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Pastimes : The Justa and Lars Honors Bob Brinker Investment Club Thread -- Ignore unavailable to you. Want to Upgrade?

To: Alan Bell who wrote (2228)	2/2/2003 3:02:21 PM
From: Boca_PETE	Read Replies (1) \| Respond to of 10065

Alan Bell: re: ("the chances of hitting nas 800") If 2003 earnings disappoint, I suspect NAZ 700-800 is a strong possibility. However, I expect a "victory" bear market rally before that happens if and when Saddam goes "Thunk!". But who knows - anything can happen these days. Thanks for the information about "OnDemand" Moneytalk. I don't feel any urgency to listen to Bob's words that carefully since he reduced his talking about the market. It's a service I choose not pay for. I miss his internet impersonators with the multiple of screen names :-) Although exhausting at times, it was always fun figuring them out and getting hints out of them on Bob's views. As for "Reflating" the economy, rumor is he means that Alan Greenspan has attached a bicycle pump air hose to the economy and is pumping it like there's no tomorrow. Weekly M2 money supply growth has not been growing unusually fast -I follow it every week federalreserve.gov and Free Reserves have not varied significantly according to the table in Barron's. Low interest rates while industrial capacity is so low would not likely have much reflative impact by generating new loans for capital expansion. Greenie's arm muscles are getting stronger from all of that pumping - I bet his squash game is getting better. P <grn>

To: Alan Bell who wrote (2228)	2/2/2003 4:14:59 PM
From: Lone Ranger	Read Replies (1) \| Respond to of 10065

AB, P, and SL, "Is anyone else confused by Bob's term "reflate"? While he says that the Fed is trying to do this, I haven't heard him define what he means by it. Does this mean creating inflation?" AB, short answer is yes. Inflation is the general increase in prices over time, and we have been in a period of disinflation which is a general decrease in inflation. Deflation is a general decrease in prices over time. Usually the CPI numbers are used for statistical purposes for inflation/deflation. From my readings this is my take on Brinker's ideas. The Fed has become worried about this anemic recovery. So worried in fact that they did a major study of Japan's economy and subsequent deflation. The purpose of this study was to find ways to prevent deflation from taking hold in this country. While most people say it can't happen here because our economies and cultures are so different, the Fed has begun to worry because of the muted effects from its stimulatory monetary policy. The reason for wanting to reflate or cause an increase in inflation is that this would give corporations some improved pricing power for which they have very little of presently. The main import of the Fed study was to move quickly and to prevent deflation from taking hold initially. For if actual deflation begins, not disinflation, it becomes much more difficult for the Fed to have any impact on our economy through monetary policy. In fact with real interest rates being marginally negative, some people say the Fed's done basically all it can do. That was the purpose of Fed governor Bernakes's speech. It demonstrated the Fed can do more for example such as buying 10 year treasury notes to keep long term rates low. An interesting aside is Brinker's recent comments on Jess Livermore. A couple of his books on the recommended reading list involve this famous trader. One of his principle trading belief's and skills was actually selling stocks that become weak and buying stocks that are strong and gaining strength. Imo, William O'Neil of IBD, has made his fortune in fine tuning Livermore's basic trading strategy and this somewhat has become the basis for Technical Analysis. But for sure Brinker did NOT adhere to this with his speculative play in the QQQ. Another point for discussion is Brinker's ability to call what he deems cyclical bear market rallies. As a subscriber I will not divulge any of his letter but in my mind I am perplexed as to how we will arrive at a buyback level without one of the following: either a further decrease in prices so as to lower valuations or an unexpected increase in earnings, which I doubt will happen soon. For without one of these two things happening the valuation part of his model, imo, remains too high, for a buy back call. A final thought is that I believe even he realizes that his calls are really only probabilities of events unfolding as his analysis indicates. Because he knows that even he might be wrong, I believe that explains his partial but majority shift to cash away from equities in year 2000 instead of totally. Always an interesting discussion that Brinker. LR