To All, Barron's Review. After several lousy issues in a row, Barron's hits a homerun this week.
1. Abelson is really on top of his game. He mentions that T bonds were down 14.4% last year, and that, folks, is total return, which counts the interest. This is only the second time The Lehman Govt./Corporate index has been down since it started in 1973. The other time was 1994, and 1999 was worse. It was, supposedly, also the worst performance ever for the Treasury. I say supposedly, because he is talking nominal dollars. The principal was down more in some big inflation years, but the high payout made up for some of the nominal loss. However, if you've also lost 10-15% of your spending power, that, too, goes into the equation. So, while I agree that 1999 was no walk in the park for bond holders, I don't agree that it was the worst year ever.
Abelson shows a devastating chart of the Nasdaq's PE ratio that calls the bubble better than words possibly can. From under 20 times eps in 1990, we probably hit 200 times at the end of December. Yes, the eps grew, a little bit, over those ten years, but the bulk in performance was pe ratio expansion as ever-dumber investors jumped into the parade of retards. To put it in perspective, the Nasdaq pe JUMPED by 30 points in December, while the ENTIRE ratio was 20 times for 1990. Abelson says that investors should be happy to discount 200 years of current eps and that the chart drawer better get ready for 1000 times. <g> I think that if we are discounting 200 years of current eps, we'd better take our anti-oxidants, do our aerobics, and plan to live another 70 years, minimum, to see these prices reach fair value.
Jim Grant is quoted as saying that the Fed's balance sheet expanded 17.7% over last year, providing the fodder for the retards on parade. This is what I mean by saying that Greenspan's rate cuts have been phony. He pretends to be threatening to take away the punch bowl while giving crack away for free under the table. Nary a designated driver in sight. <g> Grant expects gonzo tightening of this credit excess in 2000. I don't know. That would mean AG acting like a banker and not like a drug pusher. Possible, but, IMHO, not the way to bet.
2. Great chart on Sony, which I owned for most of the past two years. I am willing to brag bigtime about this one. Please, no comments about Nissan, which I also held. <g>
3. The Dogs of the Dow are shown to live up to their name. The scam artists who came up with this one are remaining in their bomb shelters if they have any sense whatsoever.
4. A polling of Wall Street charlatans, er, strategists. The really bearish couple think the Dow may see 10,000. Whoa, the optimism is amazing.
5. A guy who supposedly called the bottom in 1974 is calling this a top right now. His schtick is human psychology, which is also one of my main props. He says the final mania started Nov. 1 and a top this month.
6. Great Market Watch this week. Lowry looks at Selling Pressure to claim that the supply of stocks is MUCH greater than demand. Michael Berger talks about internet retailers can lose money because idiots buy their stocks anyway, so that puts huge pressure on the brick and mortar guys. Duh! <g> Will Lyon, from Short on Value, one of my favorite pubs I forgot to mention in a previous notes, calls for the death of internut advertising as most e-tailers go belly up. Rabbitt calls for a huge bond rally due to extreme pessimism. Gee, why would there be pessimism with a run and gun Fed in charge of the money supply? Peter Eliades drops the TA crapola just to show how, logically, this is a bubble, whether it declines in price or not. His main point is one somebody made much earlier on this thread. If both Microsoft and the Linux Huckster stocks are zooming up, that is a bubble. One can only win if the other loses.
And, my favorite, Chris Johnson, claims that the pessimism in markets is in some cases, at unparalled levels. Chris, uh, you talking about some stock on another planet or what? <g>
7. Bill Dudley of Goldman made a telling point to the Fed: if this is a New Era, tightening won't bother it. If it is not a new era, then they'd better damned well get a tightening going. <g>
8. Bad breadth from Lauren Rublin: 61% of NYSE stocks were down during 1999. 54% of the S&P 500. 49% of the Nasdaq, the only winning avg. 56% of the Russell. |
