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

To: AC Flyer who wrote (40430)	10/29/2003 9:20:41 PM
From: Seeker of Truth	Respond to of 74559

<Prediction without a time table is useless> Hello Deferred Bear, It seems to me that in the stock market we are always predicting without a time table. Say you buy attractive stock X. Naturally you are expecting it to go up. It may double in a month or in five years, we don't really know. Barring wild inflation, both are good outcomes. Can you really say for certain at the moment of buying that you are buying near a local bottom? If you happen to sell it some years later because you need the money for something even more attractive, do you really know that it will henceforth do less well than the apparently more attractive stock? Your point about the opportunity cost sounds very reasonable but suppose we think stocks are generally overvalued and can't find an exception? Waiting with cash is an opportunity cost if we had realized that stock X was not overpriced or would not be so considered by the market. But that's the commonest thing in investing, i.e. getting the value thing wrong. Or, you see some interesting stock but you'd like to buy it cheaper, as you think it's a bit overvalued just now. Do we really know for sure ever? To get down to the present situation, I think the heaviest blow of "the end of the world" will hit the US not because US people are more wicked or something like that, but because the US $ has been regarded as a standard of value for so long that the US federal government and US consumers have managed to live on the never never. Other countries have had to pay their bills. For example in the most recent fiscal year Canada had a small surplus of seven billion dollars Canadian. But the US had a deficit of around 500 billion. Canada is forced to balance its budgets because of its chronically poor record in the past. Cold calculators around the world want to see the Canadian debt decrease before they buy more Canadian bonds when the present ones come due. The US will be forced to do similar things, sooner or later. Meanwhile we will do best investing outside of the US, and preferably in companies which don't depend on the US consumer. That's not an opportunity cost. If we invest in the US we have an opportunity cost of not investing in Canada etc. I'm probably more bullish on the planet earth minus the US than Jay who thinks the tremors will shake all countries's stock markets. I remember October or was it November 1987. At the time the Japanese stock market went down considerably less than the US market and recovered more rapidly, so the US non-US coupling may not be so tight. Taking an umbrella lacks a timetable for rain but it costs very little. I remember Buffett's remarks about the tech stocks and I figured that, not working with technology, he didn't realize the amazing potential and he still remained a genius in handling the non-tech stocks. I scoffed but he was perfectly right. Now as to his present ideas ...? By the way when Jay predicted the tech crash he didn't give a timetable but in fact the tech market didn't go up after his prediction. Did I pay attention to him? No, only till I'd lost a big bundle. This time around I've been buying gold and consider it an opportunity gain, not an opportunity cost. Sorry for all the wordiness, too busy to condense it. Lots of luck pursuing your opportunities.

To: AC Flyer who wrote (40430)	10/30/2003 6:25:12 AM
From: macavity	Respond to of 74559

Flying High. AC Flyer - I tend to agree with you. I am a dyed in the wool bear stating that the Dow Jones to Gold ratio will tend towards and hit 1. All the factors that people mention in TEOTWAWKI, I agree with. It is just that we won't reach there next week, or in a reasonable time as we have the entire world on fiat currencies. Why not? Politics and phaff. Japan is a case in point. Everyone knew it was a basket case by 1992/3, but still 10 years later it has not had a significant economic revival, and it is still in the is-it-isnt-it a (secular) bull market stage. My biggest contra-view is similar to yours. US Rates are not going to rise. This is because my personal interepretation of the Kondratieff winter is that there is no demand and there is a debt overhang. You have then got to make adjustments for the currency system that you are in. If the Asians sell, the Fed will buy - simple. US money supply will go off the scale but so what the homeowner and borrowers will be protected. There is no demand, in short the only demand that we will see in the US will be from Uncle Sam and not from the private sector. There is just too much world wide capacity - still (except in the production of commodities). Sir Alan Greenspan of Bubbleville knows exactly what is going on. Here we have the $CRB breaking out of a 5 yr double bottom, China scooping up commodities world-wide, and all the Fed states is mumbo jumbo about 'low inflation'. I agree we cannot have deflation - not with the printing presses on overtime, but we do not have sustainable and real demand. This is an acknowledgment of a lack of pricing power for all sectors that have been financed by debt and have still not reduced capacity significantly. The US is going through what Japan went/is currently going through. A K-Cycle winter with a fiat currency. If we were on gold we would have had a 1932 type crash-bang-wallop type of bear market - TEOTWAWKI. Rates would have gone up long ago. What Mr G has done is to substitute 1932 US for a 1989 Japan type bear market. This just makes things worse - no doubt about it, but it also postpones The Judgement Day. What we are currently seeing is a loss in faith of the dollar relative to other currencies. Until we see a real loss of faith in all other currencies, esp euro, vs. gold we are no way near TEOTWAWKI. The catch is that when it comes it may well be violent, but it will be violent like the rally in Nazzdog stocks was violent. A frenzy! Until this we should keep all things in perspective, unless we can afford to park away capital for 20 years, or so. Long YGZ3 -macavity