My world through "Rose" Blocker Glasses,
The more I analyze your post to back into your thinking process, it's clear as to what is going on. You are an extremely astute market watcher, a forward thinking approach regarding immediate trends, I tend to always be out 4-6 months until I have a clear undestanding of the trend, then I engage. I saw October-December "Down Trend" in March of 00. You saw what I couldn't see in December as to direction for January 01. Our perspectives suit each of us well. I can sit in a "Tree Stand" for months waiting for an opportunity, I don't have to be in the market everyday!
When I was a kid, we lived in a poor area in Baltimore, called Essex. The families were blue collar families, most all the fathers worked at Bethlehem Steel. This manufacturing/fabrication mentality is what I grew up with.
At the age of 11 or 12 Texas Instrument invented the hand held calculator; the first time I saw it I had to get one. So for 3 months I saved everything I made, walked to the Montgomery Wards store, pluncked down my 49.99 and I had that calculator! with all it's fancy functions; add,subtract,multiply,divide! -ggg- This was my first exposure to Technology!
When I started investing I tried my hand at what I Knew. I bought BethSteel! what a slow moving unexciting stock! I think I bought it at 21, and sold about 3 years later at 24! But at least I was LONG! -ggg- But what I learned was Patience. During the time I held BethSteel It was higher that I bought it, and lower at times. I then started to analyse what was making it move in a certain direction, and my findings that still serve me well today are that stimlus/detractors all had a latency period, that finally did something to the stock.
As to the current point. Greenspans Rate Cut, strip out the pop the day of the cut - Over reaction. Look at how the markets settled lower, and ask why he did that? The answer is that he is forward thinking, at least 4-6 months, having information that is not clear at the market level yet. Then the reasons for the Cut start trickeling into the media. A report that was dismissed by markets yesterday was the "FED Philly" index down to it's lowest level since 1990,the future forcast of that index was also down 4.2% and the lowest reading of that goes back to September 1990; we were in a RECESSION during that time! Greenspan was fully aware of this alarming development, and I'm sure others, thustly the drastic 1/2 point cut. By the way, regardless of the level of the markets, a 1/2% cut is now guaranteed, because of the drastic manufacturing slowdown, and whatever else he is aware of.
So I guess what I'm saying is that it appears Greenspan is acting in a "proactive" posture as opposed to "Reactive". The latter, basing Fed Policy on "Leading Indicators".. which in my opinion are trailing indicators, because the horse is out of the barn at the time they are released, and the stimilus for direction takes 4-6 months to catch up. This posture has never really been tested, as I don't beleive enough data is available to model it.
For example that 1/2 point cut, because of slowing manufacturing, mounting inventories, reduced consumer spending, widening trade gap, current account ect. Is a model inplace that takes into consideration JIT? Inventory management is state of the art now. Take a look at AAPL, they managed to wipe out 60% of a staggering pile of computers because of JIT. Allows managers to see the slowdown comming relatively fast. So their inventory is pretty much under control, but you've got this 1/2 point cut in the pipe line, impacting in May, and another 1/2 point comming that will impact June. So this stimulus will have an effect, but at the new rapid pace with which companies can manage inventory, mismatched with lagging Fed Policy Actions there is a 3 month gap for extreme "Wipsaw". So when the interest rate cuts impact, along with a possible tax cut, and inventories are very thin, there is your "Inflation Equation" So I beleive as the "Bear Trap" was set the next phase will be the "Inventory Trap" as the manufacturing will continue, long after the buyers go home!
I beleive that the numbers that are being reported have not been impacted yet by the slowdown. Jan-March will be the clear evidence. Gerstner jr. of IBM is no non-sense when he says what earnings will be like, you can bet the farm that he'll hit the mark. So when IBM didn't warn, that was a clear signal that the BULLS would be off to the races again! But IBM won't show signs of the slowdown until April 01, because of the nature of their business. The market dosen't even view them as a tech company, look at P/E about 22 IBM is projecting 8% growth 01 , Analyst say 12% hardly a "Tech" stock profile, but they certainly fit the historic profile 8% growth 12-19 P/E we discussed awhile back.
I beleive that the companies reporting ok earnings have not been caught up to yet! The ones that have rapid inventory turnover, and only a few products, got nailed first. This next quarter will catch a lot of people off guard, as the CEO's that skated by earnings season, could "Talk the Walk" although presenting the visions to shareholders, through "The Rose Colored Glasses".....
The Markets didn't go straight up, and they aren't comming straight down, I beleive this 3028 Compx will show direction until April earnings. The rate cut at FOMC will place it there, we just have to see hao it reacts, if complacency continues to run rampant then 32-3500 is obtainable. I won't wavier in my "trend is down" stance but I have unbeleivable patience. I won't be long at any time, if we must go to 3500Compx, as the Downdrafts are so much more enjoyable! -ggg-
Best to you Ike, and I sincerely appreciated your response, In all seriousness I respect your wisdom and Intelligence, and you ability to put a bull spin on whatever I'm rambling about. -ggg- That's why I'm here, I know that I'm viewed as a radical here, but that's ok, as it seems senseless to be on a thread where everybody would agree with me. I don't think anybody agrees with me here, and It sharpens my limited skills
Thanks
John |
