Lifted on a sea of purportedly easy money and visions of the neutering via secret ballot next month of the president 55% of likely voters surveyed by the Ragin' Cajun, James Carville in a midyear poll believed to be a socialist, it was "risk on" this week. The assets repeatedly highlighted here, from gold/silver/Brazilian real to AAPL were strong, but there's a big But.
There is a disturbing pattern. The financials are lagging. This is the dark side of the current ebullient market, which is both so different from that of 2006-7 but so similar. As in 2006-8 (first part of 2008), gold/silver/oil are surging; junk bonds have been surging for some time; yet as in 2007, the people think the economy is in a recession. The people were right, more or less, in that while the economy was allegedly booming in fall 2007 just as the stock averages were hitting all-time highs, Americans were about evenly split about whether the economy was already in recession. The people got it right. I know. I was one of those people who did not trust the economists. It was clear to me in summer 2007 that housing was in a depression, autos were in a severe recession (GM and Ford already were rumored to be in danger of failing), and therefore the domestic economy was already in deep trouble. Hey-that's about half of the domestic economy right there, counting all their related industries.
Now, Gallup shows that, on a 14-day average, self-reported discretionary spending was only $59/day, which is down by about 50% from peak levels.
Not. A. Real. Recovery.
Meanwhile, assuming there is a semi-free market for money, the collapse in the 2-year note to about 0.35% yearly and the collapse in the 5-year note to little over 1% yearly is not consistent with a stock market surge. It is, however, consistent with a domestic depression.
But not the Great Depression, either. Think Japan as the current template.
(Better Japan than Greece, that's for sure!)
How then can be that McDonald's, gold/silver/oil, IBM, etc. can surge, several of them to or near all-time highs, while the National Federation of Independent Business and numerous other surveys show a chronically weak economy and federal and state tax receipts disappoint?
Is it lunacy?
Not necessarily.
It's the rest of the world; as Mr. Carville might have added in 1992: ", stupid".
Do Messrs. Obama and Bernanke feel just a bit abashed, even humiliated, that Brazil and Peru have been buying U. S. dollars to stem the ascent of their currencies against that of the colossus of el Norte?
Or that the most recent estimate of India's economic growth rate was raised to 9% while our current and projected growth rates were lowered to low single digits?
Just wait till you start hearing of how badly our workers are treated when they go south of the border for work.
There are, however, some domestic investment opportunities in the U. S., to be discussed in the next couple of days.
Copyright (C) Long Lake LLC 2010
Showing posts with label Peru. Show all posts
Showing posts with label Peru. Show all posts
Friday, October 8, 2010
Wednesday, July 22, 2009
More Frothy Signs in Stocks as Pushers Get Desperate
How the mood has changed from the despair of this winter and last fall!
Perusing the headlines of Barron's online makes one think it's 1999, not 2009. Forget the bull noises about Apple (breathlessly reported is that it has $31 B in cash (which it does not)). The truth is that Apple has never paid a dividend, may never pay a dividend, and sells for about $110 billion dollars more than it is worth under generally accepted accounting principles. A mere 5 years ago, AAPL sold for one-tenth its current share price. Are you sure that the iPod won't become a commodity item, the iPhone the same, and the computer business won't get overwhelmed by the next new things? And that Steve Jobs can continue to work?
Also ignore that a bull market winner, Family Dollar (FDO) has a CEO who just unloaded $7 M worth of stock. You, the little guy, should buy and hold. (And FDO is one of the "good guy" companies in EBR's book.)
Ignore that Barron's is leading off with a pitch for Siemens, one of the most corrupt companies around ("Bribery was Siemens's business model," said Uwe Dolata, the spokesman for the association of federal criminal investigators in Germany---from PBS.org).
Here's the first scary thing:
Leaving U.S. Stocks for Foreign Opportunities
Subscriber Content Read Preview
Financial adviser Dawn Bennett has dumped domestic equities for emerging markets such as Peru and China.
When Barron's expects you to pay money to get "subscriber content" so you can read about some kid who is long Peru when you can buy Eli Lilly or BMS for 8-10 times earnings and a secure 6% yield, IBM for 11 times earnings, and P&G on a down year for 15 times earnings, you should realize that things are frothy. (This comment is NOT a market timing tool; remember "irrational exuberance" was correct but 3 years early--December 1996.)
Here's the second scary thing:
Hot Research PM
AMD Ready to Advance
Subscriber Content Read Preview
FBR Capital Markets upgraded the chip maker to Outperform
Per the Yahoo/Finance AMD chart, the stock has gone down for the last 26 years. It has a negative tangible net worth. It is down about 10% after hours due to results so poor that even most of Wall Street's paid optimists want to dump it. Yet Barron's, once a bastion of reality-based investing, chooses to highlight perhaps the one shop
that upgrades this over-promising, under-delivering company.
