Date: Tue May 24 2005 12:39
trotsky (@interesting non-gold stock) ID#248269:
Copyright © 2002 trotsky/Kitco Inc. All rights reserved
an interesting stock imo: CSTL
trailing p/e of less than 6, no debt, about $1.50 per share in cash, only 3.85 million shares outstanding, and it trades at $3.
only drawback, it's in a mundane business ( fax servers ) and relatively illiquid.
but it sure looks interesting from both a fundamental as well as a technical standpoint ( the low float is of course also a major plus... and the stock's been going sideways for a long time - the spikes on the chart every 3 months coincide with the earnings releases ) .
dyodd, as always.
Date: Tue May 24 2005 12:15
trotsky (P. Yorkie) ID#248269:
Copyright © 2002 trotsky/Kitco Inc. All rights reserved
a few comments:
"Now, ... utility stocks, for instance, share many of the characteristics of long term bonds. I think we are both guilty of over generalisation. It depends upon which stocks and which bonds."
well, this is true, there are always some stocks or sectors that are rising even in bear markets, but i would suggest that over the long term utilities are also correlating quite well with the broader market. the major difference is that you tend to get more by way of dividends, which softens the blow in long term bear markets.
"If that relationship between stock prices and trade deficit exists as you say, I would be inclined to postulate that interest rates were being driven down by the excessive influx of foreign savings when trade deficits got wider and that effected stock prices through interest rates rather than asigning "mood" as the explanation."
i don't think so. if that were true, why did growing trade deficits not drive interest rates down in the 1970's? imo Prechter is one of the few analysts who have a handle on the cause-effect vector in financial markets. the socionomic theory that ascribes market trend to changes in the social mood is far more believable than any of the more 'rational' sounding explanations that point to earnings or economic growth, or interest rates or whatever as 'causes'. history bears this out. e.g. both economic and earnings growth in the aggregate were far higher in the 1970's than in the 1990's, and yet, stocks went nowhere in the 70's and went up in the 90's.
now, interest rates rose throughout the 70's. the explanations ranged from 'sharply growing budget deficits' to 'sharply growing money supply'. but both the deficits and the money supply grew at far faster rates from 1990-2005 - and yet, interest rates went down.
an even better example of the social mood in action is the internet stocks boom of the late 90's. i think everybody agrees that it was neither 'ernings' nor 'valuable assets' ( in a zero-barriers-to-entry industry, the very concept makes no sense ) that drove these stocks higher. so it must have been something else. some will say 'easy money' from the Fed. but even THAT depends on the social mood, because the very act of borrowing money into existence in the fiat system requires ebullient borrowers and unconcerned lenders - in short, a positive social mood context is the sine qua non.
" The bursting of this housing bubble you fret about is probably only going to come if/when interest rates take off."
i disagree - i now, that is what everybody says, but it's simply not true. investors in Japanese real estate got trapped by this very 'hook'. they also thought in the early 90's that real estate prices couldn't possibly come down, as interest rates kept falling. the US housing bubble has become a 'monster' as far as such bubbles are concerned. it will eventually crumble under its own weight, regardless of further rate declines. this is inter alia because the affordability of housing has hit at an all time low due to soaring prices. even the servicing of mortage debt has become onerous for new borrowers, not because of interest rates, but because of the sheer size of the mortgages required to purchase the median home in the bubble regions ( basically all the major cities ) . at the same time, 34% of last year's demand was e.g. for either speculation purposes or 'vacation homes', i.e. not even houses anyone's planning to live in. the amount of speculation and turnover exceeds anything seen in history to this point by a wide margin. but the speculators have probably made a miscalculation, as their excess demand will bring on a huge amount of fresh supply. e.g. the condo developments in Miami that are in the works right now are 8 times the number of condos built over the entire preceding decade.
i've little doubt that housing developments in other parts of bubble nation are driven forward at a similarly furious pace - it's obvious from the balance sheets of the home builders.
this surge in supply can't be absorbed without trouble unless speculative demand increases even further. in other words, the entire bubble now depends on the greater fool theory. i don't think iow that higher interest rates will pop it. it will pop as a result of normal bubble-dynamics, i.e. its inherent contradictions. the trigger will likely be a worsening in the social mood.
