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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: patron_anejo_por_favor who wrote (31646)	5/3/2005 4:17:39 PM
From: ild	Read Replies (1) \| Respond to of 110194

Date: Tue May 03 2005 15:53 trotsky (Bleuler@Cara) ID#248269: Copyright © 2002 trotsky/Kitco Inc. All rights reserved unless he calculates the impact of hedonic indexing on both reported inflation numbers and reported productivity statististcs, the statement that productivity is '0.5% higher than inflation' is essentially meaningless. regarding the stock market's future expected performance, even IF productivity were to eclipse inflation by a huge margin, it would NOT guarantee a rising stock market. case in point is Japan, where productivity increases have been far above reported inflation rates throughout the 13 year long bear market. future stock market returns depend mostly on WHEN in the course of the business cycle one is buying in. right NOW is a particularly bad time to buy in expectation of good long term returns, as stocks trade at the outer reaches of the historical valuation spectrum, while interest rates are at multi-decade lows. a very good time to buy was when the exact opposite situation obtained ( in 1975, or 1982 respectively ) . at the time, naturally, almost no-one argued that it was a good time to buy stocks. when stocks really ARE so cheap that buying them makes sense from a long term return perspective, it is because NO ONE WANTS THEM at the time. arguments aiming to rationalize the buying of overpriced stocks ( such as this misleading inflation vs. productivity argument ) are naturally also not heard when it IS time to invest. at those times when investing in stocks promises inferior long term returns, there is however definitely a great inflation in such rationalizations. i'm still studying if it is eclipsed by the productivity of those forwarding the rationalizations.