Agree with Jerry and the above commenters. More QE and stimulus will further misallocate and waste resources. It will further encourage unmerited overconsumption. It will further punish prudent savers by monetary debasement and discourage value producers by punitive taxes.
All these effects should be clear to any investor with basic understanding of economics, and the specter of additional distortions of a free market economy would cause investors to sell-off, not to buy stocks !! Thus, I am not buying the notion that "investors" sent the market up due to expecting another round of QE, rather that the QE recipients-to-be pushed up the market in gleeful anticipation of large bonuses they can get when the fed buys more of their worthless assets at our expense.
Markets detached from fundamentals in the mid-90's due to excessive liquidity from Fed. As time went by, investors lost sight of basics like dividend yields which have to be high enough above risk-free yields by a premium. Shills started justifying overvaluations by using "Earnings Yield", ignoring the fact that earnings are based on creative accounting (such as not deducting cost of executive options, etc...). The notion took hold that you can buy any stock at any absurd price and just hold it for a while, and a nice guy will then pay you more for it. This is not investing, but a Ponzi scheme, and many who bought into it have started to see the consequences
Over the next decade, market participants will slowly re-learn old fashioned investing fundamentals, and yes, they imply an S&P in the vicinity of 750 about now, or its inflation-adjusted equivalent in a couple of years.
On Nov 13 06:45 AM Archman Investor wrote:
> Absolutely. > The market is nothing more than a FED liquidity driven market.<br/>S&P > 500 should be at 750 or so which would be at its 25 year continuation > trend line. I have no idea when it gets there, but knowing that it > should be there, is what counts. Average Americans have no clue about > anything, that is why they continue to lose in the markets over long > periods of time. Just ask the average American who's portfolio is > at 1999 levels when it should be at 2009 levels. > > www.compdivplan.com
Global Markets in Review: In the Clutches of Uncertainty [View article]
"As Niall Ferguson, professor of history at Harvard University, wrote: ‘The reality being repressed is that the Western world is suffering a crisis of indebtedness.’ In which case, pumping out yet more debt will not be the answer."
This obvious fact has been repeated, many thousands of times, both by recognized experts, and by vast numbers amongst the general public, in editorials, letters to newspapers, comments on the web, etc.
Although some mavericks in congress have made similar remarks, yet, amazingly, the authorities who actually make decisions have persistently refused to recognize such an "inconvenient truth".
Dennis Gartman: Go Long Infrastructure, Short Everything Else [View article]
FCX have already cancelled their dividend entirely. I haven't checked PCU recently, but suspect they will, at least, reduce it.
On Dec 28 06:22 PM jegan ;-) wrote:
> Relating to 'Confusion's' question above. Although I like too like > Gartman's comments, his advice does seem to bounce around a lot. > One week it's 'go long of gold', next week 'I wouldn't touch gold > with a ten foot pole'. My advice is listen to what he has to say, > but unless you are a member of his newsletter, don;t follow his advice. > > > I'm curious why everyone that hears Obama's pledge for infrastructure > jumps on the SLX, or more commonly URE (Proshares real estate). Not > only did he propose an infrastructure buildout, which means bridges > and buildings, but an increased funding of broadband internet. <br/> > > Sometimes I feel like the 'Lone Ranger' here, but it would seem to > me that copper would be the best infrastructure/broadba... play. > Not only has copper been creamed... Now trading at 1.25 from 4+... > But PCU and Freeport McMorran are two excellent companies. And both > pa reasonable dividends (I'd keep an eye on the divs for both as > my feeling is that divs are generally coming down the next two years > ). > > My point is that I don't care what you build... earth movers, cars, > electronics, power stations, bridges, homes, laptops, Mr. Coffees, > refrigerators... etc... etc.... They all use copper. Not all of them > use cement or steel. > > jegan
Dennis Gartman: Go Long Infrastructure, Short Everything Else [View article]
I doubt that the steel demand for all the new bridges and tunnels will make up for the decline in demand due to fewer new petrochemical facilities, power plants, mining projects, industrual buildings, office buildings, malls, casinos, cruise ships, cars, trucks, etc. There is a capacity overhang in all these areas that has to work itself off, and many projects around the world that consume steel are being put on hold.
