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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Freedom Fighter who wrote (70977)	11/24/1999 9:57:00 AM
From: Cynic 2005	Read Replies (4) \| Respond to of 132070

I got on soapbox this morning: #reply-12081375 ---------------------- <<Reddy, You may be willing to believe the Wall Street and Clinton administration spin on productivity. I don't. Yes productivity improved due to widespread usage of computers in a lot of areas. In my line of business (consulting) it is hard to get those improvements to the bottom-line. Our clients "expect" the productivity gains to be passed on to them. In product oriented markets, the end users 'expect' lower prices as a result of increased competition and the vastly claimed 'productivity gains.' If we don't do it, our competition will. I know new era believers won't believe until the asset prices really hit the wall. The "productivity miracle" touted by Wall Street is simply baloney (or vankai - if you prefer Telugu term -g-) If you are willing to open your eyes and see things for yourself, here is some proof: This morning 3rd Quarter GDP growth was revised upwards to 5.5%. The profit growth of US corporations in the same period (year over year) is 3%. (http://biz.yahoo.com/rf/991124/lf.html) This is with all the accounting tricks, stock buy backs, selling naked puts etc. etc. For example - as in new today - IBM got caught today with funny accounting. Not that it is any news to me but it is news to many new era "investors" who believe in the Wall Street BS like "productivity", information age". Don't forget that 3Q 1998 was really a bad quarter for profits. Now tell me how much NasDUNG grew in the same period? Now, here is the real question - if 5.5% growth yields a whopping 3% growth in corporate profits, the bear that I am, I can't wait to see how well the "information age" companies' bottom lines look in a recession. Speaking of the productivity improvement in top of the economy, i.e. financial sector, is just a waste of capital. In terms of long term value, it hardly matters to the real economy if gazillion day traders have up to the sec access to information from 200 different sources. IN the short run yes. ciscos, Suns of the world will benefit from the expansion drive by e-brokers and e-tailers. But in the long run, only a handful of these 100s of companies will survive and that is when the new era "investors" really understand the phrase "stable and sustainable growth." BTW, I was once in a camp like yours. I consider myself to have graduated to next level. Honestly, I wish I waited at least 18 months before I graduated, though! -g- In this market, I consider that ignorance is a bliss - at least until this moment. >>

To: Freedom Fighter who wrote (70977)	11/24/1999 11:07:00 AM
From: Don Lloyd	Read Replies (2) \| Respond to of 132070

Wayne - I think that the key in discussing productivity is the decision to distinguish the effect on individual companies and the effect on the market and the economy as a whole. If an individual company can invest both capital and human creativity towards the improvement of various factor unit productivities, then it will be able to either produce more output with the same resources, or the same output with less resources, but the extent to which that will translate to higher profits depends on both consumer demand schedules and on how well its competitors, both real and potential, are able to do the same. The success of fundamental-based investment depends on being able to separate the winners from the losers in advance. On the other hand, the effect on the overall economy and the market is much different. First of all, it IS true that improving unit productivity is positive for the overall economy, but, to the extent that the benefits are limited to lower prices to the consumer, profits will NOT improve and stock prices will NOT rise, absent market multiple expansion. I think that productivity enhancements need to be broken down into two groups, as their effects are far different. One type is the result of existing, dominant, companies investing large amounts of financial capital to add to an existing large physical capital base to continuously lower costs and defend their dominant product market position. This WILL improve profits over time and CAN support stock price appreciation. The capital invested in this type of program is that which is seeking moderate returns at low to moderate risk. At any point in time, the companies in this category are the ones which primarily determine market benchmark returns. The second type of productivity enhancement is that due to sharp technological advances and breakthroughs. The financial capital invested in these ventures is seeking extraordinary returns at high risk. The successes of this type will exhibit massive appreciation, but will initially have little positive effect on market benchmarks. In fact, the market benchmark effect may well be negative as the economic value of the physical capital bases for the existing dominant companies is destroyed as new processes and products come into being. Even if it is the dominant companies that deploy the new technology themselves, the existing physical capital will still be destroyed and profits will be only maintained, at best. Regards, Don

To: Freedom Fighter who wrote (70977)	11/25/1999 6:25:00 PM
From: re3	Read Replies (2) \| Respond to of 132070

looks like this poster knows that Warren B agrees with ME about new technology usurping old technology...<g> What Buffett means is: "I understand tech..... I understand that ANYONE could come along with a new patented technology and cause a mega cap CSCO to implode. I understand that new technology comes along every day which obsoletes existing technology." boards.fool.com and from the mootley fool... Just to remind some of the boo-birds, here are some technology stocks you could have invested in over the past 20 years or so . . . Osborne Computer Eagle Computer Visicorp Control Data Comdisco Kendall Square Computing Cray Miniscribe MediaVision WordPerfect Borland AST Packard-Bell Ashton-Tate Masscomp GCA Itel 3DO General Magic DEC Data General funny i think mike burke has mentioned many of these too... wonder how many of todays darlings will be on the list for 2009 ? or earlier ho ho ho