Wednesday, 9/25, Market WrapUp (Why DID The Markets Rally?)

Financial Sense Online ^ | 9/25/2002 | James J. Puplava

[STONEWALLS]

.."Old Lou always seemed smart and funny in a bull market -- much less so in a bear."

..yep, it's easy to be glib when things are going good...just like in poker: winners telling jokes; losers yelling "shut up and deal the cards"

Good luck to everybody! Stonewalls

[eastsider]

Many people only have heard "buy and hold" and they will continue with that strategy until the pain gets unbearable.

Memorable, bumpworthy line : )

[patent]

"Is there a reason to get personal about this?"

Nothing personal (towards LS) was intended.

You must be kidding. Asking him if he’s had a sex change operation and then stating that “not many changes [are] needed there” isn’t getting personal? If a sex change isn't personal, then what exactly would be? Look, that was a personal attack. I don’t agree with either of you all the time, and I’m hardly a LS cheerleader, and I’m not as well read on economics or the markets as either of you. Both of you make factual statements from time to time. Since I don’t the time to check every little fact each of you aver, I’m forced to evaluate your positions based on trust. If you deny that was intended as a personal attack then I appreciate your making it clear just how careful you are with your statements, or how much I can trust you. One or the other.

Are you a member of the FR thread police or are you just assuming that LS can't defend himself for some reason?

Neither. I enjoy reading well reasoned comments, and appreciate it when even those I disagree with provide comments, as it forces others to rebut them with substantive ideas. That helps me learn.

patent  +AMDG

[eastsider]

If you are looking for an exit point and have remained fully invested, these kinds of mini-rallies should be used to get out and invest in defensive bear market investments.

It was a comment from you similar to this one that I credit with having saved me thousands of dollars. Thanks again.

A bear market is what we are now in, and this bear has a long way to go before it will end. The second phase of this bear is going to produce more damage than the first phase.

I heard on the business news this morning (WCBS-AM, New York) that markets were also down prior to the Gulf War, but that they went up when the battle was actually joined. Clearly, the listeners were being asked to induce that a similar downturn is occurring now as rumors of war abound, but that the market will recover when we finally act to oust Saddam. How does this kind of "geopolitical" analysis fit into the Phase II theory?

[rohry]

"You must be kidding. Asking him if he’s had a sex change operation and then stating that “not many changes [are] needed there” isn’t getting personal?"

I think that you completely misunderstood my post. Let me try to explain what I meant.

1) Abbey Joseph Cohen is a well known shill for the stock market and has been saying that "stocks are going higher" for the last 30 months of a major bull market.
2) Abbey is a woman
3) LS is a man

I was making a crack that LS "was" Abbey because his pronouncements are parallel with hers. I tried to make the added joke (maybe in poor taste) that she had to have had a sex change operation to "become" him, however.

The added crack that "not many changes are needed there" was aimed at Abbey because she is VERY masculine looking. It was not intended to demean LS (who I respect even though we completely disagree on economics and the stock market).

Sorry if I ofended anyone...

[patent]

Thanks.

[Dick Bachert]

...and the deeply inbred British royals are so fond of f**king one another, they have great respect for someone like Sir Alan who can -- according to Sir Lawrence (Kudlow) of America -- f**k up an ENTIRE WORLD ECONOMY.

[LS]

You sure I was responding to the same post---you had two. But, specifically,

American history has shown, repeatedly, that our greatest economic expansion came in periods with high trade deficits. We did not even go into surplus until the mid-1890s, as I recall. The 1980s had steady trade deficits, despite incredibly real growth. "Prosperity" and trade deficits are not at all linked, as the Spanish learned under mercantilism, when they always had trade surpluses---yet steadily fell behind England and France.

Second, and I think I also have made this point to you before, foreign countries often "double count" their exports and we accept their numbers (as far as I know) of the value of their count. I have seen, for example, RAND studies that have shown trade deficits as virtually non-existent in real terms of trade.

As for debt, I have constantly said to you---and you know this---that debt is a function of GNP/income and/or assets, both personally and nationally. I don't have the latest debt to GNP figures for the U.S., but in the late 1980s it was falling even as all the Dems and Robert Reich were whining about the national debt.

Several studies have shown our national debt to be highly mis-estimated. Our national assets are vastly undercounted, due to FEDERAL REGULATIONS.

