Yes Dougjn, I see the internal inconsistency. The inconsistency arises because people are panicking over not very much at all as far as I can tell. Including Alan Green$pan, Rubin and egged on by Clinton who is keen for everyone to forget about impeachment so the allegedly terrible financial predicament can be normalized by his leadership. They seem worried that some sort of unnecessary self- fulfilling prophecy of collapse might occur. I don't think they believe there really is a serious economic problem, despite the precipice comment. So I'm commenting on the panic and dismay people are feeling, but I don't think things are so bad, hence the inconsistency.
The market is down 20% from the all time high, which is a normal night terrors decline. This is inconsistent with real panic which would see a much steeper decline. Again, internal inconsistency I agree. I think that's because there really is not that much wrong. People are wanting to panic, but the true value of stocks really isn't that low. Compare interest rates and returns on stocks. Especially interest rates and stock returns next year and onward. Interest rates are rotten and shrinking fast. That is good for stockmarket returns. In the absence of a recession or depression [whatever the difference is].
I can't see any serious reason for a USA stock market crash. Sure, some change in spending away from international travel to cellphones. Also, savings might increase as people worry, which means lower interest rates and less shopping.
P:E of 20 is reasonable when interest rates are around 3% or so. While such low interest rates are novel for most people, they are historically normal enough. If people have a choice of cash at 3% or shares at 5%, why choose interest. Because of deflation is the answer I suppose. But Alan is almost certain to push the print button given the demands, which will put paid to deflation.
I realize this is just a collage of ideas, rather than rigorous logic. But I hope it gets the idea across. The idea being; people are frightened of their own shadow, things are good and getting better every day, ups and downs are normal, deflation won't happen due to printing by the Fed, interest rates are so low that stocks are a good buy, cdmaOne is going gangbusters despite China getting a bit nervous about 3G CDMA and simultaneously negotiating a better deal for infrastructure by threatening to go with GSM.
A bunch of accountants, banks and Asian property developers have done their dough. Bad luck for them. No great worry for the rest of us. Japan is handling their stuff just right - let the bankers hang out to dry.
Something like that anyway.
Looking forwards to Qualcomm's end of financial year results!
Mqurice |
