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Strategies & Market Trends : Booms, Busts, and Recoveries
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To: Snowshoe who wrote (40381)10/28/2003 3:45:17 PM
From: AC Flyer  Read Replies (3) of 74559
 
Hi Snowshoe:

I'm a great admirer of Warren Buffett. He's a value-oriented, LTBH kinda guy, as am I.

Nevertheless, we must operate in the world of what is, not in the world of what we'd like to be or even the world of what should be. So....the Fed uses what one might argue is an outmoded or too narrow definition of inflation (I disagree with that premise, btw) to guide monetary policy. That kind of thinking exists in the world of what should be.

In the world of what is, we have interest rates at 45 year lows, hence discounted cash flows are at 45 year highs, hence stocks can trade at 45 year earnings yield highs.

Given the unprecedented (in my lifetime, anyway) deflationary forces acting on the US economy, the balance of probabilities lies with....low interest rates to the horizon.

This will likely all end very badly, as I have said previously, but seeing the cataclysm around every corner (i.e. Jay's endless rollover prediction of TEOTWAWKI) is the world of what should be, not the world of what is.
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