For example, our gold stocks are valued by the measure $35 an ounce. Naturally, gold makes up a tiny portion of our national assets, but it is a prime example of how we have assets with market values 10X and 20X and even more what they are actually listed as on the books. The most recent estimate I have seen . . . and I admit this is about 12 years old (but I don't think much has changed) . . . that we had a slight national surplus if all assets are accurately measured (land, buildings, federal holdings, etc.)

Now, is that better?

[evaporation-plus]

Social democracies will spend until they can't spend anymore. Then they go in debt. Then they print money.

It's not only the Fed... Read any paper, any day, all governments down to the smallest locality can't seem to find enough money. After stealing all the low fruit, ie. sin taxes, now they all going after the big moneymakers such as property, income and sales taxes. The poor tax paying slob will get crushed in the near future. With the economy as it is it seems like something will have to give!!!

[LS]

Rorhy, again, two years of "being wrong" is NOTHING in a stock market, where assessments are usually based on 25-30 year track record. That is why I keep bringing up gold, because Howard Ruff's 30 track record of "buy gold" is pathetic. Compare to him, I'm Nostradamus.

Second, the experts and the polls do not support your view on who is leaving the market. Most tend to agree that these are first time investors. The people who are HOLDING are people like me, in it for the long term.

[RightWhale]

What he said.

[rohry]

"It was a comment from you similar to this one that I credit with having saved me thousands of dollars. Thanks again."

Give yourself a pat on the back, it was you that swallowed the bullet and made a move contrary to most of the "experts."

"How does this kind of "geopolitical" analysis fit into the Phase II theory?"

The markets were clearly into full bear phase before 9/11. Since then the pundits have used it and any number of other "explanations" as to why the market is losing value despite unprecedented Fed rate reductions, loose credit and massive government spending increases. The coming Gulf war is another excuse for the market seeing further lows. But, they claim, it will proceed back up to Dow 36,000 soon after the war is concluded.

Needless to say, I don't buy it.

[rohry]

"Now, is that better?"

Yep...although I discussed gold in neither of my posts...

Although your historical details may be correct I think the amount of governmental, corporate and household debt held is unprecedented. Add in unfunded trust funds (Social Security, Medicare, etc), underfunded pesion funds and the fact that foreigners own about 40% of our bonds and you get a house of cards ready to fall.

[rohry]

"Rorhy, again, two years of "being wrong" is NOTHING in a stock market..."

I'm just being consistent. I laughed at the Bears throughout the '90s, I'm going to be laughing at the Bulls until the market gets to fair valuation.

Let's assume that you got in the market when I did (around 1990). We were both right for 10 years. I got out in 2000, so I've been right for an additional 2.5 years for a total of 12.5. Because you've been in the market while it's fallen 30% you're back to where you were in late 1997. While you were only wrong for 2 years it has cost you tree previous years of gains (for a total of 5).

I guess we disagree again, surprise, surprise...

[bvw]

"in it for the long term"

That's always and ever an excuse, not a wisdom. While it is true that for each investment, the term should be considered, and that there are wise long-term investments, and that "short-term" investment approaches tend to be mostly speculation and gambling, still folks make that kind of statement when they don't want to know from Adam, so to speak. It's wishful, not wise; ignorantly wishful.

Some great investor said, "In the long run we're all dead." -- yet that is not near enough of an adequate knock to the "in it for the long term" canard.

[rohry]

"The markets rallied because despite Algore and "Puff's" histrionics, it is now a pretty done deal that we are going after Saddam; and because suddenly the GOP's chances of taking the Senate by MORE than 1 vote look better due to this..."

See, now here's an example of a non-economic post of your that I completely agree with!

[rohry]

"That's always and ever an excuse, not a wisdom...Some great investor said, "In the long run we're all dead." -- yet that is not near enough of an adequate knock to the "in it for the long term" canard."

Well put, you wordsmith you...

[razorback-bert]

In my buy and hold investment world, a stock paying me a cash dividend is the one to hold. I am still making a return even if the stock price is down and I am better able to sit and await an increase in the stock price.

Non dividend growth stocks are speculation to me, just like gold is some.

[rohry]

"In my buy and hold investment world, a stock paying me a cash dividend is the one to hold."

How have those energy stocks turned out that you were researching in the Spring? I expect that their prices are down but they are paying some dividends (I don't follow them so I don't know)?

[LS]

Good. Except that it has everything to do with economics because politics drives economics, and vice versa.