IN Support of US economic monopoly- SUNW CSCC ASND COMS- IT in hands of US.
Subject: "IDEA OF THE DAY"-Trading in&out for profits.
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To: +j g cordes (994 )
From: +IQBAL LATIF Jun 21 1997 4:50AM EST
Reply #999 of 1000
Bird's eye view always distinct a good trader from a poor one, Jim view from the balcony is the right approach, I am pleased that you Bob Simpson and others like Chuck jbn3 Taqi ocassionaly drop by and add a flavour to otherwise very banal task of talking money.
I will make 2 points only for now;
1- I don't think economic valuations in US are at any level comparable to Japan or even Europe san UK.Based on going forward earnings US potentials appear to be quite good, look at IBM trading at 16 times earnings a 55% annual growth rate for last 4 years, going forward next year it would be 12-14 $ earnings, I with even most earnest of efforts cannot find a single company which can compete or even come closer to IBM. I can say same trhings about INTC MSFT or COKE,. these are global company. Let me give you a small example I was in Lahore last week as my friend invited me to grand opening of third KFC in Pakistan, it is a subsidiary of PEPSI but you believe it that people wait in long queues to be served. This is a phenomenon of 'MCdonaldisation' of the world. Can you show me any other company with such a total domination.
Boeing and Air Bus are competing for commercial aircraft market domination, take the hidden subsidies and you find Air Bus struggling,
even automobile industry has turned corners.
It is that technical advantage and compelling valuations that takes you to the top. NIKKEI even at 20,000 is having difficulties to sustain itself above it, the drop from 32,000 was 'irrational exuberance' we talk about. We don't have these kind of valuations. Real Estate values even when 500 bn$ were to be lost in Savings & Loan crisis, Resolution TRust turned the entire depressed market around in 6 years and US tax payers only suffered 40% of the loss what was actually anticipated.
France Japan are undergoing economic recession, unemployment in France is at 12-13% and with all its austerity they are unable to tackle structural problems of their economy. The cradle to gravr 'grand fathering' frowned by the founding fathers has resulted in this unique super giant.
I live in History, Jim and I take lessons from history to establish my outlook from stock market to global economy, my humble opinion is that US asendancy cannot in present day and age compared to Spain or France or Prussian Germany or even Great Britain, see how fast these powers were thrown from the pedestal of glory.
US being no 1 is a combo of military might with economic prowess to go with it, no other European power even came close to it except Great Britain, but could not sustain as "sum total of her total continental obligation were far in excess of her resources' ( Paul Kennedy).
I don't find US obligations to be in excess of its economic might, to become a world leader without Isabella of Castille, Napolean or Bismark direct me to US unique position, Spain, France or Germany failed on this count.
It is different this time, US corporations are driving force behind every thing in this world, a juvenile diabetic will not live without Eli Lilly contribution, home consumer products or tabacco without P&G or MO are Unimaginable, it is this reach which is not yet factored in market valuations of US stocks, come next 20 years and we will look at present valuations the way we look at valuations in 70's. If premiums are to be realised on forward potential DOW will be anywhere in 20 years, thanks that greed and fear keeps capping this whole thing under a lid, but a pensioner whose broker is lending money to his client instead of selling is actually doing a favor, stock markets will go thru corrections but in long term I find stocks out performing any other form of investment.
2- I still believe that borrowing at 2% in Yen and lending at 6% in $, due to exchange difference and risks is agood deal for funding benign deficits US has. A country that runs deficits is better than country which does not.Currency risk cannot be protected by an exotic derivitive, I was involved in a deal where I wanted to borrow a multi-currency loan facility of 24m pounds and drawdown in Yen so as to make money on diffrential, I looked in all kind of alternatives to hedge my exposure but the cost prohibited me, so I avoided it. I will write on this more if you want to know about multi-currency loan facilities.
I am sorry this train of thoughts may not be entirely coherent, I just typed and thought editing is not reqd as you have a big heart, to ignore ordinary mistakes. |
