The Residential Real Estate Post-Crash Index-Moderated Message Board

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Strategies & Market Trends : The Residential Real Estate Post-Crash Index-Moderated

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To: yard_man who wrote (38463)	9/4/2011 6:09:30 PM
From: yard_man	3 Recommendations Read Replies (2) of 119360

Posting to oneself smacks of egoism, I s'pose, but some things have struck me as funny. I visited with an old friend this weekend. He was supposed to be working on the place he bought and I was picking up a boat I bought from another friend, so we sat under the tree in a chair and had a few beers. I asked about how he was positioned -- how much cash / stocks etc. Two years from retirement, still heavily invested in stocks -- but more conservative -- dividend paying stocks. I asked obliquely why he thought stocks were still a good place to be. I love him. We have fun. But all he could come up with was an absolute faith in QE3 -- "it's just a few weeks away. Why worry? You KNOW he is going to print like mad." Oh -- one other thing he said "Corporations have a lot of cash." Nevermind putting those two things together: I asked him if they were hiring or what their prospects were for increased profitability going forward. Stocks used to be valued using discounted cash flows -- anyone remember that?? That was a non-issue. I didn't say much after that, except to express my near term pessimism for the indices -- then talked turned to other things. I suppose that for many it is hard to connect two dots: gross monetary inflation on the one hand and longer run effects on corporate profitability. Correct, me if I am wrong, but Austrian economic theory does allow that initially there can be an apparent increase in profitability due to printing when there has been a severe economic contraction -- but there is a point of diminishing returns. I've seen subsequent posts talk about long term dollar bull / deflationists ... what can I say, the Celente video nailed it: Devaluations are competitive. The result of all of this will be a decline in real economic activity. For periods of time some currencies will be more valuable than others in relative terms. Which ones?? As of late the swissie has been great. What's next?? Gold, gold, gold -- everything's about gold?? I'm not saying: don't own some. Do. Just think for a minute: QE can't be done forever. Why?? Because it doesn't even make banksters rich after a while. Just think about it.

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