I got on soapbox this morning: #reply-12081375
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<<Reddy, You may be willing to believe the Wall Street and Clinton administration spin on productivity. I don't. Yes productivity improved due to widespread usage of computers in a lot of areas. In my line of business (consulting) it is hard to get those improvements to the bottom-line. Our clients "expect" the productivity gains to be passed on to them. In product oriented markets, the end users 'expect' lower prices as a result of increased competition and the vastly claimed 'productivity gains.' If we don't do it, our competition will.
I know new era believers won't believe until the asset prices really hit the wall. The "productivity miracle" touted by Wall Street is simply baloney (or vankai - if you prefer Telugu term -g-) If you are willing to open your eyes and see things for yourself, here is some proof:
This morning 3rd Quarter GDP growth was revised upwards to 5.5%.
The profit growth of US corporations in the same period (year over year) is 3%. (http://biz.yahoo.com/rf/991124/lf.html) This is with all the accounting tricks, stock buy backs, selling naked puts etc. etc. For example - as in new today - IBM got caught today with funny accounting. Not that it is any news to me but it is news to many new era "investors" who believe in the Wall Street BS like "productivity", information age". Don't forget that 3Q 1998 was really a bad quarter for profits. Now tell me how much NasDUNG grew in the same period?
Now, here is the real question - if 5.5% growth yields a whopping 3% growth in corporate profits, the bear that I am, I can't wait to see how well the "information age" companies' bottom lines look in a recession.
Speaking of the productivity improvement in top of the economy, i.e. financial sector, is just a waste of capital. In terms of long term value, it hardly matters to the real economy if gazillion day traders have up to the sec access to information from 200 different sources. IN the short run yes. ciscos, Suns of the world will benefit from the expansion drive by e-brokers and e-tailers. But in the long run, only a handful of these 100s of companies will survive and that is when the new era "investors" really understand the phrase "stable and sustainable growth."
BTW, I was once in a camp like yours. I consider myself to have graduated to next level. Honestly, I wish I waited at least 18 months before I graduated, though! -g- In this market, I consider that ignorance is a bliss - at least until this moment. >> |
