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Strategies & Market Trends : Technology Stocks & Market Talk With Don Wolanchuk -- Ignore unavailable to you. Want to Upgrade?

To: dvdw© who wrote (14091)	3/17/2004 11:02:00 AM
From: Kirk ©	Read Replies (1) \| Respond to of 206733

Yeah, the chart just came in email last night. I am making last minute updates to my newsletter to include my thoughts. The people who sent the chart have a bearish slant and I believe they also don't like pres. Bush... politics seems to color so many in their investment decisions. This is some of what I am writing to accompany the chart in my newsletter to go out later today. This chart from www.chartoftheday.com is very telling. chartoftheday.com During the bubble of 2000, most companies put in capacity that was not needed. Projections for false demand from Enron, Worldcom and Internet Companies had companies from Agilent to Waverider build capacity to deliver products to companies that were showing a false demand. The recession took out many companies but the factories (capacity) pretty much remained in place. As the economy has slowly recovered, companies have not had to hire new workers to add capacity as they already have the capacity in place. All they have to do is dust off the cobwebs, so to speak, oil the gears and start churning out widgets. Since companies didn't have to build new buildings and buy new machines (capital investment) the increased profits started to roll in almost right away. We see that in the chart as increasing profits with little change in capacity. The bears make a huge deal out of how businesses have not been spending. The reality is they have not had to spend. They have a workforce terrified of getting laid off or outsourced to China or India. To keep their jobs, workers are working very hard. Don't you wish government workers had similar incentives to work hard! California would probably have a surplus if the efficiency of government workers rose at any rate close to that of the private sector. The costs of adding capacity are what slows earnings growth in up cycles. It is expensive to buy and equip new factories. We have so much capacity added from the last up cycle that, well, I believe this is why President Bush and others in the GOP really are not worried. They see jobs will EVENTUALLY show up once we have to start adding capacity to meet a rising World demand. The difficult part is how to keep the World from falling into a global depression. Getting the supply of oil flowing for a few more decades seems to be the solution which is why turning Iraq into a democracy was so important. It is hard to not color my own thinking with my politics. A friend of mine is very liberal but she is finishing a book on the politics of Oil (she has done many for the idiots series). As far to the left she is, we seem to agree on the oil deal from emails we've exchanged on the subject. This book,"The Oil Factor: How Oil Controls the Economy and Your Financial Future", also gives some good insight even if I don't agree with the solution to build wind turbines amazon.com I'd be interested in the thoughts of othes on this... if the chief allows it here. If not... we can move to my forum for the energy stocks. Kirk