Ditto for other infrasturucture commodities.
Thus, I believe the infrastructure bandwagon (like all bandwagons) has been over-rated.
Between a Rock and a Hard Place [View article]
All these effects should be clear to any investor with basic understanding of economics, and the specter of additional distortions of a free market economy would cause investors to sell-off, not to buy stocks !! Thus, I am not buying the notion that "investors" sent the market up due to expecting another round of QE, rather that the QE recipients-to-be pushed up the market in gleeful anticipation of large bonuses they can get when the fed buys more of their worthless assets at our expense.
Are Stocks Making a Major Top? [View article]
You are absolutely right.
Markets detached from fundamentals in the mid-90's due to excessive liquidity from Fed. As time went by, investors lost sight of basics like dividend yields which have to be high enough above risk-free yields by a premium. Shills started justifying overvaluations by using "Earnings Yield", ignoring the fact that earnings are based on creative accounting (such as not deducting cost of executive options, etc...). The notion took hold that you can buy any stock at any absurd price and just hold it for a while, and a nice guy will then pay you more for it. This is not investing, but a Ponzi scheme, and many who bought into it have started to see the consequences
Over the next decade, market participants will slowly re-learn old fashioned investing fundamentals, and yes, they imply an S&P in the vicinity of 750 about now, or its inflation-adjusted equivalent in a couple of years.
On Nov 13 06:45 AM Archman Investor wrote:
> Absolutely.
> The market is nothing more than a FED liquidity driven market.<br/>S&P
> 500 should be at 750 or so which would be at its 25 year continuation
> trend line. I have no idea when it gets there, but knowing that it
> should be there, is what counts. Average Americans have no clue about
> anything, that is why they continue to lose in the markets over long
> periods of time. Just ask the average American who's portfolio is
> at 1999 levels when it should be at 2009 levels.
>
> www.compdivplan.com
Global Markets in Review: In the Clutches of Uncertainty [View article]
This obvious fact has been repeated, many thousands of times, both by recognized experts, and by vast numbers amongst the general public, in editorials, letters to newspapers, comments on the web, etc.
Although some mavericks in congress have made similar remarks, yet, amazingly, the authorities who actually make decisions have persistently refused to recognize such an "inconvenient truth".
Dennis Gartman: Go Long Infrastructure, Short Everything Else [View article]
On Dec 28 06:22 PM jegan ;-) wrote:
> Relating to 'Confusion's' question above. Although I like too like
> Gartman's comments, his advice does seem to bounce around a lot.
> One week it's 'go long of gold', next week 'I wouldn't touch gold
> with a ten foot pole'. My advice is listen to what he has to say,
> but unless you are a member of his newsletter, don;t follow his advice.
>
>
> I'm curious why everyone that hears Obama's pledge for infrastructure
> jumps on the SLX, or more commonly URE (Proshares real estate). Not
> only did he propose an infrastructure buildout, which means bridges
> and buildings, but an increased funding of broadband internet. <br/>
>
> Sometimes I feel like the 'Lone Ranger' here, but it would seem to
> me that copper would be the best infrastructure/broadba... play.
> Not only has copper been creamed... Now trading at 1.25 from 4+...
> But PCU and Freeport McMorran are two excellent companies. And both
> pa reasonable dividends (I'd keep an eye on the divs for both as
> my feeling is that divs are generally coming down the next two years
> ).
>
> My point is that I don't care what you build... earth movers, cars,
> electronics, power stations, bridges, homes, laptops, Mr. Coffees,
> refrigerators... etc... etc.... They all use copper. Not all of them
> use cement or steel.
>
> jegan
Dennis Gartman: Go Long Infrastructure, Short Everything Else [View article]
Ditto for other infrasturucture commodities.
Thus, I believe the infrastructure bandwagon (like all bandwagons) has been over-rated.