The Justa and Lars Honors Bob Brinker Investment Club Thread Message Board

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Pastimes : The Justa and Lars Honors Bob Brinker Investment Club Thread

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Jan 8 4:00 PM EST

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To: Hank Stamper who wrote (1034)	4/15/2001 7:03:07 AM
From: Boca_PETE	Read Replies (1) of 10065

Hank Stamper: re: ("4-16 Barrons - Richard Russell article") I know Russell's record of the past 20 years has not been spectacular, but it was etched during a Secular Bull Market. To me, it's more important to critically examine the plausibility of the case he makes for a worst case Secular Bear which is a follows: - The USA is swimming in debt (so what else is new) - The USA "savings rate" is negative (has there been changes that make this statisitic questionable?) - $4.5 Trillion in USA stock values already has been wiped out (sounds ominous - are we yet to see serious economic fallout from this event?) - Corporate manufacturing facilities have been overbuilt (has this factor been mitigated by the the smaller portion of the total economy that manufacturing represents these days? Can this excess capacity be converted to produce new products?) - Retail sales are dropping ( my wife is handling that one well) - world competition is vicious ( we're #1 is cutting edge tech, biotech and changing paradigms to the disadvantage of competitors) - The USA is running a trade deficit of over $1 billion per day. (It's nice that our products sell so well overseas - supports proof of the previous item) - The dollar's strength is probably not sustainable (he fails to explain why) - Mutual funds are fully invested in other people's money (most do have this mandate in their charter - look what happened to Foster Freiss when he went to 90+ % cash during the fall 1998 Asian currency crisis) - Both individual investor and professional sentiment still are far too bullish (While true, bullishness investment advisors has fallen to the low 50's in recent weeks - moving in the right direction after holding up for a surprisingly long time as the NASDAQ plunged). - Investors obviously aren't prepared for anything resembling a worst-case scenario. Most keep looking for, hoping for, a bottom. (I refuse to move into my early 1950's underground bomb shelter - who knows if that canned and dried food is spoiled by now. And those Gold coins Harry Browne said would be there only legal tender haven't increased in value - instead they've decreased in value). On the other hand, the evidence is not in as to whether or not we have entered a Secular Bear period similar to 1966-82. Also, capital spending cutbacks could impair future corporate profits for a longer than expected period - so could the effect of falling consumer confidence on retail sales (despite the fact that housing sales have thus far held up well). Also, we don't know when layoffs will subside. I posted this article as food for thought. The message I got from it is BE VIGILENT. P

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