Post of the Day
August 12, 1998
Communion of Bears Folder
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Subject: A lot of Bull
I got my hip waders on now. So go ahead with analyzing the market using tea leaves, planetary motions, and Gann Arithmetricks.
I don't think that there is any correlation what so ever between witchcraft and the movement of the market. If there is any hope of predicting the market it lies somewhere buried in chaos theory. The number of inputs, and the hourly variablity of those inputs, is staggering. In other words it is impossible to model.
What is tangible is to look at the snapshot of the world economy, and then try to judge what the many implications mean. No better computer for this task then the human mind. So what do we have?
|"Should you speculate on Asian Markets? Are the reforms in place? I am more uneasy about investing in Asia than KO, even at 50 time earnings."|
Asia - Economic crisis stemmed from fiscal mismanagement, croneyism and bad loans. The result of which has meant the flight of investment capital from the region. Where has that capital gone? A lot of it comes right here to the US markets and bonds.
Former Soviet Union - Corruption and crime form the underside of the markets there. Markets rise on support from the IMF, then fall in a panic. I wouldn't invest a roll of wooden nickles in that market. We are likely seeing some movement of assets from Russian markets to Europe and US.
Europe - Strengthening market and economy. The western partnership is strong.
China - A very large super economy, with a broad base built on cheap labor and government control. This behemeth will be slow to move in any direction, and is not likely to be a factor, at least not suddenly, in world markets.
Africa - still in emerging status, and a non factor, except for maybe South Africa.
What does it all mean for US markets? Will Asia pull the plug on GE? Will the Russian Mafias control of markets there affect ours?
When looking at the world situation today, I find no better place to invest than the US markets. What you gonna do? Call Moscow and go with Russian Index funds? Not!
|"Really the only place that I see that are worthy of investing anything are in Europe and the US."|
Should you speculate on Asian Markets? Are the reforms in place? I am more uneasy about investing in Asia than KO, even at 50 time earnings.
South African Gold Stocks? With the price of gold falling for the last decade, and the price of which being more closely tied to the cost of production than financial markets, watch out!
Really the only place that I see that are worthy of investing anything are in Europe and the US. I don't think we will see the feverish growth in the market we have seen for the last three years, but it will be steady. And it will beat T-bills.
Long term outlook is still good for US markets. That said we will likely see some corrections from time to time. We could see 10 to 20% declines. We could also see 10 to 20% increases, as the rest of the world invests in the only sane market, the good old USA.
Since I don't invest in Index funds, the general direction of the market is not that important to me. It is the individual stocks that I own that I will continue to evaluate the underlying businesses of. From that analysis alone I will make decisions to buy, sell or hold.
Anyone who thinks they can get an edge by reading the stars deserves to lose every penny they invest!
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