To: Earlie who wrote (44494 ) 7/16/2001 4:39:44 PM From: Seeker of Truth Read Replies (2) | Respond to Earlie, I'm aware that your motives in posting are altruistic and I thank you for that. I think your point of view, that the declined economy has not fully reflected itself in reduced stock prices, deserves much respect and this makes me doubly cautious in any purchase in the near term. I have just one doubt. You speak of the manic increase of the money supply by the Fed. I would call it manic if it produced inflation, but that's not too visible. Here in Toronto, we don't live under the Fed, but the influence is certainly there. There is a big construction boom underway, particularly in residential buildings. Nonetheless prices of real estate are only about 4% higher than last year, a rarely observed phenomenon. The boom is in volume, not in prices. In the U.S. there is also no marked inflation. Whatever the Fed is doing can't be that harmful. I remember once I lived in a poor country and prices tripled over one weekend. Now that was really printing money! I think it's folly to sell a stock now if it suits ones valuation measures as reasonably priced. Things ALWAYS look most scary at the bottom if you are simply observing deteriorating economic phenomena. Since experienced evaluators such as you and Mr. Shannon prophecy further much worse disaster, we have to make sure our valuation algorithm is sensible. (By the way, Warren Buffett counsels against short selling. He wants to hold stocks with a franchise, a moat around them, as long as that is still true AND as long as they are not wildly overpriced. He views that as highly superior to the return from short selling. We shouldn't neglect his experience.)
