Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Strictly: Drilling II -- Ignore unavailable to you. Want to Upgrade?

To: isopatch who wrote (4113)	11/16/2001 11:45:24 PM
From: SliderOnTheBlack	Read Replies (3) \| Respond to of 36161

Food for thought... From Doug Noland & Prudent Bear: It was an ugly week all around with simply stunning volatility, in what has all appearances of a bursting of a speculative Bubble. The most ominous aspect of this week’s turn of events was reading numerous references to a "lack of liquidity." How quickly liquidity can vanish in such a distorted marketplace… In the past, we have noted how, individually, higher interest rates, wider spreads or a declining dollar are not overly burdensome for U.S. financial markets. In combination, however, rising yields, widening spreads and a sinking dollar can prove immediately problematic. After this week’s significant jump in yields - with the general dislocation and resulting losses for the "leveraged speculating community" - the performance of the dollar takes on added importance. It is also worth watching agency spreads closely, with the presumption that this market has been a focal point for leveraged speculation. At the minimum, the sharp reversal in rates and extreme volatility are just more things the derivatives players have to worry about. *(...DERIVATIVES... remember that word; when, not if... tic- toc')* We have often contemplated the ramifications for the day when this protracted period of declining interest rates would have finally run its course. It is, after all, our contention that without the extraordinary monetary expansion resulting from the mortgage lending boom and related speculative "hot money" flows, the U.S. Credit Bubble would be left to face dire straits. * (that day has arrived & right he is - about how mortgate rates & refinancing have bolstered consumer sentiment and spending)* I am intrigued by Chairman Greenspan’s response this week to the question, "Do you feel with the country in its current economic state that interest rate reductions are still a feasible method of boosting the economy?" Greenspan: "If I answered that in a way which you think you understand what I said, I made a mistake (laughs and more laughs from the crowd). Remember, the purpose of monetary policy is to address the structure of financial markets - that’s what we do. And the fairly dramatic decline that the Federal Open Market Committee has initiated since the beginning of this year has very clearly had marked impacts within the financial structure. We have, for example, seen a major reliquefication of corporate balance sheets; there’s been a huge increase in longer-term corporate debt repaying short-term liabilities which has essentially moved American business into a far better position to move forward once the uncertainties which I alluded to earlier start to come down. So the notion that people have that monetary policy changes one little notch and the economy goes up clearly has never been the case and indeed is not the case today. But all evidence that we can adduce does suggest that monetary policy is about as effective as it’s always been given the changing economic structure which is reflected in very complex, changing models which we employ for evaluating monetary policy. I may have missed something along the way, but I don’t remember when the "purpose" of monetary policy became addressing "the structure of financial markets." What a "slippery slope" the Greenspan Fed has slid, with interminable interventions and manipulations fabricating today’s distressingly grotesque "free market" financial system. *( AMEN ! ... this is the most propped up, dike plugged, intervened upon and manipulated - UN-FREE market in history)* As I write this piece, I am struck by the parallels between year-2000’s first quarter technology speculative blow-off and current wild excesses throughout the consumer mortgage finance area (at both the household and financial market level). While the technology Bubble had been expanding for years, the frantic period of "terminal" speculative excess actually came to pass concurrent with an abrupt deterioration in underlying business conditions. Today, the widening divergence between the degree of household credit excess and underlying consumer fundamentals is uncomfortably reminiscent of the severe dislocation of security prices from underlying technology fundamentals that preceded the bursting of the NASDAQ Bubble. We will not predict that the end is at hand, but it does appear quite close, especially after this week’s surge in market rates. The signal is how outrageous it’s all become and, at the same time, by how often we are being told that everything is just fine. A collapsing junk bond market and an abrupt withdrawal of new finance for the telecom/Internet sector ushered in the bursting of the NASDAQ Bubble. Will a similar waning of liquidity develop in agency and mortgage-back securities commence the bursting of the real estate Bubble? *( he's right on there as well ....tic toc') *

To: isopatch who wrote (4113)	11/17/2001 11:24:08 AM
From: Joan Osland Graffius	Read Replies (1) \| Respond to of 36161

iso, It looks to me like some folks are not looking at total returns when buying metal stocks these days. For example if one would have started accumulating gold stocks using a strategy of averaging down on companies that share profits with the shareholders they would be in good shape right now. I looked into the value of some of these gold companies in 1999 and I was going to pay $10 or less for the gold in the ground. Compared to other investments I could not find a better discount to the value of any asset on the face of the planet. I started buying using Michael Burkes famous 1/3rds strategy and my basket at the moment is paying over 5.5% in dividends and I currently have over 20% in capital gains on the shares. We are now having a similar opportunity in Uranium. I also think we will have a similar opportunity with Platinum, Palladium and Rhodium during the next year or two. Joan