Hi Pezz,
<<The prevailing wisdom ... Co's ... putting cash to work buying back stock ... long term taxation...>>
Recent history would show it is cheaper to be taxed than robbed, for most, and prevailing wisdom always change.
<<low inflation, interest rate environment has a larger roll to play here>>
Like Japan? Oh, I forgot, the Japanese are from another planet and do not live under the same set of financial laws as the rest. Oops, or did I mean the Americans. It is so confusing.
Shifting time sequence, adjusting for time period, and we are right with the Japan script. You know, quality, productivity, low cost financing, belief in levitation, stocks rise, real estate rise, media spin, government intervention, repeatedly, then ...
In some ways, you are absolutely right in that life is simple.
<<perceived idea that stock appreciation ... to retirement heaven ... DOW and S&P without concern for dividend yield..>>
Time to turn the page, and get ahead in the required readings.
As interest rate drop, and economic activity continue to head down (the economy did not head down because of unbearably high interest rate, it is blowing up due to other reasons), and inflation continue to rise, dividends, real estate, increase of leverage, and wealth protection will all become more important to folks with the majority of wealthy folks. At the same time, jobs at any price, increase of savings, reduction of spending and lowering of leverage will all become more important to J6P.
<<I have never been a believer that valuations drive the market. IMO it's the availability of money and the perception of potential for future growth.>>
BTW, it is both.
<<Will that growth pan out?...It would take something out of the ordinary for this not to happen.>>
The out of the ordinary is happening, now. So many FED cuts, and long bond yield stays up, stocks meander. Do you really not smell the smoke and sense the heat?
<<I don't see inflation developing here.>>
Oh, yes, apparently not. Many I know in the US say different.
<<It would be unusual under current economic conditions but that could change.>>
It is happening, masked by strong dollar and odd stats, and the truth is apparent to the bond investors. Oops, I left out the platinum worms and gold bugs.
It is also painfully obvious to my relatives paying those crazy utility rates.
<<When the FED pumps up money supply some of that finds it's way into the mkt.>>
A lot of it finds its way into real estate, because the leverage is more, relative to a brokerage account. Given the reduced carrying cost, a lot of the money also finds its way into commodities, especially when there are systemic and structural shortages caused by politicians trying to be smart and interest groups trying to be hypocritical. I keep forgetting that core inflation excludes housing, food and energy, but I do remember the gathering and interpreting of stats matters less to folks than what comes out of their wallet each month.
<<When CD's yield pre tax comes close to inflation some of that money flows into the mkts.>>
Markets is right, just not the ones you are thinking of.
I do appreciate the bulls, because their money, dumped on the amber of Wall Street dream, will ultimately help the financial system achieve a higher state, of cleanliness, paving the way for this thread's participants to enjoy their long healthy stress free life in an environment of wealth, as measured in all the stocks the bulls used to like.
I have always valued my real estate by cost, however, I do note that my real estate should soon be valued on market transaction value. I am also beginning to explore with my mom about her possible move to Santa Barbara, joining her sister, thus allowing her homestead (double lot, quiet established neighborhood, 20 minutes to downtown SF) to be liquidated for a whole bunch of chips. I also remember I must liquidate mom out of a bunch of shares newly levitated by your fellow travellers.
No, Pezz, at the moment on this thread, the enjoyment is total, glee absolute, and then, soon to be followed by rapturous joy and orgasmic ecstasy, garnished with studied optimism and rational hope.
Chugs, Jay |
