Posted on 10/16/2007 10:09:52 PM PDT by bruinbirdman
Would you suggest getting out of the foreign market now, if you had gotten in before its takeoff and had accumulated a profit?
I have reduced as much overseas exposure as I possibly can. I am making a bit of a bet aren’t I? Yes, but it is calculated and feel that it makes sense. I haven’t seen this kind of irrational exuberance since 1993, much worse in fact. But hey, it might just keep running, and I’m going to miss it, along with my misguided clients.... I do have an overweight on growth stocks since the last couple years, especially since January. Growth right now is beating the tar out of value, and the returns are equal to the international stuff that I’m out of. With growth, I get higher upside potential than usual, with less risk than usual (due to years of under performance). IMHO, with international, you’re getting more risk than usual, with less upside than usual (due to excessive irrational performance) Hope that helps.
Normally, a person would have up to 20% of their equity holdings overseas, maybe 25% if it was dirt cheap. Today, if you want to avoid the risk of being completely out, pare it down to 5-10%.
I don’t have a crystal ball for sure, just try to do what a prudent person, that knows the stuff would do.
I agree with you. see some of my similar commetns. But it is very hard to explain, and understand...
I appreciate that explanation but it doesn’t cover this scenario.
Transportation costs of goods shipped to market goes up. The price I pay is increased to cover this increased expense.
That’s the inflation that affects my standard of living. If I have to spend more on the items I buy, and my salary is not adjusted each year, my purchasing power suffers.
Either way, inflation happens. Wouldn’t you agree?
Is China under a heavy debt load, like we are? If I recall we pay 40 million a day for ours.
“Would you agree that it’s effects are tantamount to inflation?’
No, absolutely not. You hold-on on to conventional wisdom and it is wrong.
“Wouldn’t you agree?”
No I do not agree. I cannot agree to 2+2=5.
Inflation is too much money chasing too few goods. Please read Sowell. He does a great job explaining this. The increase in prices of certain things results in trade-offs. Again, inflation is when too much money is chasing too few goods. Please do yourself a favor and read the book. To people with a basic understanding of economics your questions are..how can I put this politely...lacking in knowledge. I’m not saying people that don’t understand economics are stupid. Economics is just not taught. I have many friends in the Medical and Legal and other professions and they don’t understand economics either. You can go through BS, MPA, PhD, JD and MD and while they force you to take a couple of art history classes or such there is no requirement for econ 101/102.
Do you find it odd to find so much psuedo-Keynesian economic reactionary-ism when it fits the sky-is-falling modus on FR? Odd that people here profess to disdain the MSM when it comes to all else except economics.
We are low-tax supply-side in name only!
Weird and sad.
It takes discipline not to look back. But it sure makes for a better nights sleep. There is work to do tomorrow with the cash.
yitbos
Good thinking. It's already down. LOL.
I am making a bit of a bet aren’t I? Yes, but it is calculated and feel that it makes sense.
Or it doesn't make sense and I'll be wishing I hadn't bet.
. I haven’t seen this kind of irrational exuberance since 1993, much worse in fact.
Not even in 1998 when the chairman of the Federal Reserve used the term in a speech.
But hey, it might just keep running, and I’m going to miss it, along with my misguided clients....
Who misguided your clients?
I do have an overweight on growth stocks since the last couple years, especially since January.
What will you do if value outperforms as it usually does?
Growth right now is beating the tar out of value, and the returns are equal to the international stuff that I’m out of.
So you're out of international for a while now? Not good.
With growth, I get higher upside potential than usual, with less risk than usual (due to years of under performance). IMHO, with international, you’re getting more risk than usual, with less upside than usual (due to excessive irrational performance) Hope that helps.
Are you one of those "investment gurus"?
Normally, a person would have up to 20% of their equity holdings overseas, maybe 25% if it was dirt cheap. Today, if you want to avoid the risk of being completely out, pare it down to 5-10%.
Sounds like one of those plastic asset allocation sheets that insurance companies give their brand new registered reps. I mean, they're good and all.
