prevailing reasons justifying investing new capital
I am constantly seeing reasons stated
in Business Week recently, three articles struck me, side by side on the same page
the messages: dollar decline not a big deal, technical analysts offer an unclear view, consumer debt is exaggerated
wow
BW claims the dollar decline adjusts for something, but is not clear what that is... they talk of reserve currency status almost be unchallengeable... they cite the trade debt being large, but that it has always been large... they talk of slower economies elsewhere... they talk of perceived opps in the USA continuing... conclusion is no big deal
BW looked at chartists and saw their track record as not crystal clear (which must be a reqmt for veracity and value, unlike economists)... they cite some dire forward views, but doubt their likelihood... conclusion is no clear view
BW cites figures on mortgage debt and other consumer debt... they look at service cost, ignoring total debt, and doubting that rates will rise and hurt ARM holders... they make some hokey adjustment for pct of homeowners, which supposedly renders the debt as quite harmless... conclusion is no big deal
also
I get numerous unsolicited stock investment newsletters, since in the past 3-4 years, I have subscribed to a few... two came recently that intrigued me
Personal Finance claims a stock recovery and economic recovery is imminent, almost solely from massive fed stimulus... they disregard the constancy of seriously ill balance sheets... they like the $200B in refi money sloshing around... they cite defense spending as good for economy (but ignore capex drought)... they note the revival of commodity prices, esp oil and gold... therefore, as in the past, stocks and economy will enjoy a resurgence... they like oil and gold, suggesting oil and oil service, plus Apex Silver and Barrick Gold... I like their oil picks (Hess, Anadarko, Apache) but think silvers might be kept down for a while and Barrick is the biggest loser in the pack of precmetals
no mention of deflationary spiral or bank sector woes
if recovery were only that simple
some guy loves to tout microcaps, possibly so as to capitalize on his own recommendation pushing his front-runned stock buys... I personally observed his last one, which rose only after his next rounds of marketing
he cites a few reasons for recovery
- low fed-inspired shorterm rates
- mfr efficiency
- stabilized employment levels
- steady return to 3-4% GDP growth
but shorterm rates have done nothing to inspire capex spending, or a lift in mfg cap utilization
I suspect mfr "efficiency" might be a symptom of duress
job losses still average in the 400,000 range with high-profile layoffs mounting steadily
Q2 had 1% GDP growth, and Q4 is slated to have the same
amazing how the consensus continues to see things as consistent with past recoveries, using the same old dynamic thinking, while noticing nothing remotely similar to 1930
simply amazing
bad economic analysis, reliance upon bad statistics, avoidance of supercycle comparisons
we wont be sorry, rather they will
this is complex
as a good very bright college friend said to me over the weekend
"it cannot be all that bad"
he never uses bonds, and has lost all his gains in 401k
now he is losing his principal, but is not concerned
I give us 3:1 odds that it is worse than all that bad
/ jim
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