Hello Joan, All,
I admit to being very a ambivalent bear. I've been repeatedly proven wrong by the market. I'd rather not discuss this history of miscalculation, more important is understanding how I miscalculated in hopes that I can improve performance.
My greatest miscalculation was how the dollar would be valued. This is due to the resilience of the US economy. I did'nt believe the earnings projections; and indeed these could not have been achieved on revenue/sales growth alone, it is the share buy-backs that have exended this cycle. Just look at RBK or DELL. However I also acknowledge that the pace of the economic expansion has been slow enough to avoid excesses of the previous expansions. So although I would like to blame my miscalcuations on Corporate deception, I have to acknowledge this mis-read of the economy.
Now we are at an even greater impass. The dollar is already expensive and hurting many international companies; now the third world countries have devalued and this increases the cost of our products.
There is a competitive devaluation occuring throughout the world. Listen to the herd and this is a single digit marginal problem at most. I disagree. This disparity has hurt companies from NKE to SEG. The dispartiy has just doubled with third world currencies, and other developed countries (Europe) will be affected. I see a lot of financial advisers referencing this to the Mexican crisis. Big difference; this is world wide. Referencing my own community, many of the grain growers are not selling at these prices. The export demand has not showed up yet. Only 25% of the USDA projected corn export demand has been filled. The bins are full and now we are filling implement sheds holding out for higher prices. I am skeptical the demand will show up. The Asians' will up the slaughter, decreasing their corn needs and increasing their bean consumption. The effect of the devaluations hits small town America. Fractional-digit marginal problem says Abbey Cohen. We'll see!
I expect that the crisis will eventually hit the dollar and all this paper stuff floating aroung (deravitives). This is total speculation on my part, but it's the way economic phenomenon spread. Didn't inflation start with oil and spread to the price of everything. Now we have deflation and look how it has spread over the few months. It will end in a panic climax. Where is the safe haven? What do your Merill advisors say? The chief economist from Bank One, Chen was on NBR last night and to his credit he now acknowledges he is no longer a new paradigm person, having seen the lack of productivity growth. He was adamant that these devaluations were not an economic problem. Seemed a little young for a chief economist, looked like he was thirty or mabe thirty two. Doubt he has memories of inflation. Sucks, I remember stocking up on everything because sure as not it wouldn't be avaible next week no matter what the price; bailing twine, barb wire, canning lids, in fact the money itself wouldn't be available for the same price next week now the inverse of that would be to sell anything as the opportunity arises and hold the cash. But is the cash really safe? There are a lot of Thais' that wish they hadn't had cash this last quarter! I'm no gold bug and don't know what I'm talking about here so best to leave this to speculation! Isn't everything?
best, art |
