Tuesday, August 09, 2011

DR. STRANGELOVE, OR: HOW I LEARNED TO LOVE THE DOW

I am completely at peace with the idea that I don't know squat about the Stock Market.

Everything I need to know, I learned from an old boss of mine. To paraphrase: "It's never as bad as it looks and it's never as great as it looks. If you can skip the fear and the excitement and just look for the opportunities, you'll do all right."

I suppose that's a life lesson as well.

Casting fear aside, what I see from last week is a market that was not happy with the level of capital going to innovation. Last Friday and yesterday the market said "Wake up, People!" and now it's marking time to see if anybody got the message.

Unless you're a retiree drawing down on a trading account, this is an opportunity to reevaluate lots of stuff. Talk to your broker. If you're a day trader...well, there ain't no victims, only volunteers.

2 Comments:

At 8:14 AM, August 19, 2011, Anonymous Anonymous said...

I like your title line ... the DOW may indeed be a good ride, till it blows up. I got a broker call telling me stocks were "on sale", but of course the Dow has almost doubled from the lows, thanks to massive government stimulus.

QE3, the next heroin-like injection of cooked book money, is probably coming. But those I read think that will fail even sooner than the last injection.

"It's never as bad as it looks" ... until it's worse than it looks. Going off the gold standard helped our government pile on debt, to the point we now think a thousand billion (trillion) a year in new debt is not so bad. Most of the incredible debt is still hidden, but the day of reckoning is coming.

If you have money to burn and don't have your own business to invest in, MAYBE Microsoft or other stable companies are as good as gold, or better than the dollar. The famous PEG ratio says the P/E should reflect its Growth rate. That COULD mean the Dow is more fairly priced at 4000 than 11,000, since growth is not looking great.

The unprecedented Fed promise to keep interest rates near zero for at least a couple more years continues to punish savers, and tries to force money into bad investments.

Some would say that indicates the "Ponzi scheme" is coming to a head. We've had the dotcom bubble, the real estate bubble. Perhaps the currency bubble is the next to pop, as we see the Euro struggling to survive, but the entitlements and billionaire bailouts continue.

Consider too, that the boomers have been in their prime money making years during the 80's and 90's. Now they are retiring.

I don't claim to know how stocks will respond in the next decade, but there are no refunds. At least we'll always have the government to take care of us, right? Or we'll riot like they do in Greece.

Here is the one stock to bet on, "National Debt" ... it is sure to skyrocket.

http://fwd4.me/09PC

Bill

 
At 2:14 PM, October 03, 2011, Blogger UMRBlog said...

Bill,

Provocative stuff. By my calculation, the market only grew .6 of a percent in the ten years since 9/11. That's an outlier.

Read "Too Big to Fail" and "The Big Short" and be very worried. Yet, it seems like the only choice is to "buy" because there is virtually no hedge.

If you have $5000 gold, you have moats, turets and private security forces in your house high on a hill.

TYFCB.

 

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