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Strategies & Market Trends : Gorilla and King Portfolio Candidates

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To: Earlie who wrote (44394)	7/14/2001 2:53:48 PM
From: Seeker of Truth	Read Replies (1) of 54805

Comments about the macro situation are certainly welcome, and useful to everybody, the more detailed the better. What I objected to in your post was the emphasis on the predictive power of past declining earnings. Even in your reply you speak of imploding future earnings. When we don't know what will happen to future earnings how can we talk of them imploding? The stock market is not like a rapidly rising ball or a falling ball, obeying the laws of classical mechanics. Stocks can turn on a dime from a rapid rise to a fall or from a rapid fall to a rise. Earnings can also do the same. It's certainly true what you say that we should preserve our capital. We can do so from time to time by putting money in the bank. Maybe that's true now, i.e. maybe the interest after taxes is about equal to inflation. But in the long run this tends not to be so. We also have to heed another truism: it pays to invest and increase our capital. The question is the timing, of course. Your first post, sounded to me like, "the stock market has been going down big time, therefore an even worse disaster awaits." I've heard this tune in every recession that I have observed. Your comments on the general economic situation are no doubt important. I find myself unable to judge; I'm unaware of a u.S. Treasury printathon. Personally, just in case predictors of further disaster like you are right, I have a big cash equivalent position now, to tide my family over for a long time. I would advise this for everybody. But I see too many conflicting factors to accept the general bearish argument. Anybody that bought the gorillas in April have done well now. But the argument against stocks was stronger then. The inventories had not been worked down as much as now. Interest rates were higher.

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