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

To: Wyätt Gwyön who wrote (6641)	8/4/2001 10:51:45 AM
From: TobagoJack	Respond to of 74559

Hi Mucho Maas, so, call me foolish, is it bottom yet so that we can buy:0) Chugs, Jay

To: Wyätt Gwyön who wrote (6641)	8/4/2001 11:12:42 AM
From: KyrosL	Respond to of 74559

Interesting article, though I can detect some inconsistencies. He considers a 26 p/e for the S&P 500 bubble territory (and I agree), yet he buys Microsoft (p/e 48+) and Intel (p/e 41) for his funds. I guess it's not easy trying to invest $22 billion.

To: Wyätt Gwyön who wrote (6641)	8/4/2001 11:34:46 AM
From: Ilaine	Read Replies (3) \| Respond to of 74559

Good article - nice to see someone stating the [to me, obvious truth] about the stealth bull market in value stocks. His take on productivity is spot-on: >>Say you come out with a seed corn that is twice as productive -- that is, for every dollar of seed it will grow twice as much corn in an acre. Give it to everybody at the same price as the old seed. Productivity will double. But what will happen to the price of corn and what will happen to the profits of the farmers in the following year? I think it is fairly obvious to everybody that they will be drowning in red ink and there will be corn coming out of every silo. Productivity does not necessarily equate with profit. However, let us give it only to a farmer in Illinois. What will happen to his profits? They will go through the roof. He will grow twice as much corn per cost as everyone else and he will get rich and famous. Productivity gains are fine if there is a monopoly. If productivity is shared by everybody it flows right through to the consumer. . . . . Productivity can ruin you, which is what is happening.<< I keep banging heads with people who say that productivity is a myth because GDP isn't going up. I think he also makes an excellent point that when the US dollar finally drops, the exchange rate switch will give a boost to investments in other countries - but if the US economy cools down, which countries won't slow down in unison?

To: Wyätt Gwyön who wrote (6641)	8/4/2001 10:29:52 PM
From: Mark Adams	Respond to of 74559

I liked his comment on timber, though it is a bit simplified. In a mature forest, growth slows to as low as 2-3%, so return will suffer if sales are postponed indefinitely. Also, timber can be destroyed by fire or storm, so postponing sales during times of poor pricing entails risk. Finally, timber is subject to intense competition from global players (Canada and New Zealand, for example) so it's important to manage entry and exits properly. [edit: I won't bother mentioning the potential for hemp to displace the pulp production ] The comment on timber from the article; There are also hedge funds, and my favorite asset class, timber. Q: Isn't that a somewhat controversial investment? A: Timber is the only low-risk, high-return asset class in existence. People are not familiar with it. What they are not familiar with they avoid. But timber is the only commodity that has had a steadily rising price for 200 years, 100 years, 50 years, 10 years. And a unit of wood, just the price of a piece of wood -- in real terms -- beat the S&P over most of the 20th Century, from 1910 to 2000. The price of a piece of wood actually outgrew the price of a share of the S&P, which is an unfair context, because there is some growth embedded in the share of the S&P and there is no growth embedded in a single cubic foot of wood. The yield from timber averaged about 6.5%. The yield from the S&P averaged 4.5% The current yield on the S&P is 1.25% and the current yield on timber is 6.5%. In each of the three great past bear markets that I've referred to -- 1929-'45 and 1965-'82, and a third one that's off everyone's radar screen, which is post-World War I, 1917-'25 -- the price of timber went up. It is the only reliably negatively correlated asset class when you really need it to be. One reason for that is you can withhold the forest. If you find the price of lumber is no good, you don't cut. Not only is there no cost of storage, the tree continues to grow and it gets more valuable. That is a very, very nice virtue.