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 : Graham and Doddsville -- Value Investing In The New Era -- Ignore unavailable to you. Want to Upgrade?

To: porcupine --''''> who wrote (966)	11/11/1998 10:15:00 AM
From: Freedom Fighter	Read Replies (2) \| Respond to of 1722

>>What I recall mainly from Dreman's appearance on WSW was his advice that investors hang in with 100% stock portfolios<< I have problems with that advice even though you can justify it if you want to by looking at multi-decade stock vs. alternative studies. 1. It implies that you can always find stock bargains that will produce greater returns than the alternatives at any snapshot in time. This is simply not true. 2. It leaves you in a situation where you can't take advantage of the truly great bargains that pop up during corrections and panics in either the overall market or in a particular sector. For example, one could argue that stocks are presently discounting returns of between 5.75% - 7.5%. (with the lower range being the more likely in my view and a PE contraction a distinct profit erasing possibility). That means that an investor is surrendering returns of 1%-2% annually by staying in bills and notes. Even during this relentless rise in the market, there have been 3 sharp pullbacks in the last year or so that provided opportunities to buy some stocks at levels where the discounted return was much higher and a PE expansion was a very good possibility. This more than makes up for losing 1%-2% over a period of even a couple of years and it avoids facing the risk of a PE contraction that would more than wipe out that 2%. On the other hand, there have been periods where the Gap between stocks and bonds/cash has been as high at 8%. A 100% investment strategy would certainly seem appropriate at that time. This may seem like market timing, but it isn't. It is setting the standard for investment at a level where the spread between the expected return on the stock and its alternative is high enough to cover all the associated risks. This includes the risk of missing opportunities like we had just a few weeks ago. Some companies I am familiar with were selling at 30% discounts to their values on a long term normalized basis and an even greater discount if you think low interest rates and inflation are a permanent state of affairs. This more than made up for losing a couple of percent for awhile and gave me a PE expansion pop because the market recovered so quickly. Wayne Crimi members.aol.com

To: porcupine --''''> who wrote (966)	11/11/1998 6:00:00 PM
From: Berney	Read Replies (1) \| Respond to of 1722

Hi guy! I posted this on another thread, but thought you might enjoy it: Message 6378822 Berney

To: porcupine --''''> who wrote (966)	11/11/1998 7:47:00 PM
From: porcupine --''''>	Read Replies (1) \| Respond to of 1722

GM To Make $1.5B in Modernizations By The Associated Press -- November 10, 1998 WARREN, Mich. (AP) -- General Motors Corp. plans to spend $1.5 billion to consolidate and modernize its engineering operations in Michigan over the next five years in hopes of reducing the time it takes to get new cars and trucks to market. GM President G. Richard Wagoner Jr. also said Tuesday that the No. 1 automaker was planning for ''significantly higher production'' in North America next year as it tries to recover market share lost during last summer's strikes. The bulk of the investment in engineering, about $900 million, will go toward upgrading the 42-year-old GM Technical Center in the Detroit suburb of Warren, where employees and functions from 14 locations throughout the region will be consolidated. About 6,000 engineers, scientists and technicians will be relocated to Warren, with most coming from Flint and Lansing. All of GM's North American car engineering operations, including those for Saturn, eventually will come together at the sprawling technical center. The changes are part of GM's effort to get more control over its once-lethargic product-development process. The world's largest automaker has cut 40 percent off its product-development time in the past three years, but still lags some of its major competitors. ''This announcement today is about doing it better, faster and more efficiently,'' Wagoner said. In all, about 16,000 mostly white-collar employees will be relocated as more than 40 job sites in Michigan are consolidated into GM's four engineering and technology campuses in Warren, Pontiac and Flint, spokesman Gerry Holmes said. GM also plans to spend more than $200 million to upgrade its test tracks in Milford, west of Detroit, and Mesa, Ariz.; more than $170 million to complete the consolidation of its truck engineering operations in Pontiac; and nearly $200 million for powertrain operations in Pontiac. The plans depend on GM receiving tax incentives and other support from the state and local governments within the next six months. Wagoner declined to say how much was being sought, but said he didn't anticipate any problems. Gov. John Engler and Mayor Mark Steenbergh attended a news conference announcing the plans and said they were optimistic their governments would meet GM's needs. GM is using its Truck Product Center in Pontiac as the blueprint for the consolidation of its car engineering operations. That campus brought together all of GM's truck design, engineering and development operations to one site in 1996. For decades, GM had largely separate engineering and marketing functions for each of its car and truck divisions. It has been reorganizing in recent years to eliminate redundant functions. Wagoner said the consolidations are about ''the ability for us to act like one company, which, realistically, we didn't do in the first 85 years or so of our history.'' Meanwhile, Wagoner said GM plans to raise its production forecast for the first three quarters of 1999. Assuming U.S. vehicle demand remains relatively strong, ''we ought to be in a pretty good position to grow production and, we believe, grow share,'' he said. He declined to give specific numbers. GM's U.S. market share took a big hit in July and August because of two United Auto Workers strikes in Flint that all but shut down the company's North American production. It's share stood at 29.2 percent for the year through October, down from 31.3 percent for all of 1997. The automaker's production was further slowed by the summer plant changeover to produce its redesigned full-size pickup truck, its highest-volume vehicle. The success of the '99 Chevrolet and GMC pickup will be critical to GM's effort to boost its market share.