Dear JDN: Are you responding to that post or making new arguements? It isn't clear so I'll assume that you are responding
1. It isn't the private INVESTOR who is causing the volatility. We all have stood pat through all of this. It is the funds and the increasingly important day traders who are creating the volatility. Fund managers are under incredible strains and tend to jump at the least bump in the night and they are also lemming like.
I haven't read an analysis that can make heads nor tails of the volatility. What make you so sure. My point was that the loss of macro players will increase volatility, who is to blame for this volatility is not important.
2. So long as the $$ remains strong (and if anything its too damn strong now) people overseas will always invest in this country. One, they have the chance of capital gains, which haven't been shabby, but just as important to their thinking is they protect their base from erosion due to currency devaluation.
If appreciating assets are replaced with volatile markets producing no gains this money will flow the opposite direction just as quickly. No? Maybe economics just work differently for CSCO and the stock goes up regardless of the big picture.
Our markets have been very attractive for foreign investment. The dollar weakening, IMO, will be the final warning sign to get your money out of equities. The last few weeks have been a a shot across the bow and should have shown a reasonably astute observer the weaknesses inherent in the markets. This is especially true for the Nasdaq. The cracks are there if you are willing to look.
When people realize that the markets are not King Solomon's mines the abuses of the last decade will unwind. This includes employee stock options grants and other creative methods of padding income statements that find their foundations in the greatest bull market in history. If you discount your expected return in CSCO taking into account these risks you will find (if you are a reasonable person which I assume you are) that you are better off in bonds or some dividend paying stock.
This does not mean that you will lose money. Say this is the roulette wheel thread and you posted that you were putting your life savings on black 2. You win. Did you make a good decision? If someone disagrees with your advice to others to follow your example is the roulette bear wrong? Are they wrong if the ball then falls on black 2?
Face it, your success in CSCO and the markets in general has a very large foundation in luck. I know you like to pat yourself on the back for being so smart to have purchased CSCO 5 splits ago. And you are, at least partly, correct in doing so. But, you must realize that risks were in CSCO then and are still there now. The risks are far greater now with a triple digit P/E than they were in 1997 when the P/E was 25 (or whatever it was, it was considerably lower than it is now). Again, that does't mean that you will lose money, but I would rather bet against you at this point than bet on your CSCO permabear mentality. Hubris can be a costly vice when playing the markets (or "investing" as you like to call it). Besides, you're playing with "house money" now aren't you.
But, this is just more CSCO bear drivel isn't it. |
