jack, thanks for the comments and sharing some of your story.
>>how come when japanese rates dropped from 3.5 to 1, japanese stock prices continued to fall? maybe the relationship is not that predictable.<<
in the sense that you mean predictable, i agree. you can't press an interest rate button, chug a formula and get a stock price. i would add that stocks would have fallen more than they did if it hadn't been for the cut. instead rising, they fell less.
>>buffet says stocks can't earn 13% as a group unless some combination of gdp + dividends = 13%. but gdp has never grown like that, and stocks have grown by 13% annually the last 10 or more years.<<
jack, notice what you did in the statement above. you compared earnings to stock appreciation.
they are two totally different animals. growth for many companies is slowing while valuations increase. msft is a prime example. its growth rate was much faster years ago and it valuation was 50% less.
i'd love to hear a rational explanation to explain this phenomenon. i believe the answer is in irrational behavior caused by excess cash being infused into the economy through excessive debt (root cause greed) - a credit bubble so to speak.
someone posted to me about a new economy that buffet doesn't understand. i've been accused myself of focusing on "financials" and not products (hello?!?!?!).
gdp is so incredibly weak (about 2% or so) if you subtract out "chained dollars." "chained dollars" account for nearly 50% of gdp growth. what are "chained dollars?" monopoly money is more real. they are financial fantasy used to goose gdp and, therefore, productivity to give the illusion of a new economy. why? b/c the reality can't do it.
as for the net, i have a theory. my theory is that consumer ignorance is the single greatest profit driver in the world. the net reduces ignorance. i can now get free long distance, free net service, free office applications, free browsers, etc. due to the net. heck, you can get a cheesy free computer box now.
where is the profit in free? why does amzn have to wrap dollars around books to grow sales? if they didn't, their sales growth would topple, that is why. when they raise prices then i expect folks to shop elsewhere - not everyone, but enough to hurt amzn. badly.
the net is a dream based on a faulty premise. removing consumer ignorance (through improved information flow) is good for profits. it is really the black plague in the long run. that is the rule, there are exceptions.
the net is a dream for me, though, as a consumer. i get stuff REALLY cheap nowadays ;-)
as for a monopoly on the net? i disagree. even if you pick right. the minute someone makes a profit some clown sells at cost and charges for advertising. or a bid site opens up and sells at lower costs. you no longer have to spend 40 minutes going to a competitor, you spend 3 seconds clicking on a bookmark. cost of entry is essentially nil.
jmho, of course.
good luck. |
