Jay, I thought I'd better reply before you think I fled! My screen time has been minimal because I've been lost in the 3D world, deaf, dumb and blind without 3G. Anyone who thinks 3G is a loser should try driving around at night in alien lands without any idea where motels, gas stations, toilets, food supplies or anything else is, including themselves. SnapTrack and 3G will be life savers. Literally.
It wasn't inadvertent that I stepped into your club house; it was more of a direct challenge. So I'm not surprised to see typical primate territorialism. With the soft interface of cyberspace, I expect I'll survive.
<With bulls like you still around, dangling bits exposed> Keep in mind that there are always exactly the same number of bears as bulls [or more accurately, every share that is sold is bought and both buyers and sellers think they are on the right side of the bargain]. So at market highs and market lows, bulls and bears are always in happy harmony.
So, for example, on Friday, when the Nasdaq hit a new low, most people think there was a big sell-off. Actually, there was a big buy-up as hordes of people bought the information revolution at what they think are bargain-basement prices. Bulls and bears were happily stampeding together [okay, I know bears probably don't stampede, but you know what I mean].
<<Alan Green$pan will cut interest rates all through 2001 as the stock markets rise>>
<Is that what is happening down where you are? Then a thought hit me and I took my Nasdaq, SP500, DJI charts, flipped them around, and immediately saw that, by golly, you are right! The markets are going up, if you look at the charts reflected in the mirror.>
I know the USA population has an attention span of part of a second and they don't have moving picture on tv now, just sound bites and one second clips of movement, but it is only just March. Alan will continue to cut interest rates and when people realize the sky isn't falling, the share prices will start rising. My point was that Alan will keep cutting, even in the face of rising share prices, because he was never simply targeting share prices; just the wealth effect. He'll cut as long as recessionary fears predominate. Because the Feds don't seem particularly worried about a recession, they won't be making frantic cuts. But I suspect they are like a swan = making haste under the water while appearing unflustered on the surface.
We'll need to check the graph at the END of 2001, not in March, to see which way the markets went. That will involve breathing through your nose for another 9 months. Actually, holding breath is approved too [that's my method until my theory takes hold and the markets stop the precipitous decline of the past few weeks].
<<Inflationary effects be zero [with oil dropping after being a huge highs]>>
<Is that a statement of fact or a wish? And do you have spare barrels of oil to sell cheap? If oil price does drop, it will be because the stock markets of the economies using oil dropped. Cause and effect relationships are tricky to gauge.>
It's a prediction. The world is awash with oil, but some suppliers [Saudis] have cut their production and the USA and Britain have cut Iraq's production to maintain profitability of USA and North Sea oil companies. But good old supply and demand will win and the true, long-run marginal cost of production of oil will be the price it sells at in the long run. The ups and downs are just the fun of the fair. The IT revolution continues unabated and the massively deflationary effects of IT will continue for decades, along with the other effects which I don't have the time to rant about right now.
Saudis will find their market share is dropping and that will create pressure on them to boost production and get market share back again. If it wouldn't make the USA very angry, the best Saudi strategy would be to sell their oil as fast as possible at what the market will bear, take huge market share and use the proceeds to buy the USA stockmarket. They could live on the profits forever and ever, Amen. But BP, Shell, Exxon and others would NOT look kindly on that strategy. Nor would the Oil President or his Dad and oil buddies.
<<I expect to see a 16,000 Dow by February 2002.>>
<Excellent! Suggest you to take out a jumbo mortgage, deposit with broker as new equity, leverage up with margin debt, and use the whole pot of chips to sell QCOM puts, generating even more chips, and buy calls on all 30 Dow stocks soonest. We will be waiting to celebrate with you, BBQ fire and sauce readied.>
Done [though not the mortgage part - margin is enough fun]. Also, I'm old enough and cynical enough and cautious enough not to bet on what a herd of maniacs will do in the short run. So they could well sell the markets off to ugly lows before the inevitable realization that as in all of human history, overall, people prefer things to get better and work to achieve that. Which means markets come right again and people get back to work. Also, I am betting on the wireless world and cyberspace rather than the Dow, which I use as an indicator of overall well-being for the public at large. So this bull at this moment owns only his two sacred cows, QUALCOMM and Globalstar [which currently has mad cow disease, but a cure is being worked on].
