"INFLATION -- there is none" ???
better be clear on the definition
the economics definition pertains to money supply, which invariably finds its way into prices of goods & services
the definition that Greenspin has spun out, and apparently you may buy, pertains only to prices
prices remain under control until they get out of control
perhaps not all sectors, but DEFINITELY some sectors
the US Money Supply has risen 30% since Jan2001
that is a mindboggling figure to contemplate
I believe some, and maybe not even most, has offset burned capital from debt collapse
but imho the majority is working thru the economy's pipelines
and will find its way along the path of least resistance
in the past that has been stocks and other financial assets
but since mid2001, it has shown up mainly in other areas
like precious metals, oil & energy
I tend to agree with you on Middle East
just like a big cauldron constantly on the burner
but almost never boiling over despite threats to do so
I think you underestimate the Arab response to all out attacks on Iraq
the sideshows would and will be much more dangerous than we might expect
too many zinger unpredictables here
here is a challenge
find sector indexes that show any rise since autumn2001
all I have found are XAU/HUI precious metals
and OIX/OIH oil and gas energy
when such unprecedented money supply infusions are infused into the US economy, the central quest becomes finding its ultimate destination
where will the money go?
what will it chase?
I dont think it will lift S&P, Dow, Naz all that much
I have stated dozens of reasons why, and am tired of repeating
I think it will chase commodities, the neglected underinvested sectors
like precious metals, like oil and energy
which would be a continuation of the current established trend
you are totally overlooking a very very strong historical relationship
when real interest rates on the shortend maturity are near zero, and remains near zero, bondholders move slowly into gold
they have done so this entire century
why should they remain if almost no return on investment?
real rates have been under 0.5% and probably close to zero since October 2001
I would link you the article to read, developing the concept
but you would likely dismiss it outright
I call that "contempt before investigation"
maybe it is dismissed because of lack of understanding???
the other big force behind keeping gold up is the USdollar
unfortunately for many US investors, currency movements rarely adjust by 5% and stop
they usually get extreme on the upside, then embark on a new trend
my guess is that the 10-yr strong dollar trend is ending
and a new 10-yr trend favoring the Euro has begun
if the US economy is a supertanker.....
then the currency market represents continental shifts
currency market is now $22 trillion annually
got news for you, Volt
the trend reversed since Christmas
the Sept11th events brought us a top in the USdollar
then there is the trade debt, approaching 5% of US GDP
no precedent for a major industrial nation to avoid a 10% currency correction, minimum
as you say, you might be right
but history is not on your side
you seem to be an incorrigeable tech stock trader
I read a very wise saying recently
AFTER A SEVERE STOCK DECLINE, INVARIABLY IT BRINGS WITH IT A TOTALLY NEW SECTOR LEADERSHIP
for several reasons, I think it is commodities
the financial version: gold and silver
the commercial version: oil, gas, energy
/ jim |
