Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : John Pitera's Market Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: John Pitera who wrote (13701)	2/20/2013 11:10:31 PM
From: robert b furman	1 Recommendation Respond to of 33421

HI John, Consider a low growth environment, in concert with generationally low interest rates - undisputebly like now. Would not a solid fortress like balance sheet company, bid higher premiums for stable companies with historically repeatable cash flows,just to accomplish growth. With this thesis - keep in mind - cash yield nothing, many corporations have billoins and collectively represent trillions. The throw in naked shorts who have enjoyed billions of free equity, and suddenly they see cash rich corporations buying out stable cash flows at premiums because growth is the missing ingredient. Then cheap money buys growth into the infinitum future - as in stable cash flow. Others get hip to the plan and allocate cash hordes to similate the investment theme. The when deals get announced ,as a surprise from the blind side, and the hedge funds who shorted stable companies ie Heinz,wake up to realize they just got a past tense settled out haircut of 20 %, and you have a fear that sends tingles up the back of any and all short. Add to that,the fed seeing that cheap money is chasing stable cash flows and burning shorts at the same time and you have shorts covering as cheap money seeks out every lucrative deal. As shorts get scared and cover, and asset allocation form bonds to equities morphs into equities with dividends becomes the safe secure play with capital gains to boot - there suddenly becomes a tsunami of money chasing equities in an low interest rate environment. Then bonds are the losers and a real tsunami of money chases equities. Even in a weak up growth market the world looks robust in equities as rates go up - until of course rates restrict business activity. But Bernanke will scream irrational exuberence way too late - just as did Grennspan. Tha'ts just history and another story - we'll get there later. But now and today we need to get long as we climb the well publicized wall of worry. Just another view eh? VERY POSSIBLE IN MY VIEW !! Bob