Hi Arthur, On "why not" fight the FED, I meant the FED will have little to do with the direction of the economy for a while ... else Japan's problems would have been solved 10 years ago. The Japanese did everything their collection of smart folks, systems and institutions allowed them to do.
I believe the FED's "printing of money" or making available of money is what got us here in the first place, sometimes unavoidable (LTCM etc) perhaps.
The business cycle is also unavoidable, especially in the context of bubble blowup. Many think we in the 1990s have discovered what others failed to for all of recorded history. I believe the beliefs are wrong.
We live within the confines of a set of rapidly evolving, complicated and interlinked patchwork of systems and sub-systems, all designed for dedicated purposes, and sometimes at contradictory purposes (i.e. encouragement of savings vs encouragement of spending), all put in place at different times, and set with sometimes incompatible tolerances.
The patchwork of systems is now weak. The system's forward health is dependent on fewer and fewer exogenous inputs and is more subject to external shocks that have built up over this extraordinary period. The equity and debt markets have demonstrated that times have changed, imbalances are causing malfunctions. All is not well.
Many feel obliged to placing or maintain bets before the roulette wheel stops spinning, which may be wise, depending on the bet. I believe the bets are unwise for most.
The standing stocks are getting fewer, and GE still stands. Do we retreat to what we know best, or do we seek other paths. Thus the discussions on these threads.
Should the message be one of GE deserving an allocation, yes, it does deserve an allocation. Should the message be GE "be the bet", then probably not, even as we discuss.
Less expectation of capital gains, the same expectations proven wrong in all stocks at some time, GE is expensive, relative to all traditional measures of value, and to its peers. GE does have peers. Less the faith placed in Jack, GE is but a large conglomerate, marking time with global economic growth.
Less the faith in Greenspan, the economy is ill.
The discussion of GE of course cannot be disassociated from a discussion of the global economy, and thus my challenge to the notion that the FED's cannot be "fought". It is always the most firmly held beliefs that leads to mistakes in strategy. In some sense I come to this thread to learn by shaking one of the firmest counter left in the casino, to see just what the faith is based on, and if I should change my view on other matters as a result of the learning.
The discussions at CSCO, ORCL, etc, no longer generate enough conviction for maintaining the LTBH strategy.
I have 100 shares of GE as I do in many stocks, nostalgic residual leftover from better times, to encourage me to read the news on the company and feeling participative.
In your opinion, is GE an allocation, or is GE a bet (deserving over-weight allocation)? Is this the time to make such an allocation? Finally, what major change in the broader environment would necessitate a change in stance?
Many TIA.
Chugs, Jay |
