Hi Grace, I was going to keep off the SI until I return to Hong Kong from Jiaxing (where?), about one hour drive from Hangzhou. The approaching typhoon and heavy rain is causing a delay in my meeting.
I read your posts in two different ways, first by taking your words literally and precisely, and then by reading between the lines.
The precise reading yielded an understanding that …
<<When you get away from the big caps and tech wrecks that are making the news and making indices flounder you see a sea of companies that are doing rather well … the indices masked the over all Bear in small and mid-caps during the rise, the indices are now masking a Bull in small and mid-caps. If you listen to CNBC you'd never know that there were so many companies whose stocks have done so well over the last year>>
The reading between the lines yielded a sense that …
<<It certainly runs counter to the collective wisdom on this thread and it doesn't fit the profile of a secular Bear. A secular Bear gets everyone, large or small.>>
I do not know what the collective wisdom on this thread is, but here is what I think …
a. Money is like water (CB thought it was like electricity), it flows, pools, rises, boils, evaporates, bursts, floods, and freezes. Humans try to dam it, guide it, use it, for good and evil;
b. Governments’ job is to allow the gradual creation of more money, and establish the policies necessary to guide its flow, aggregation and pooling;
c. Private sector’s job is to take advantage of the governments’ policies and the available pools of money to do the best for itself;
d. In recent times, a giant pool of money was aggregated, probably originally in the sands of Arabia, then, guided by policies, moved to Japanese stocks, real estate, USA real estate, stocks, SE Asia, Latin America, Korea, Taiwan, China, USA again;
e. Within the USA, the pool of money was guided by government policy and moved by the frenzied crowds from savings and loan, to real estate, to communication infrastructure, to big cap stocks, to real estate, and as you noted, to the baby stocks;
f. The pool of money was poisoned by unsupportable debt in the private sector;
g. The collective wisdom of this thread, if the thread participants all agree, may be that the explosion, the kaboom, the big kahuna, is a process, and not an event. The process will exact its satisfaction by punishing those that mistaken the explosion thinking it is a singular event, after which all is well;
h. Hiding behind the comfortable thought that a bunch of small company shares are doing well, and are selling for below 20 times earnings may be harmful to one’s financial health;
i. Out where I am, we have plenty of small companies selling for 2 times earnings (no, I did not leave out a zero), and large companies selling for below 20 times earnings, and guess what, we even have money that can be borrowed for at 1.25% rate;
j. If your response to my above point is “so what?”, you would be right. Indeed, so what, we are going into our script without hiccup, without delay, and the mid/small cap stocks in the US will follow, in accordance to the ticking of the equation of time;
k. Why should the equation of time matter? Because, money is like water, and its movement, pooling, freezing and evaporation all take time.
Sense the broader business environment, feel the market pulse, know that the pool is poisoned, trust the force, and believe in the power of the frenzied crowd trying to stampede out one fine day for that event defining the process. This thread is anticipating the event, after concluding on the nature of the process. We are guessing at the script, and are not waiting around for the event itself.
Now, you have said small stock prices are doing OK (as thread participant Pezz has noted as much). I agree. If you say “real estate prices are doing great”, I would also agree. Should you say “things are different this time than 1929”, I would respond “yup”.
Yes, things are different this time. I just do not want to experience the differences first hand. Anticipation is a survival skill.
Welcome to the thread. We need you here.
Chugs, Jay |
