Foolish market scene
Intel at $17 and Intel at $22.50
Both are same company with about same sales and about same profits.
Little changed between 90 days ago and now except we are back in the "exhubrance" stage again.
Intel stock has climbed at least 25% on little news.
Market has done about the same.
People think all is ok and the world is at peace and moving back into a summer stock rally and better earnings.
Here are a few things to think about.
Wall-mart only up 2% last month which is about the same amount as population growth in USA. Nothing happening here.
Homes are still hot. Refinancing market and new housing market will be one of our growth industries in 2003. What happens after this is done in 2004?
Cars are stuck in idle. Dealers only can sell cars if there is zero or low interest financing and you give new cars away. Ford is tettering on bankrupcy.
Another growth industry is bankrupcy. All airlines, Fleming Foods (2nd largest wholesaler in food industry, telecommunications (MCI, etc), and a lot of others are there. That is our new growth industry and keeps attorneys rich. Is this what we need for 2004? More corporate bankrupcy?
Another growth industry is biotech which is a legal bet on gene alteration. This is often outright gambling and not real safe investing. IMCLONE is a good example. Poor Martha - she had it right....
Another growth industry is security. More police! We keep adding layers of protection to the public and this is going to cost a lot more. No matter where I go there is ever increasing security and more people securing me. More police,. More screeners at entryways in arenas, malls, airports, etc.
The tax cut is supposed to make us spend and the last time it did nothing for the economy. I think that will be the same this time around.
And the public chatter!!!! We are barraged daily by spin on Squakbox, Bloomberg, MSNBC, etc on the "rebound" and the "new economy" and the parallels to the "late 1980's", etc. Over 60% of Americans own so stock and the other 40% are so poor they are on the government handout programs. Not exactly a balanced world.
Employment is keeping a lot of people nervous. Job security is in the toilet and permanency in a job is an illusion. Some work is going off shore and many companies are retreating on keeping permanent full time employees. The game is to get rid of this extra baggage and trim overhead. Stocks are responding to les overhead even though it is your son or daughter or neighbor who is affected. That is not a good way to solve problems.
So what does all this add up to:
We have an economy filled with nerevous crap shooters filled with road rage and they are only interested in themselves. People who love to gamble on an unstable stock market that is fueled by rumors of future prosperity such as Intel, the housing and refinancing bubble and the biotec stock represent. A very self centered population.
At the same time government is spending us into oblivion and we fight all the wars in the world, are not respected by many nations except for our superpower might, and our citizens are losing their privacy rights and their expectations of permanent secure emplyment.
So they are willing to risk their last hope and that is their stock portfolios which are betting on the rising market and the new tech bubble.
Summary: We are a sick people looking for some wisdom in a land of fools. So the run up in stock prices and expecially Intel has to be a byproduct of the "irrational exhubrance".
