Bearded One - thanks for pointing out the Barron's article - while I would like to think my post provided some impetus, I have my doubts (many have been talking about KP creative financing for quite some time).
Regarding the article - I must admit that my view of the market has become so negative of late that nothing shocks me anymore. We live in an era of no rules and no commonly agreed-upon methods for establishing valuation - in fact the rules change daily, and they change at the whim of, at the whim of - at the whim of someone, yet, I have not been able to figure out whom (perhaps a Merrill or DLJ analyst- or even a CNBC producer). Why some stocks should go down on good fundamentals and others go up on no or bad fundamentals - well, it seems the market is out to mock anyone who ever bothered to spend any fraction of time studying finance. The market awards those that close their eyes, lick their finger and stick it in the air and go the way of the wind from the passing crowd caught up in the bull stampede. Soon, we'll have companies that cook their books even see their stock prices rise - "okay, so they misstated their revenues, but their business model is stellar - and they have a patent to boot!"
The rules constantly change in this new economy. And who knows what the rules will be tomorrow. It reminds me of accounts I've read of the cultural revolution in China in the mid-1970's, when rules were changed daily - when the height of absurdity was reached when the young revolutionaries decided that red traffic lights were incongruous with the ideas of the revolution - red, the revolutionary color, should not mean "stop", red should mean "go" - and so the traffic laws were changed (luckily, there were not so many cars in China at the time - as I imagine the implications would have been severe). In our new economy what makes stock prices "go" or "stop"? Who knows? Who cares? It makes us money now. Eat, drink and be merry for tomorrow... I have nightmares that 100 years from now a statue of Charles Ponzi will be erected on the mall in DC. Speaking of Ponzi - check out today's NYT:
nytimes.com
Thanks,
-Eric |
