>>Hi Mike, now that we agree on what Greenspan is doing and how he is doing it, what then is the antidote to his action effects on our NAV?
Your answer is "I do not time market, and so LTBH"<<
Yes to the latter, but always with an eye to value as evidenced by strong operating cash flow and a clean (i.e. relatively debt free balance sheet).
As to the former, I think Greenspan has been 100% correct in rapidly inflating the money supply. I will continue to think this until we see a meaningful uptick in inflation. And I don't mean Austrian-type financial asset inflation, which is not inflation at all, imho. I mean good old fashioned inflation in commodities - metals, grains, cotton, paper, etc., etc. - and in manufactured goods. Basic CPI and PPI inflation.
I don't expect this any time soon, as I have said before, because of two important factors. (1) Post-1995 productivity - the New Economy, if you will - which I believe is real (5% productivity in 4Q '02, in a recession, is quite something), and (2) The China/India factor, which has been broadly discussed. We are enjoying the proverbial free lunch (i.e. rapid expansion in money supply with no inflationary effect) and will continue to do so until the deflationary impact of (1) and (2) above begins to wane. |