I don’t have a crystal ball for sure, just try to do what a prudent person, that knows the stuff would do.
Do you think you "know the stuff" enough to hand out investment advice in a public forum? I heard that was illegal unless you are NOT a registerd rep.
The price of energy is up, because demand for it is up. That is not inflation.
no yitbos
I’ve been following this thread due to my early involvement. The discussion has been pretty good. I don’t understand why you felt the need to make that last comment above. I thought we were pretty much on same side here even if we did have differences of opinion.
I appreciate your explanation of this, and I’m not going to claim you are technically wrong. None the less, you are not focusing on the real world here.
If I make $3000 dollars per month and my budget for gasoline is $200.00, and all of a sudden I’m spending $300.00 per month, that is inflation. It is an inflated cost to me, that decreases my expendable income.
When you include food, clothing, home heating or anything else in that picture you increase the impact of that cost inflation. If my budget is $700 for the items impacted by energy costs, and all of a sudden I’m spending $1100, my expendable income is reduced by another $400 per month.
This is cost inflation and pruchasing power deflation.
While this may not meet your technical standards, it is a very real impact on the average family. It is realized inflation, and it’s a real problem.
If I’m using the wrong terminology please correct me. What I am addressing is real and it’s a problem.
Inflated, it is. Inflation driving the cost of high oil, IMHO, it is not.
Oil is expensive to us, due in great part to our weak currency right now. Also, I’d say that we are seeing a very strange/high amount of hoarding by hedge funds and speculators, much like Hunt Bros with silver in the past? While demand is much higher for oil, supply certainly is no problem, but refining capacity is so limited, especially with the recent demand surge, it drives the cost up.
One day, these barriers will be gone, and oil will be stupid cheap, like it was in 2003. Then we’ll rail about something else, so we don’t become totally bored!
Oh, I’m sure the govt will find more taxes from oil as it cheapens, so it will probably not be as cheap as 2003. So much for our war for cheap oil huh?
One benefit is future industrial technology from this spike, like the last ones. We wind up finding more efficient ways to burn the oil. My Yukon Denali is getting 15mpg, 6.2ltr v8, while my dad/moms Chrysler Cordoba two door got 12 in 1978. The Yukon is no wimp either, nearly 400 horses.
It wasn’t my goal to imply that inflation was driving the cost of oil. It was my goal to imply that the cost of oil was driving inflation.
Right now the cost of oil is high, and it’s having an impact on prices across the board. To the average family that is inflation.
As you imply, these things are cyclical and they price will probably drop in time. And at such a time as it does, it will be appropriate to address the issue of deflation. At that point the family budget will be able to purchase more for less money.
I do have to tell you it bothers me to see the inflation report acting as if prices across the board were nearly static, when they aren’t. There is real world inflation taking place right now.
Is that impact severe? I don’t think so, but it is real and in the interest of honesty, I want it addressed in real world terms.
No it is a higher price. Even if a bunch of stuff is higher priced at the unit level it is still not inflation.
I think you are observing something and calling it inflation. You are quite correct to think this terminology problem. But on the other hand true inflation would be serious problem. This is like commanding a boat helmsman to “turn, which is useless, even “turn right” is pointless, but turn right to zero-six-zero has meaning. Some would call that a “technicality”. But again, I think we need more people in this country understanding economics. Read Sowell.
“I do have to tell you it bothers me to see the inflation report acting as if prices across the board were nearly static, when they aren’t. There is real world inflation taking place right now.”
Ah, I see the problem. Hopefully I can not explain this. (Iknow Sowell can) Inflation is characterized by an increase of prices of everything on average. If prices of some things are up you notice, but you may not notice that some other goods and services are way down. Inflation reports the aggregate, so even if gasoline went to $100/gal we may or may not have inflation. Inflation is the measurement of all prices in typically a relative static supply. It happens when the government increases the money supply, typically.
The average family needs to learn economics, in my humble opinion.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.