your position in a stock can lose 5% of its value each week, every week, forever
(after revising your price reference each week)
and still stay above zero
just had to stick that in
a lesson in geometric math
excellent article in Business Week on the economy
and requirements for the stock market to rebound
very well written, unusually adept and thorough
risks all over the place, and many unknowns
the New Economy forces are still out there
now some of them are working against the recovery
I dont mean the internet is the enemy of business
sure, plenty of excess capacity pertaining to the internet, webservers, installed software, highspeed networks, storage capacity
rather, venture capital is near non-existent, as is IPO funding
innovation is about to suffer
competition is also likely to diminish, not disappear
we have enjoyed both a technological revolution and a financial revolution in the last few years of expansion
THIS IS THE MISSING CHAPTER IN THE Federal Reserve playbook
we dont have ANY history on the repercussions from the financial revolution retreat
this recovery is NOT just about continued consumer spending
and the revival of capital expenditures after the glut is absorbed
the biggest unknown is the repercussion of the financial revolution retreat in my mind
seasonal effects, not gonna do it
(monthly effects have been shifting for 2-3 years)
money on sidelines, not gonna do it
(it can chase bonds or foreign stocks)
need for brokerage bonuses, not gonna do it
(how many times will we believe their self-serving salesmen bullshit?)
continued Fed cuts in rates, not gonna do it right away
(sledge hammers destroy the good and the bad; removal of sledge hammers dont encourage everyone to rise and run roughshod)
the second biggest unknown is the confidence placed in the Federal Reserve to properly manage this growing crisis
this confidence is slipping, evident in frequent attacks recently
the third biggest unknown is the effect of an economy that now has a far far greater rate of change than ever before
it can grow much faster, as seen last year, which frightened the NumbNut Federal Reserve governors
it can now shrink much faster than ever seen before
we DONT KNOW how fast the economy can retreat
three big unknowns as I see it
/ jim |
