Sunday again Jay! They come around fast.
<...very few folks actually rode on the strength of the rising indices to a position of wealth. We as investors simply are not that good, and we as speculators have so far been lucky, but only so far. >
How do I know whether I am a good investor or simply lucky? I don't believe we can know for sure, and even if we are right for what seem to be the right reasons, I think there is such an infinite array of variables that we are actually lucky [or unlucky] more times than we like to admit [because knowing we depend on luck makes the universe a cruelly indifferent place - the reality of which we prefer to ignore].
Whether smart or lucky, I did ride those indices [and since well before 1982 as well]! Now I want to repeat my performance/luck for the next 20 years. [Wealth of course being a relative term - but I'm happy enough for my simple needs].
Apart from that idle boast, KEEP YOUR COTTON PICKIN' HANDS OFFA MY GLOBAL XING. Okay, it's true that it isn't actually mine yet, but I am eyeing all those ripped to ribbons supertechwrecks and thinking that there is a LOT of money to be made and wonderful technologies to be rolled out by many of them. It is not fair if the superbears go swooping in on the bargains before I, the superbull, have gone shopping to my heart's content. You will cause the price to stabilize or rise if you buy. Not fair! You should stick with gold.
However, I have been doing my technical analysis and I suspect there is actually more to go downwards for a LOT of stocks and that necessary movement for many will drag down [to a lesser extent] those which have perfectly sound NPVs at today's prices. The good shares go down with the bad because of the portfolio effect, which is sales from distressed portfolios of good stocks, even though they are good, because the bad one which caused the drop is now so low in price that selling it can't reduce the margin enough in the person's portfolio. So, as Jon Koplik says in frustration when some company [such as JDS Uniphase] reports rotten results and QUALCOMM share price drops "Uniphase sucks, so sell QUALCOMM". There is also the sector effect where all are sold as they are considered simplistically to be in the same sector.
It's premature to find supersonic bargains, though not too soon for those sitting on US$ because US$ will drop. When the dollar drops, other assets will go up. [Slight error in logic there, but I guess you'll know what I mean = less risk with US stocks]. The best 'other assets' to own are New Paradigm companies; those making the cusp! So, best not to wait with US$.
I think you must have contaminated my wildly optimistic thinking a little bit [which is why I am here = to try to avoid blundering ignorantly into a financial disaster].
On productivity growth, there really is productivity growth. QUALCOMM invented CDMA [others invented Pentiums and stuff]. Those technologies enable billions of people to do great stuff that they never could before, freeing hordes of people from switchboards and other obsolete jobs to go and do something more productive. One company invents something which frees billions of people from drudgery! That's productivity increase although it mainly shows up on the QUALCOMM balance sheet [or whoever owns the technology at issue].
The users of the technology do get a productivity increase in the sense that they now need just a few people and not much capital to produce vast increases in efficiency and production. But because their competitors also buy the new, super-duper technology, the productivity is competed away, so profits for the new technology users don't increase. Nor revenue in many cases since lower input costs means lower prices. The end user gets all of the benefit - not normally called profit, but that's what it is, [driving a car, Pentium or CDMA phone instead of walking, using a slide rule or typewriter, or a twisted pair phone line as examples of productivity increase]. But the end user doesn't figure in productivity figures. The intermediaries compete away the efficencies [mostly].
The profits of the productivity enhancements go to the producers and owners of those productivity gains, such as QUALCOMM in the case of CDMA, but others such as Samsung who add their own expertise can also gain profits from those productivity improvements. The gain to a country comes from the freeing up of people do more useful things adding to GNP through those new activities.
Because the USA is at the hub of all this new stuff, the productivity profits are flowing to USA companies disproportionately.
Also, because globalisation is happening and prices are dropping, billions of people will benefit, so profits will go up as hordes of people buy new paradigm technologies and money flows into those USA companies.
The productivity gains are NOT science fiction. But the profits don't go to just anyone or "The Nation". They go to those who invent and produce productivity. Of course, via taxation, the USA takes a big cut of the productivity improvements around the world [they tax QUALCOMM heaps].
Meanwhile, I am very happy to see Jiang Zemin happy to humour George W and say, kindly, that he can
'do business with him' [using Maggie Thatcher's famous compliment to Gorby]. nytimes.com
<``Both sides share a positive desire for a good relationship,'' he said, dismissing as routine background noise the voices in the Bush administration calling for mobilizing against a ``China threat.''
``We should try our best to find the common ground between us,'' he said, almost rising from his chair.
Mr. Jiang met Wednesday with the publisher of The Times, Arthur Sulzberger Jr., senior editors, a columnist and China-based correspondents of The Times for an interview that was initially suggested by Chinese diplomats. Mr. Jiang's chief goal appeared to be to emphasize China's desire for smoother relations as the new American presidency takes shape and as China looks toward playing host to the Summer Olympics in Beijing in 2008 and braces for major transitions in political leadership and the economy.
The 85-minute interview took place in a formal meeting hall lined with red armchairs in a large gardened compound for senior leaders in the fading resort town of Beidaihe. Mr. Jiang, who is 75, appeared cheerful and confident as he defended China's domestic and foreign policies, sometimes waving his arms and citing proverbs.
While his message was one of friendship, he gave no ground on areas of difference with the United States, including Taiwan, Tibet or human rights. Rather, he often suggested that the problem was that foreigners did not understand China's goals and why it must adapt Communist rule to a changing society rather than scrap it altogether, as many in the West might prefer.
``I lived for three-fourths of the last century,'' he said when asked about the prospect of a major political loosening, ``and I can tell you with certainty: should China apply the parliamentary democracy of the Western world, the only result will be that 1.2 billion Chinese people will not have enough food to eat. The result will be great chaos, and should that happen, it will not be conducive to world peace and stability.''>
I am inclined to agree with Jiang on that! The western zealotry for mob rule [democracy] and religious ferver gives me the creeps. "Softly softly catchee monkey" is my favourite slogan [apart from "Don't let a slogan do your thinking for you"]. Flipping China to democracy as might have happened in 1989 [as happened in USSR] would NOT have been a good thing. I prefer a benevolent dictator to a malevolent mob. Democracy does NOT mean freedom [as the most casual observer in NZ would notice].
Mqurice |