AMD has never paid a dividend. If you had bought the stock 26 years ago, you would be down by half. If you had done something really risky and invested in and rolled over 1-year FDIC-insured CD's, you would have approximately quadrupled your money. Yet, only a few years ago, AMD was about 10 times higher than it is now. (I hope that's not a cautionary predictor for Apple Inc., but that's why I mention both companies in the same post.)
The truth as seen here at EBR is that this is probably the most confusing time for an investor in an investing lifetime. Perhaps the closest is the 1973-5 upsetting of the then-orthodoxy that recession and high inflation were incompatible. But $23.7 TRILLION of government intervention down the road for such little economic results, and promises from a campaigning-for-renomination Ben Bernanke that small savers will continue to be forced to subsidize JPMorgan Chase et al for a "considerable" length of time, make all predictions chancy.
But when you take it one day at a time, you can't help but worry when stocks such as Eaton shoot up- aided by Jim Cramer's hype- just as their sales and earnings collapse, and Barron's wants to charge you money to be exposed to such bull---- market idiocy as getting rich off of Peruvian stocks or by buying one of the worst-performing large tech companies known to man.
Copyright (C) Long Lake LLC 2009
Perusing the headlines of Barron's online makes one think it's 1999, not 2009. Forget the bull noises about Apple (breathlessly reported is that it has $31 B in cash (which it does not)). The truth is that Apple has never paid a dividend, may never pay a dividend, and sells for about $110 billion dollars more than it is worth under generally accepted accounting principles. A mere 5 years ago, AAPL sold for one-tenth its current share price. Are you sure that the iPod won't become a commodity item, the iPhone the same, and the computer business won't get overwhelmed by the next new things? And that Steve Jobs can continue to work?
Also ignore that a bull market winner, Family Dollar (FDO) has a CEO who just unloaded $7 M worth of stock. You, the little guy, should buy and hold. (And FDO is one of the "good guy" companies in EBR's book.)
Ignore that Barron's is leading off with a pitch for Siemens, one of the most corrupt companies around ("Bribery was Siemens's business model," said Uwe Dolata, the spokesman for the association of federal criminal investigators in Germany---from PBS.org).
Here's the first scary thing:
Leaving U.S. Stocks for Foreign Opportunities
Subscriber Content Read Preview
Financial adviser Dawn Bennett has dumped domestic equities for emerging markets such as Peru and China.
When Barron's expects you to pay money to get "subscriber content" so you can read about some kid who is long Peru when you can buy Eli Lilly or BMS for 8-10 times earnings and a secure 6% yield, IBM for 11 times earnings, and P&G on a down year for 15 times earnings, you should realize that things are frothy. (This comment is NOT a market timing tool; remember "irrational exuberance" was correct but 3 years early--December 1996.)
Here's the second scary thing:
Hot Research PM
AMD Ready to Advance
Subscriber Content Read Preview
FBR Capital Markets upgraded the chip maker to Outperform
Per the Yahoo/Finance AMD chart, the stock has gone down for the last 26 years. It has a negative tangible net worth. It is down about 10% after hours due to results so poor that even most of Wall Street's paid optimists want to dump it. Yet Barron's, once a bastion of reality-based investing, chooses to highlight perhaps the one shop
that upgrades this over-promising, under-delivering company.
AMD has never paid a dividend. If you had bought the stock 26 years ago, you would be down by half. If you had done something really risky and invested in and rolled over 1-year FDIC-insured CD's, you would have approximately quadrupled your money. Yet, only a few years ago, AMD was about 10 times higher than it is now. (I hope that's not a cautionary predictor for Apple Inc., but that's why I mention both companies in the same post.)
The truth as seen here at EBR is that this is probably the most confusing time for an investor in an investing lifetime. Perhaps the closest is the 1973-5 upsetting of the then-orthodoxy that recession and high inflation were incompatible. But $23.7 TRILLION of government intervention down the road for such little economic results, and promises from a campaigning-for-renomination Ben Bernanke that small savers will continue to be forced to subsidize JPMorgan Chase et al for a "considerable" length of time, make all predictions chancy.
But when you take it one day at a time, you can't help but worry when stocks such as Eaton shoot up- aided by Jim Cramer's hype- just as their sales and earnings collapse, and Barron's wants to charge you money to be exposed to such bull---- market idiocy as getting rich off of Peruvian stocks or by buying one of the worst-performing large tech companies known to man.
Copyright (C) Long Lake LLC 2009
Subscribe to:
Posts (Atom)