Neither of these statements are even remotely true, Cathy, thanks. We have elevated PEs on record earnings and profit margins, both mean reverting series if you care to look. These interest rates are not terribly high compared to the 70s true, but you picked out a straw man there to knock down haven’t you?

“The reason people are ignoring the bearish news is that they have little/no long term consequences. ”

TRUE, thanks to the Greenspan Put. But I think you will not like the end to that bit of moral hazard either. It won’t be pretty. Or do you think that it’s now the Feds job to keep asset classes inflated? If so, the flip side to that is $USD devaluation and goodbye to price stability. So far, so good though with the Fed talking tough (“managing inflation expectations”) and flooding the system with money. It works until it doesn’t even if they do give Nobel Prizes for the concept.

Thanks for the tip. Nice unique handle you have.

The bubble can also be rapidly popped now by a reduction in the money supply. For even more obvious reasons this won’t happen either.

The third option, which is what is currently happening I believe, is the fed will continue to attempt to print money at a rate that will conitnue to support the economy while we work our way out of this bubble. I am assuming that rate of money supply growth is between 2% and 8%. This is in the best interest of the fed and seems like their only alternative

Theoretically there will be a rate of growth that can deflate the bubble slowly without causing a panic. Do I believe the fed can find it? I believe they are bending their will in that direction and I don’t think the problem is as complicated as everyone would have us believe. I don’t think this is a dynamic problem but a static one. The problem is finding the ideal rate which is what the people at the fed are paid to do

you are welcome. I first got that link from a poster on this blog a while back so I am now returning the favor.

Secondly, Mark,

you should add a little uniqueness to your posting handle. At least that way it is more evidential that you are being copied

and finally, Teddy,

Has the concentration of wealth caused a discernable change in the markets? I would love to see if there is data on that. All I know is that good buys are still good buys and that the big boys dis them until they have loaded up their pockets. Then suddenly the dog is a beautiful thing again. Nothing has changed much. If anything the game is just a little quicker and more efficient these days.

If you’re sharp the game is still there because that’s how they like to play it. You also can’t rule out the human element. One of my favorite trades is identifying quality management that is outperforming their peers or the economy. I believe that character and style tend to be consistent and it will show up in the way a CEO manages his company both on the good side and the bad side.

Those things can only be determined over longer periods and by the time a manager has built up a track record of consistent performance he has won the job until he no longer wants it. Thus he will probably perpetuate his performance going forward

Also, the big boys can’t easily get into the small plays without causing major distruption to the price. That gives the smaller player a huge market to play in that the big boys won’t touch until we deliver it up to them in size

As for the Fed and the money supply, we are not talking about micro moves here but the fed is working very hard behind the scenes to influence the general direction and the general direction they seem to be aiming for is a slow motion devalutation of people’s savings and dollars over time. I haven’t seen any evidence that this has changed at all with globalization. The reason for this is because the other economies of the world are also governed by central banks and fractional reserve banking systems and those banks are following the same basic game plan as the fed.

What they do is systemic and there is no significant financial destination that you can go in the world where the game is any different. You could read the minutes and money supply figures from other CB’s I suppose but that is like trying to get a different spin on the news from two different sources in the main stream media….especially when it comes down to the bottom line issues. They are all on the same team and we are the (willing?) pawns in their game. They want (relatively) satiated pawns though, it keeps us quiet that way

Does anyone here ever look at any market besides the US stock market and that, in the most general terms?

Is this a reflection of the shortsightedness that many Americans (assuming you are from the USA, apologies to those who are not) seem to have? I am seeing a pickup in other economies and markets. Although we are a very big market when I look at he world in terms of regions I see major markets along with sub markets.

Let me share: Although there is always work to be done, the USA/Europe has quite the developed physical infrastructure. From what I have read ( If anyone wants me to travel on their dime to investigate please contact me!) many other countries and regions need to build up their infrastructures. This relates to demand. I think we need to get in between source and demand and filter out our take. MMMMMMM cement,mmmm zinc, mmmmm technologies, mmmmm you get the idea.

Any one here ever think about how cell phone technologies has allowed areas of the so called 3rd world to bypass all that wiring with “cell” phones? All of a sudden millions of lbs of human brains get to reach out to each other over vast silences. Think they are not going to talk about their concerns to each other? The rate of change itself, is increasing. Lets make sure we are not applying 19th century ideas to 21st century situations.