It is NOT wise to be sold out involuntarily at the bottom of a market, which is what can happen with excessive margin, which I happen to have right now [thanks to my mad cow].
<We are not selling anything cheap to anyone. We sold expensive, very expensive, and are waiting for bulls like you to panic, and panic you will. Panic is only for folks who sold too late, not early. Agree with you that the predators are always on top of the food chain, by definition.>
Maybe you sold nice and early, but plenty of others are selling now. Also, if you are not feasting now, you might miss out because there are multitudes of people feasting right now and the carcass will be picked clean and you'll be left with rapidly depreciating money [compared with the stock market, not the price of goods]. I suppose we have to wait until the end of the year to find out who the predators are this year. Maybe it will be like the famous nature film of two bull seals fighting on the beach for supremacy and suddenly a killer whale lunged up the beach out of the surf and grabbed the seal which thought he'd won because the other one started running for it. Two seconds later the tough seal was being eaten like a chicken nugget.
It would be nice to be able to check the label on our backs to see if we are a weak seal, a tough seal, a killer whale or a chicken nugget. The other picture I'm reminded of is the bullfighter who was gored up the bum and carried along on the horn of the bull which he'd stabbed with a sword and which had picadore prods hanging off his bloody back. It's a harsh world out in the jungle or the bull-ring.
<<The panic in QUALCOMM [like many of the other panics outside the dotcom world] is based on lack of understanding of what's actually happening.>>
<Why limit the thus reasonable panic to the dotcom world? It is not as if money lost there is not lost to the rest of the economy.>
The fact that people put a high value on something with no value doesn't mean there was any value actually there. Investing in Santa Claus doesn't create an actual Santa Claus so when the tree has no presents under it and the value suddenly goes 'poof', nothing has been lost to the world. Those people who put a lot of effort into the Santa world or bought shares from those who sold the Santa world are certainly in a sad way. But the world is no worse off with the demise of the Santa world. In fact, it is better off as those people will direct their efforts to something more constructive and realistic.
Similarly, if there is a 3G SiGe Atomic Bomb being built by QUALCOMM and many people say it can't be done because it breaches the laws of physics, so they sell their shares, causing a big price decline because most people have doubts, that doesn't alter the reality of the bomb. The value is being created whether it is recognized or not. When it goes BANG, people will take note and the consequences will follow.
<<Financial collapse of 2001? I don't see any reason for it. In fact, I see the contrary. The world is getting better in leaps and bounds every day. Not for everyone of course, but overall and on average and that's what makes the world tick.>>
<The world looked beautiful for most of 1929. It takes but one morning realization to see the mistake made the night before. What is it you need to see before you panic? >
The world has looked beautiful to me for most of 50 years. There are now 6 billion people alive, all wanting their lives to be better, which is the nature of being alive. There used to be a few hundred inventors and a billion people [ca 1900]. Now there are millions and each invention can be cloned at near-zero cost for the benefit of everyone. Invention is piling on invention and fewer and fewer people are toiling in poverty in rural labour. The economic powerhouse of the world is vast and growing rapidly.
What would make me panic? Something going wrong such as George Bush deciding to snort some cocaine, have a couple of drinks for courage then taking on China with Condoleezza Rice ranting about evil commies abusing human rights. That would make me come over all faint. An incoming comet would cause me to panic. A killer whale sneaking up behind me would make me panic. I like panic. It's a very adaptive ability we have which evolved over millions of years. I like to keep my panic skills and paranoia highly-tuned.
But a swarm of journalists saying 3G is no good, CDMA is hopeless and GPRS is great makes me feel predatory rather than panicked. Especially when they panicking about the sky falling at the same time, when all I can see is clear blue.
Mqurice |
