Hi Oblomov, Reasoned but simple contemplation -
This is what DAK and Pezz was discussing about ...
- Future of the economy is being forecasted differently by the bond, commodities and the equity markets, with only one possible future actualizing
- investors fund companies with current and/or potential value
- companies invest to earn profit
- companies with hope of making profit employ folks
- employed folks spend money
- money spending folks create profit opportunities
- …
- when folks are debt-ed up, and fearing unemployment, they stop spending on all but the basics
- SUV and USD 8,000 per course bio-pharmaceuticals are basically unnecessary
- Neither is 5% nor is 7% unemployment basic
- And for that matter, neither is Nasdaq at 1400 nor Dow 8000, god guaranteed, Greenspan not withstanding, and O’Neil not standing at all
- The demand for money will determine interest rate and credit availability, and supply, especially in excess of demand, will merely determine the size of the next bubble, each successively weaker, until the final unwinding
- Financial excess will unwind, timing is depending on many factors I do not know but can guess at, in the mean and nasty time
- The actions of others, especially of the many, need not dictate what I do, and at critical junctures, must not dictate what I do
- The market will display true value when profit returns, and in the interlude of all spin, it is best to avoided participation, at small nominal or even negative real opportunity cost, especially when such costs can quickly be recouped with a few trades at the onset of better times, with more favorable odds
How wrong can I be, and what would be the result if I am?
Chugs, Jay |
