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Technology Stocks : Qualcomm Incorporated (QCOM) -- Ignore unavailable to you. Want to Upgrade?

To: DaveMG who wrote (18981)	11/30/1998 7:56:00 PM
From: Sawtooth	Respond to of 152472

That's an outstanding article, Dave. Well worth the time it took to read it. ...Tim

To: DaveMG who wrote (18981)	12/1/1998 6:44:00 PM
From: Maurice Winn	Respond to of 152472

Dave, Thanks for the article. A cogent case for the doomsters. But it doesn't allow for the infinite elasticity of money. He says cut debt, which means that he thinks money is going to be increase in value compared with the stock against which it is borrowed. He says he is a shorter and will cover after the crash. So what is he saying people should do? He says don't have borrowed money, but implicit in his logic is that stocks should be sold, which means you get money for them. He has confirmed that he has even sold stocks he doesn't have. Okay, so there we are with our honey pot of money. Then what? Just sit on it at rotten low interest rates and hope for the market crash? Meanwhile the Fed will be printing money flat out, converting the cash to confetti. If there is a real crumble in markets, you can be sure there will be a very rapid printing of money, just as already happened. Which means gold, oil and stuff like that will go up in dollars. So one should buy gold and oil now if his logic is correct. Oil is as cheap as it has been, but the production cost is way lower than the price still, as shown by the OPEC quota agreements. So that is a bad bet. Gold just sits there and if you don't get the collapse, you don't make the speculative capital gain on gold and he is saying speculation is bad. Gold only has speculative value. It is the most non-investment thing there is, though it does have some value as a material. So just what is he saying we should buy? I think I'll stick with my QUALCOMM which produces essential goods. I'll continue to avoid luxury producers which will be the first to go in any crunch. As in Korea, QUALCOMM sales will just carry on regardless of recession, depression, war and insurrection. If money is going to be printed in big heaps and depreciated, as it always has been and will be, I might as well borrow some to buy productive assets like QUALCOMM. Then, when it is devalued by massive printing, QUALCOMM will be more valuable. Being careful to not get caught at the bottom of any market crunch in a margin call of course. Bill Feckenstein is talking his doomster, short order cook book. Use it to understand what's going on, but draw your own conclusions. I reckon he has got the wrong ones. From his article, look how fast the Fed can create credit, money or whatever you want to call it: "In what is surely the biggest move in history, the S&P Futures exploded 4.9% in 4 minutes creating roughly $500 billion of equity for the world's speculators..... ....How was the Fed able to print money and create credit in unlimited quantities to manufacture this bubble? The absence of CPI inflation! Having learned nothing from the twenties or Tokyo either, the Fed and nearly everyone believes that nothing can be wrong if there is no CPI inflation. Yet it is only in a period of low inflation that the monetary spigots can stay open long enough to foment a bubble. Once created, the damage has been done. Good policy options don't exist, the position the Fed is in currently. They are now in the bubble-management business.." That's good! He sees that the key to the money printing is the low CPI thanks to the hugely dropping effort required to do things in the New Paradigm globalized world or integrated economics, efficiency and political stability [compared with the bloody mayhem of the 20th century]. But again, he draws the wrong conclusion. It isn't a bubble. It is just the Fed pinching value from those who hold cash and are silly enough to lend it out at derisory interest rates. Stockmarkets go up because people are getting a better return than on cash. QUALCOMM is going to earn something like $2.60 this financial year and $3.50 the following year according to analysts. At 5% return on your investment, that implies a $70 share price. You won't get 5% on your money in banks now. And QUALCOMM growth won't stop there. "The fun is just beginning". If there is an L M Ericsson 3G agreement by Xmas, we won't be worried about the Fed! Mqurice PS: Jon, Ooops, just saw your one, not read before posting this lot! Maybe I'll change my mind after reading it, but I doubt it. A quick glance and I don't like the overcapacity idea. I haven't got enough things, so capacity is short as far as I'm concerned. I just don't like the price. Overcapacity means the return on the investment is less than what the producer could get if they closed up and put what they get in a liquidation into interest bearing deposits. Much of overcapacity claims are just whining business owners who aren't making what they used to. If they don't like it, they can sell their assets and put the money on deposit. For example, there is probably overcapacity in analog handsets. Bad luck for Motorola! They'll have to close it. ---------------------------------------------------------------