Date: Tue May 24 2005 11:45
trotsky (dan) ID#248269:
Copyright © 2002 trotsky/Kitco Inc. All rights reserved
well, i disagree...i don't think one can blame losses in futures trading on anyone but the trader, unless there truly are force majeure type circumstances that have produced the loss.
anyway, i sense from your occasional reference to such losses that bitterness over the experience informs the extreme bleakness of your outlook.
regarding the stock market, no question that there are a lot of scams out there , but that doesn't mean that there are no stocks worth investing in. anyone who bought Berkshire, or Microsoft, or WalMart, etc.etc. 15 years ago would laugh you out of the room.
Date: Tue May 24 2005 11:22
trotsky (Wiffo) ID#248269:
Copyright © 2002 trotsky/Kitco Inc. All rights reserved
point about the 'dimming' comment:
they're telling us dimming is bad, and at the same time they're telling us that doing something to reduce it would be even worse. if that's true, and we're in a 'no win' scenario no matter what we do, i suggest we carry on as always. when things can't get any worse, they can only get better.
and yes, the so-called 'anthropocentric' global warming theory remains contentious, unproven, and sounds exactly like the other countless hobgoblins we've been treated to over the centuries ( beginning with Malthus ) .
i still remember the 'big threat' that needed to be 'immediately addressed if we're to avoid a catstrophe' in the 1970's was 'global cooling'.
well, it seems to have been addressed. presumably by mother nature.
Date: Tue May 24 2005 11:14
trotsky (dan, 10:43) ID#248269:
Copyright © 2002 trotsky/Kitco Inc. All rights reserved
well, the fiat money system is basically fraudulent, i'll give you that. but the allegation that changes in Dow components were 'never reflected in the divisor' is nonsense. the divisor has been recalculated every time components have changed or stock splits have been effected.
from the rest of what you said i conclude that you lost some money trading futures and now blame everyone but yourself...right?
Date: Tue May 24 2005 11:02
trotsky (Bizarro, 10:23) ID#248269:
Copyright © 2002 trotsky/Kitco Inc. All rights reserved
Syria has always been higher up on the list of potential targets due to 'doability'. compared to Iran it's a pushover militarily, so that makes attacking it comparatively 'safe'.
another failed state in waiting?
Date: Tue May 24 2005 10:50
trotsky (P.Yorkie@ trade deficit & stocks) ID#248269:
Copyright © 2002 trotsky/Kitco Inc. All rights reserved
"After five years of the stock market staying more or less stationary while the bond market goes from strength to strength one has to start looking for reasons to be not bullish on stocks rather than simply assuming its a bearish outlook .. sorry folks ... Maybe the trade deficit starting to look better would be a catalyst."
this assessment couldn't be fuller of holes if you tried i fear.
first of all, the major reason for the bond market's inordinate strength is the scary economic outlook ( the bond market 'knows' that the housing bubble is bound to burst and fears the deflationary spiral this will engender, since over 60% of bank assets are tied to real estate these days ) .
secondly, regarding the trade deficit, if one overlays a chart of the SnP 500 with one of the trade deficit, what immediately become obvious that they have almost perfect long term correlation - i.e. an expanding trade deficit goes hand in hand with a rising stock market, and stock bear markets invariably coincide with a shrinking trade deficit. so the trade deficit could indeed become a 'catalyst' - just not in the way you imagine.
it's actually perfectly logical...rising stock prices are an expression of a positive 'social mood' to use Prechter's term, and so is a rising trade deficit, since it denotes the willingness and ability to spend ( obviously, when the social mood is grim, less money will be spent, and the trade deficit will decline. so will the stock market ) .
Date: Tue May 24 2005 10:41
trotsky (dan) ID#248269:
Copyright © 2002 trotsky/Kitco Inc. All rights reserved
you really are a hoot man...ROFLOL!
"Pregnancies are a greater threat to public safety than handguns.."
they're gonna throw babies at us! 'sides, all those pregnant wimmin are an ungainly sight...
Date: Tue May 24 2005 10:34
trotsky (dan) ID#248269:
Copyright © 2002 trotsky/Kitco Inc. All rights reserved
"So why aren't more people denouncing shares as investment fraud worst than overpaying on numismatics?"
maybe cos they don't agree with you? think that's in the realm of the possible? from July 1932 to January 2000 , the Dow Industrials had a nominal price increase of 36,562% - it's a lot less adjusted for inflation, but you know how impressionable people are. they might have come away with the idea that stocks are a worthwhile asset class.
|
