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Technology Stocks : Disk Drive Sector Discussion Forum
WDC 163.00-0.4%Nov 7 9:30 AM EST
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To: Z Analyzer who wrote (9005)1/21/2001 9:46:49 AM
From: Robert Douglas  Read Replies (3) of 9256
 
Something wrong with the picture?

It shows that the average American is willing to sell off his financial assets to buy foreign produced goods.

Is this stupid?

Well, if you argue that America's financial assets are overpriced and the dollar is way too high, then it would make it a rational decision to sell off paper assets and buy inexpensive goods produced abroad.

Or, you could argue that Americans are giving up ownership in the future to party today.

Which is it? I think a little of both. In 30 years, I don't think there will be many "American" companies. The stock in multinational companies will be held by people in all countries and where a company is incorporated will depend more upon the taxes and regulations required by that locality.

I remember talking about this with Seagate. If a Taiwan company had bought them, could they have sold off the Veritas shares without paying U.S. capital gains taxes? I think they could have.

Now what if in 10 years the majority of Intel's stock is in foreign hands and these shareholders demand that Intel change its "residence" to Panama and not pay America's absurd 40% corporate tax rate? Let's say that by then only 15% of Intel's business is in the U.S., why should Uncle Sam be able to tax those profits?

But I digress. I think that what we are seeing is partly an internationalization of financial assets. The best assets are still in the U.S. and that explains part of the picture. I don't discount that U.S. citizens are being foolish in letting their wealth go for instant gratification, but it is only part of the picture.
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