Thank you for your response!
Lately, though, there are lots more stocks selling below net current assets, or even below net cash, than in recent memory
Exactly right, and we may get the opportunity to see even more, which is why I'm concentrating so hard to clarify my thinking for this type of evaluation and selection.
When Greenspan was talking around the time of his first rate hike, he said that the existing barriers to inflation were starting to go away. At that time, I think he listed the pressures of a global marketplace were increasing competition and thereby exerting a downward influence on prices, the Asian crisis had peaked, but that those countries were exporting their way out of crisis, which meant lower prices here; American's fearfulness regarding rapid obsolescence of job skills was preventing them from demanding more concessions, although that was being offset by a tight labor market to some extent, and the main one, productivity gains, outpaced the other sources of inflationary pressure.
Most of those conditions have changed, global recovery means more demand and therefore increasing prices, the Asian crisis is almost a distant memory, the main source of productivity gains, capital expenditures, has slowed way down, which means that gains in productivity have probably peaked, and the less rapid change in technology means that Americans may be getting a little more confident in their skill sets.
I'm saying all of this to lay the groundwork for my belief that inflation now has more potential to become the problem we have been worried about for so long than ever before in this bull run, and it may provide us with more opportunities to get NetNets if we survive the turbulence with some investment capital left. |
