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

To: Seeker of Truth who wrote (40468)	10/31/2003 4:53:01 AM
From: EL KABONG!!!	Read Replies (2) \| Respond to of 74559

Hi Malcolm, Suppose you are the despotic head of a country Ack!!! You've been researching my early years... <g> the US is in a similar position. It's not that lots of money is being "printed". It's that the national debt is increasing at enormous speed If the GDP of the USA is growing anywhere near that 7.2% figure released earlier today (and I have my doubts) and it can be maintained, then the current budget deficit, large as it is in absolute US$s, is really only marginal contrasted with historical deficits and the nation's ability to eventually be able to pay it down or inflate it away. More worrisome would be the current account deficit with various Asian nations, most notably China and Japan. If something happens that undermines the symbiotic economic relationships between these three countries, then the global economy is in deep doo-doo. The largest economic problem within the USA is simply the lack of well-paying jobs for folks with lesser education or marketable skills. The media is doing a wonderful job of obfuscating economic progress with the corresponding lack of jobs and making it appear that the entire US economy is headed to Hell in a hand basket, when the reality is that the joblessness is really concentrated in manufacturing, and service jobs not requiring a highly developed set of skills. When the large scale money printing occurs, those US companies with large cash balances will be penalized hence there is reduced incentive by the non-US foreigners to buy shares in such companies. I don't think so (but what do I know <g>). I think other factors such as sales and earnings would largely outweigh or offset any currency concerns. I also think that whether or not to invest in US stocks largely comes down to one's personal perceptions and experiences. Is it "safer" to invest in a US company or a company from another country? Is an investment "safer" if denominated in US$s or if denominated in the currency of another country? I think that various investors the world over will answer these questions differently, depending upon their own perceptions. For example, I have read that the Japanese prefer to own US stocks over Japanese stocks simply because they perceive that their US investments are "safer", and they are willing to "eat" the currency losses for their perceived comfort factor. Is that smart? Darned if I know, but I'd wager that they sleep just a little better at night. <g> I think your thesis is correct for commodity companies, mainly. I think it's correct for all companies save those that have no international exposure and no currency hedges, which as far as I can tell, would mostly be smaller US companies. I could be dead wrong on this, but... Best wishes for your personal portfolio. Thank you, and the same best wishes for your investments... KJC