeks, for the issue in answer is coming.
<<“CNBC Increases Time Reporting On Bonds”>> Yup, I think they did, big time.
<<“NY Crime Rate Rises Sharply”>> Yes, in a manner of speaking.
<<“Trading Volume and Margin Loan Profit Down Sharply”>> Yes, apparently.
<<“Lights Out At Ameritrade”>> Not yet.
<<“Many Blue Chips Trading at Replacement Value, Further Losses Not Expected”>> Not yet, and so far from it, yet.
<<“Nasdaq Hits P/E 10, Early Recovery Not Expected”>> Wrong, because E fizzed and disappeared altogether, with new accounting term “negative revenue” applied to at least one company. Imagine that, not negative profit, as in a loss, but negative revenue, as in disgorging previously booked revenue!
Along the originally scripted Collapse sequence, we are probably about 10% completed, maybe 15%, but definitely not at the bottom because …
Message 15478772
<<I figure, at the bottom, the following must be true ... and they are current not yet all true:>>
The allocation must be equity heavy, tech focused, cash and precious metal light, and margin pressing. (true, will get more true)
The credit cards must limit up, SUV new, and bank accounts limit down. (true, but zero financing can result in more SUVs)
The home must be newly renovated, mortgage freshly refinanced, and home equity squandered. (true, but one more round)
The portfolio monitor must be painted red, the color of blood. (the painter ran out of red paint, so green will have to do for now)
The denial must be strong, pain exquisite, fear genuine, and recrimination rabid. (not yet and far from it)
The regret must be total, repentance genuine, and remorse absolute. (nothing doing, so far)
The dream of effortless gain must fade, hopes for V shapes dim, and panic overwhelming. (no way, yet, until the moment of capitulating realization, perhaps)
The realization for “it is not too late to sell” must be pervasive, before 1998 gains are no more. (1998 profit should be gone soon, if not already, and now we work on 1997, 96, and 95, much like a countdown to a lit fuse)
The mind must once more focus on honest employment, strong work ethic, and retirement savings. (yes, yup, and certainly, but not enough, yet, and no particular counter-action possible, on retirement savings, that is, except to save and thus stop spending)
In a sentence, there must be an all-pervasive fear of doom, and Jay speaks no more of watch collecting.>> Just got a little machine of equation of time from an antique shop on Hollywood Road, Central, Hong Kong, epicenter of SEAsia deflation X spot, all Aztec metal, and Swiss hand labored, for some lucky lady, at tremendous inventory clearing value bashing discount, before the shop closes for good.
Chugs, Jay |
