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

To: porcupine --''''> who wrote (1347)	2/25/1999 11:56:00 AM
From: Mike M2	Read Replies (1) \| Respond to of 1722

porc. IMO the austrian school best explains the boom/bust cycle. You need not agree with their solutions to benefit from their perspective. It would take an absolute economic disaster for a significant number of people to consider their solutions. In the near term we can expect more of same. Mike

To: porcupine --''''> who wrote (1347)	2/25/1999 7:08:00 PM
From: Freedom Fighter	Read Replies (3) \| Respond to of 1722

Porc, >>You don't need to be an ornithologist to not like the sound of quacking. The AS is an extremist ideology, and that alone invites obliquy. porc is extremely anti-extremist.<< My problem is that I don't think the term extremist is suitable. I think they have a lot to bring to the table and they are kept out the mainstream discussion not because of what they have to say and its merit, but because their beliefs and desires, if implemented, would require an overhaul of the current establishment. Naturally then, they are attacked as extreme so it won't be done. The minority that benefits under the current system is protecting itself. An overhaul of the system is not extreme if it can intellectually and economically be shown that we would be better off by it. The attack of extreme prevents the discussion that could lead a majority of people to form the same view. It would then be mainstream. I know I, my family, and all my friends would be better off if we trashed the current system in favor of a version of what they advocate. You are lumping them together with people who we would both agree are lunatics. >>"Economics is a subject that has only marginal value in "value investing" other than to perhaps understand why an economy is performing the way it is in the 'short term'."<< >I must be misunderstanding your point here. As you know, Graham's undertaking was to employ economic principles to acertain the economic value of a company, and buy when its per share market price was safely lower. Buffett perfected the process. That's why Janet Lowe quoted some notable (I wish I could remember his name), who declared "Value Investing is applied economics".< When I speak of economics, I am generally talking about shorter term projections of inflation, economic growth, interest rates etc... I believe these are of little importance in estimating the intrinsic value of a business by most standards of that measurement. Intrinsic value in generally defined as the present value of all the cash that can be removed from the asset over its lifetime. So we are talking a decade(s). Thus discussions of the sort that are related to the current or next year's economic activity should be of little relevance to a long term investor's estimate of value. I try to avoid those discussions because they mean nothing to me when I invest. I'm not going to get anything out of it and believe other readers would be better not thinking about those things either. >>"So it's really not worthy of a long discussion."<< >New readers: Welcome to Wayne's World <g>. Wayne, you have repeatedly put the economic ideas of the AS into play. Yet, when I raise economic issues (e.g., does the production process generate enough income to clear the market of what is produced?), you dismiss economics as having little relevance. But, economic analysis is what distinguishes Value Investing from contrarianism for the sake of contrarianism (buying a security solely because its price has gone down is no more necessarily rational than buying solely ecause it has gone up.< I have addressed those issues that I think that I have an insight into lots of times. I don't like to repeat. Especially when I think the discussion has nothing to do with whether anyone should be buying a business they are looking at. I have generally put forth the ideas of the AS as a way of giving people a chance to get an alternative view on what is going on in the economy now or has gone on in the past. It's just information. I don't think any of it has anything to do with the values. Again, the values have to do with the present value of future cash over the long term. To me that is not really economics in the way I use that term (as described above). >However, I disagree that Japan has had 10 years of hell. On the contrary, the general population has hardly felt the problem, which is the major reason the political will does not yet exist for change. "Hell" is when the government does nothing while panic degenerates into economic and political chaos.< I figure that suicides, widespread bankruptcies, and losing a significant part of your net worth in real estate and stocks that are down 50%-80% after ten years is my definition of hell. Wayne