Hi MeDroogies, your statements concerning <<backward looking>> market where <<the size of the bubble>> does not determine the consequences of the pop, as long as the policies in cleanup is, presumably, monetary easing, allowing another party to commence, is uncommon, perfectly clear and puzzling to me. Your view on the market may be thus affected at a fairly fundamental level.
I would agree that the market cannot see the future. No one can. I would say the market tries to anticipate the future. Everyone tries, many fail. I hope this is what you meant by what you said.
On the size of the bubble and its aftermath, In clear J6P/W3C speak, we will have ‘distilled unadulterated fear that we all have been had by bull talk’ about <<The size of the initial bubble is less important than the reaction afterward>>. From the physical sciences angle, the bigger the bubble, the larger the pop. From bathroom sanitation angle, the larger the pop, the more mess has to be clean up.
The size of the bubble, the incredibleness of the mirage, and the speed of evolution in fact are a direct function of the media services, ORCL-like technology, and liquidity that you are so enamored of, given that your are working in advertising, trained in economics, and is a confessed believer in the Maestro.
No, before you get a chance to pin me as a chicken McNugget, let me state clearly that (a) I do not bet against the numbing power of media, or the ascent of technology, or the horrific deluge of liquidity, and (b) I take them into proper account and invest/hedge accordingly.
I do not wait for any particular sector to definitively fall apart before reacting, but, instead, I try to anticipate and act, then wait for the sectors I watch to fall apart. Now, I see magazines are folding, and I am guessing advertising is down, and expected by publisher to recover anytime soon. What do you think?
I am going to have fun with this longish post in response to your two uncommon beliefs. I engage in SI discussions because I am convinced of what I am saying, enough, but not enough to pass up listening to hopefully more soundly based logic and coldly calculated analysis. I pay particular attention to those who appear to the public to be making soundly based and coldly served logical calculations. Fellow bull-threader Pezz makes no such claim because he freely admits his buys are speculative, and so I banter with Pezz in a different and not so serious way.
I am not vain enough to believe that my mutterings will cost anyone their life savings (for that I am thankful) or make anyone wealthy, but I do feel obligated to vigorously challenge certain postings of others, also not because life savings are at stake, but because they are so based on formal education, media saturation, and possible backward looking denial, that they could be very wrong, contributing in some small way, however small, to some one, anyone, to buy into the market just a bit too early, in slightly larger tranche, possibly on margin, and pay a quick visit to the cleaners. In so doing, I always reveal my positions and allocation, so that others may judge what I say by what I do, and not by the way I say.
Yes, I am bearish and have been since the November of 1999 and progressively more so at the start of 2000, whereas I have been a raving bull the likes of which even Maurice and Pezz has rarely seen before that time.
I am fortunate to have called some inflection points so far. I do not have the ability to cheat the God of Odds and successfully make money by going short in any material way. I may (extremely likely) short the wrong scripts, cover too early, buy too soon, or, more seriously, simply be wrong in my bear stance all together, totally. I advise as I do, namely, hold fire on any inclination to buy, and abandon position on any indication to hold, until the design meant for us is more clear, or as your admired Larry Ellison would say, visible.
I do not know whether the market is forward or backward looking. I suspect it is forward looking, though it sees imperfectly and at times totally erroneously, at other times, the market is totally blind, fevered by imagined riches.
There is the additional complication of “which market?”, as in equity vs. bonds vs. commodities; investment vs. consumption and other distinctions, and the problem that arises when different markets sees different pasts, or futures.
If the equity market is indeed backward looking, as you claimed, it should then see perfectly, at least to the extent indicated by official stats that mesmerizes you so, and only react as these official stats are revised, which is happening with more frequency, even as many refuse to acknowledge the reality as represented new. You know, GDP is not as up as claimed, profits is not at all, productivity is first high and good, then not as high but bad, trade deficit doesn’t matter, until it does, and social security is social and secure, then not, and perhaps not surprisingly, even revenue can now be restated, mostly downward, and hardly ever up.
If so, that is, if the market is backward looking, then the equity market in March of 2001 failed to see a recession that we have just been notified of, although suspected by me, though dismissed by you at the time. Else the equity market in March was seeing what the future, i.e. now, may hold.
To continue the logic of the backward looking equity market, it then now sees a recovery that has happened already, and thus presumably is readying itself to renewed the plunge earthward on the next recession that you no doubt still refuse to see, even as you should note that the recovery, in the last few weeks past, is no more. Or perhaps this is not quite what you meant when you say the market is backward looking. I believe the confusion in this paragraph is entirely a result of the unnatural, and less than common, logic of a backward looking market.
Just as an example, by your logic, I suppose Enron price is reflective of its newly amorphous past and not its apparently certain and diminished non-future.
I do not have the burden or gift of an education in economics as you do, I tire easily of government released and ever-revised numbers that you so favor, and thus I continued to depend on my senses, and appreciation for what I think I see, not what I hope to see, and certainly not what I hope others to see. I depend on the economists and you, in some sense, for the interpretive science that could be fodder for endless debate but is often described as dismal.
I continue to visit with you every-so-often because I wish to know what people who hold diametrically opposing views think, lately, and are speculating, investing or otherwise buying. I trust that you will continue to humor me, hopefully not taking too much offense at the way I write. I also hope that my views are of some small help to you as well, as they could have and should have been, looking back, but in a forward manner:
Message 16020127
Message 16024224
Message 16026514
Message 16310650
Message 16318045
Just so that there is no misunderstanding, I continue to believe that the current markets, in all its upward surge and downward spiral, amidst all the denial talk and confidence spin, reflects unalloyed, as in pure, anxiety at the ungluing, as in dissipation, of the mirage of the past few years’ historic mania without precedent, in almost all sectors and spheres of human endeavor, and what the collapse may still hold for all.
You can guess that I do not mix well in crowds. The crowds are now with you, horns honed, mouths salivating, nostrils steaming, hoofs pounding, eyes (you are right after all) looking backward and skyward, to a foolproof market that once was, stampeding to the slaughter that will be.
To nail the point home, if the equity market is backward looking, then what is the futures market on equity looking at? A future look at backward, meaning now?
The confusing manner in which this post is put together is not intentional (and if it is, I would never admit to it:0), but a consequence of needing to twist natural logic to fit an uncommonly <<backward looking>> market where <<the size of the bubble>> does not determine the consequences of the pop.
Finally, for the moment, as I usually say to you, I am happy to let the continuing movement of the market settle our discussion, and besides, I may have misunderstood your comments totally.
Chugs, Jay |
