Lee,
In an effort to defend myself, let me state emphatically the following:
1) THE MARKET (those stocks which drive the major indices) IS CLEARLY OVERPRICED!! HOW MANY TIMES DO I HAVE TO AGREE WITH YOU GUYS?? That being a given, do you suggest I go buy "value stocks" with great P/E's?? That's a joke. They get hurt worse than the overvalued big names in these constant downdrafts.
2) Your post proved my point. Maybe I was not clear enough in making it, so I will give it another shot. MY POINT IS THAT BECAUSE OF AG'S NON-LEADERSHIP METHOD OF MANAGING THE MARKETS (which is really not his job in the first place) AND WHACKING THE WHOLE MARKET WITH A VERBAL BASEBALL BAT, HE IS ACCOMPLISHING THE VERY THING HE IS TRYING TO PREVENT. When he whacks the market in general, the whole thing sells off and guess which ones come back further and faster? Yes, the ones which are the most over priced (MSFT, DELL, CSCO, WCOM, IBM, LU, INTC, MU, SUNW, etc.). When markets are this unstable, the only stocks anyone wants to buy are those which we all know will continue to make money, no matter what. Those stocks which are "blow up proof". In other words, the same list of glamour stocks. Notice the names in your post (PMCS, SUNW, MU).
3) This is supposed to be a free market economy (ROFLMAO), where pricing is the intersection of the supply curve and the demand curve. This free market works great if our government (and the Fed which is a privately owned corporation and not even part of our government) can keep their hands off of it. If they are not controlling prices (regulation), then they are constantly messing with the supply curve (subsidies and government grants and loans) or the demand curve (fear and interest rates). If you will check your history books you will see that we had no stock market crises until we had a Fed and a government which felt the need to interfere.
4) I contend that what Greenspan has done is to take the gutless approach. He is afraid to raise rates lest he stall the economy and create deflation (not to mention the politcal fallout). So, instead of controlling inflation he is fixated on the stock market. He is deliberately scaring the heck out of the market to keep it down (which I repeat is not his problem). The only problem is that when he makes the market unstable, there is a heightened desire to move to the "big named" glamour stocks. Where are they going to put the money? In gold? (ha) In bonds? (ha ha) Dig a hole in the back yard and pay interest and penalties? (ha ha ha) Therefore the money keeps chasing a smaller number of issues actually worsening and not improving the problem.
5) When you look at the broad market, you will see that it is anything but overvalued. Most stocks are below their 200 day MA and many are at their lowest point in years. I'm not talking about dog stocks... I'm talking good companies (KO, DD, DIS, MER, MRK, etc.). Why do you think we continue to have a record low A/D line? Why are new lows out numbering new highs by a factor of 10? Because the greatest part of our stock market has been kicked in the groin repeatedly by a failed Fed policy.
Finally, Lee, I am not saying that AG is the whole problem. What I am saying is that his gutless approach and his meddling where he has no business is costing the small money of this country a ton of money. You can bet that the big money is well hedged and also has the advanced notice and hence the ability to prepare. I would like to see the market be left alone. Trust me, nobody will buy MSFT when it gets to $400 a share! Then the money will have to go somewhere else. Only my approach is much less violent and much easier on the little guy.
Matt
(this ought to get a lot of responses from the bears <g>) |
