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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: Tommaso who wrote (2359)	3/12/2001 8:00:09 PM
From: Gofer	Respond to of 74559

A snip from today's Fleckenstein column in Grant's Investor: I might point out that the way you'll be able to tell if folks have a clue about what is actually happening right now is whether or not they own semiconductor stocks. Anyone buying semiconductor stocks in this environment embodies a tripartite deficiency: they don't understand the semiconductor business, they don't understand the stock market and they don't understand the economy. From James Grant's article "Bank on Experience": Thus, on September 30, all FDIC-insured banks showed equity capital of $521 billion, which supported $6.1 trillion in assets including $3.8 trillion in loans and leases. However, things are not so simple as that. To start with, the subtraction of $105 billion of goodwill and other intangibles leaves tangible equity of $417 billion. Even that might seem more than enough, Medlin proceeds, until one makes allowances for such contingencies as $4.3 trillion in unused loan commitments and $38.8 trillion in notional value of off-balance-sheet derivatives exposure. One can sign up for a 30 day free trial at: grantsinvestor.com From Warren Buffet's letter to shareholders: I will detail our purchases in the next section of the report. But I will tell you now that we have embraced the 21st century by entering such cutting-edge industries as brick, carpet, insulation and paint. Try to control your excitement. ... Now, speculation - in which the focus is not on what an asset will produce but rather on what the next fellow will pay for it - is neither illegal, immoral nor un-American. But it is not a game in which Charlie and I wish to play. We bring nothing to the party, so why should we expect to take anything home? The line separating investment and speculation, which is never bright and clear, becomes blurred still further when most market participants have recently enjoyed triumphs. Nothing sedates rationality like large doses of effortless money. After a heady experience of that kind, normally sensible people drift into behavior akin to that of Cinderella at the ball. They know that overstaying the festivities - that is, continuing to speculate in companies that have gigantic valuations relative to the cash they are likely to generate in the future - will eventually bring on pumpkins and mice. But they nevertheless hate to miss a single minute of what is one helluva party. Therefore, the giddy participants all plan to leave just seconds before midnight. There's a problem, though: They are dancing in a room in which the clocks have no hands. Berkshire's 2000 annual report berkshirehathaway.com