Not to worry. We're all going to be selling each other insurance and giving guided tours of downtown Toledo.
Richard W.
Richard W.
Hamburgers, Richard. You forgot the hamburgers.
You know, the ones we are going to flip for each other? Vegetarian ones, of course!
Jim badly needs an editor - he's constantly doing this. And what kind of car is an "Exxon-Mobile"?
It's interesting that on the charts above, Merck's financials look relatively solid - that kind of surprised me.
.....a close friend of mine is retired CIA.....since 9/11 he has been recalled and works special assignments on a contract basis.....the CIA has been actively trying to recruit qualified Iraqi exiles to participate in a post war government to stabilize the country....when approached, the exiles look down at their shoe laces and say nothing....
Good luck to everyone!
Stonewalls the Ant
Regarding the investment markets, the war won’t change the debt levels of this country; they will only make it worse. War isn’t going to solve or pay for Herbie Homeowner and Larry Lawnmower credit card bills. It won’t pay for underfunded pension plans or absorb the glut of tech capacity that still exists in this country and around the globe.
I'll comment on the tech capacity in a bit. The debt bubble is where I wholeheartedly agree with Jim; that's a hell of a ticking time bomb. As what has been propping up (such as it is) the economy has been deficit spending, it's not going to be pretty if the bubble pops while the rest of the economy is in the shape it's in.
Unless the Pentagon has plans to drop cell phones, DVD players, PC’s, video games and PDA’s on Iraq, there is a mountain of this stuff piling up in the warehouse and distribution channels around this country.
Considering that a bunch of E-bombs are reportedly headed toward Baghdad, this glut is going to be cut into as the Iraqi electronic infrastructure is going to have to be rebuilt from the ground up. Other than that possibility, which would only really be temporary, the glut will continue until production capacity is cut.
They (the quoted top 10 stocks in the Industrials, S&P 500 and NASDAQ) only become cheap if you use historically low interest rates, which are used to discount future earnings. Even then P/E multiples of 20, 26, 32, 88, and 188 are not a bargain. Dividend yields of .3, .6, and 2 percent don’t compensate in current return for many of today’s stock market risks. Nor are companies whose stock price is 4, 8, or 12 times book value, or 4, 6, 8, or 12 times sales. In summary, all we can say is that stocks have gotten cheaper than they were three years ago, but they still are far from being a bargain. At the bottom of bear markets you will find stocks selling at 5-7 times earnings. Dividend yields will be higher than Treasury bond yields, and will be selling at less than book value and annual sales. By then your neighbors will have sold out their positions forswearing never owning a stock or mutual fund in their lifetime. Speculating in stocks will cease do be a national pass time. Cable channels will go back to covering news and sports. People will go back to saving and consumption will be a luxury other than basic necessities. That is when you will know that the bear market has ended. That will be the time to buy with complete abandon. The only problem is that you would have had to conserve your capital and be in a position to buy.
Considering that there is far more money in the market chasing essentially the same level of profit, the historical price-to-whatever levels, which had worked in the past as the ratio of investment capital to profit had been essentially constant until recently, is at least a bit low. While I don't share Jim's belief that P/Es will drop to 5-7 at the bottom (I'm looking at more along the lines of 10-12), I agree that P/E's of 20 and above are out of whack, and that a good portion of stocks are still overvalued.
What would change this is if the "nouveau" investors abandon the market, thus restoring the historical "capital-to-profit" levels. That is what Jim is predicting, and as much as I want to completely disagree with him, I can't quite discount that possibility. The market can't be propped up until earnings catches up, and considering that the market has been undeniably propped up, I have my doubts as to whether a further decline in the market can be made orderly.
Bears repeating and I agree.