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Gold/Mining/Energy : Gold Price Monitor -- Ignore unavailable to you. Want to Upgrade?

To: Rarebird who wrote (53982)	6/9/2000 10:05:00 PM
From: Helios	Read Replies (2) \| Respond to of 116804

Hey Rarebird, are you really trotting out that old argument about PE ratios in cyclical stocks. Too bad you weren't investing in the 40's and 50's, you'd have been great. Do tech's go through inventory controlled cycles? Sure in certain commodified components like memory chips, disk drives. But let me ask you, are we saturated in bandwidth on the internet, does everyone have wireless clip-on computer/cell phone that wants one, have we fully exploited the genetic code and developed all the drugs that might come from it, are people living as long and as healthily as they would like so that we are now fully saturated with medical devices that improve vision, hearing, love life etc., do we have control of the weather now, do we all have fuel-cell powered cars, has the missile defense system been put in place and is it fully operational, has the moon been fully colonized, how about mars, does everyone have a quantum computer on their desktop, how about a biocomputer? Playing inventory cycles is a suckers game for anyone not in a direct position to know what's really going on. The real problem (and advantage) for the modern tech investor is short product cycles, not something you had to worry about in 1950. Along with a technological revolution we've undergone a management revolution. Starting with the Japanese in the 60's and 70's and now with Dell computer and Wal Mart we've learned how to hold down inventories to razor thin levels. Inventory imbalances get priced into the stock market faster than most of us can blink an eye and certainly faster than a gold bugs eyes can adjust to the light when he climbs out of his vault. Thanks for your advice on diversifying but as it turns out I have been. I've mentioned deBeers before which I picked up in during the Asian crises, but I managed to buy into oil stocks when gas was just a buck a gallon (did it ever get that low in New York?). My contrary investment strategy is to buy good companies in beaten down sectors that are sure to make a comeback. The last point is important since there is really no reason to believe that this has to happen to gold. This latest downturn in the stock market was really telling. The price of gold barely budged, and (correct me if i am wrong) it's still well below what it takes to extract it. As far as the Fed is concerned well it's been tough, but so what. They're protecting the currency and that's their job. It's not at all clear to me that interest rates are going much higher now. Sure we've heard some militant voices from some of the board members but they are not out to kill the economy, just slow it down. The economy is a highly nonlinear system and the Fed is trying to apply negative feedback to help dampen the swings. They have been very successful over the last 20 years or so and while they occasionally overshoot their mark we've never had to experience more than a mild recession during this time. Could it be that with advanced models of the economy and improved data collection and analysis techniques, the Fed has a much better handle on how the economy works than they have ever had before? Nah. It seems like half the people on this thread is waiting for a 1930's style recession but that recession was a result of a confluence of many forces some of which are not in place today (not the least of which was the dependence on the gold standard). Others like to compare us now to the Japanese before the recession in the 90's. But their problems are unique to them, an aging population and a xenophobic culture that does not allow them to grow their population through immigration. The solution to their problem will also arise from their unique culture and while I can't guess what it will be I am fairly confident that they will find it. I'm not saying that we will never have any problems, but right now it's blue skys and I am going sailing.