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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Knighty Tin who wrote (46561)	2/11/1999 1:51:00 PM
From: Peter Singleton	Respond to of 132070

MB, well put! eom

To: Knighty Tin who wrote (46561)	2/11/1999 2:31:00 PM
From: JRI	Read Replies (4) \| Respond to of 132070

Thanks for your response.. Since I haven't yet read Mike Magner's posts, I'll just respond to yours.. (1) In comparison to 1920's, you are correct in stating that the fiscal gvt. had their house in better order...(creditor then, debtor now).....Although we are now trending in the right direction (thus, part of the reason for improvement in bonds and subsequently stocks over the last many years), in comparison to 1929, we are not as healthy.. World's largest debtor nation?...You are right on a real basis, but not on a % basis...The % basis is much more important...Again, as far as the markets are concerned, the important thing is the relevant trend (and not comparisons to 1929). The relevant trend is extremely postive going forward... (I will give you this: It is a crock that we refer to the current situation as "surpluses"..The surplus covers what would otherwise be an unfunded Social Security liability...so it really isnt a surplus...only is Washington could the current situation be called a "surplus"..) (2) The "savings is negative" argument is a crock, Michael. Sorry to tell you, but people are not stupid enough, and rightly so, to put their bonuses, salary increases in a over-regulated, meager bank accounts (paying 2%) vs. other accounts (including stocks) that have produced/can produce much greater returns (let's not even look at recent years...just on a historical basis)......you know as well as I do that the "savings is negative" data does not include capital gains from stocks...therefore, the data is wrong and skewed...Even the Economist is writing articles based on your pt. #2 (agreeing with you!)...This is a loony argument.....Savings are up I do agree with you that a permanent (lasting at least for a couple years), at least 40-50% correction in the markets would have a dramatic impact on this dynamic..But, the odds of this occuring are next to nil....Even the so-called bear market last year has had little impact on the psychology of consumer spending or long-term investing... (5) Dividends are subject to be taxed two/three times...As a shareholder, if the company is good ROI (which it should if I am investing in it), I (and most shareholders) would prefer that they reinvest the capital or buy back shares...better use of capital (and capital retention, less tax consequences....Better overall return (for me, with that invested cash)...The increase in the stock's price (intrinsic value) should more than compensate for the dividend (that would have been paid out)...The only good thing about dividends is that it forces the company management to be disciplined with their management of cash/ROI...The companies I invest have this discipline (anyway)... (6) Employess used to pay salaries, now options..HUH? If we are talking about management here, how can you (as a shareholder) prefer that they are paid SALARY over options...With options, their interests are much more aligned with yours... If you are talking about lower management or line employees, on a % basis (to overall salaries) the % is probably so small to be irrelevant..even so, I fail to see where this is less preferable to salary..(I would agree with you that current GAAP does not go far in properly accounting for options on financial statements) 8) No productivity growth now. Wrong! (Will have to address in a later post) Oops, no more time now..we'll have to get back to you...Thank you for your detailed response...I am certain that you are aware of the points I've raised, but like Johnny Cochran (sp?), you will use limited truths to support your thesis and win over your followers' hearts....Pretty typical bear....Hope your returns have been better than Robert Prechter, Jim Grant, and the other "bubbleheads"...