Earnings Comparison

Irrational exuberance? It doesn’t matter how bad the economy gets. The stock market keeps going up. Why? As long as we have a Fed that’s willing to devalue our currency nominal prices, including stock prices, will go up. The dollar index and the SP500 have an inverse relationship. Over the past 5 years the dollar has hit new lows as the Dow/SP500 hit new highs. The lower 90% of income earners are inflation taxed to death so the upper 10% on income earners can get richer.

Thanks George and Ben Too!!!!!

Well, there are those Alt-A loans that will be resetting soon, bigger pool than subprime,more stated income (higher FICO) more investor property, and neg am option arms to boot. So, when you hear about the subprime “write-ups” balance that against new “write downs.”

We are still nowhere near the estimates for credit losses, yet the market is pricing in the end of the credit crisis? Incongruous to say the least.

Watching CNBC today and one bull on the financials was asked, how about the idea that consumers will start defaulting on basic consumer credit. His answer-“well, during the last recession that happened but the financials made money.”

I will tell you this, after 8 months of negativity, these “long only” guys NEED this thing to be over in order to make their bonuses this year and they NEED to be able to tell their clients it is over in order to get in new money and they NEED new money most of all. Can you imagine a fund manger ever saying: “We see no opportunities or sectors we want to buy right now?” If it is not commodities anymore, then it has to be something..so why not “BUY FINANCIALS WITH BOTH FISTS.” It is like the old line: I don’t know if he is Mr. Right, but he is “Mr. Right Now” so for now, everything is fine, until it isn’t.

It doesn’t make sense, but it doesn’t really have to-that is the new pardigm in the new milleneum.

I would suggest that earnings charts be published in a basket of currencies in order to gage inflation effects but it seems that the dollar isn’t the only currency turning into a basket case.
Commodities have the “futures” problem (speculation with leverage and no plans to take delivery), so it’s paralyzing prudent investors who want real ROI after inflation and speculation costs.
This looks like a “go away in May” scenario for a huge diversity of markets.
1932 on Steroids.

Marcus Aurelius,

No help. No reasoned analysis. Here is the bull case for EMC poer that site: “Yes, they are subject to a slowing economy, but that isn’t going to last forever. The company is a leader in its field….The chart looks like EMC will move higher.”

Err….slowing economy will not last forever.” Conclusory. “The chart looks like the stock will move higher..” Chartology is not reasoned analysis in my book. “The company is a leader in its field.” Yeah, New Century Financial was a leader in it’s field, as was Bear Stearns. So, thank you, but not what I am looking for. No offense to the blogger in question and no offense to Marcus….

The stock market appears to be bullet proof. Good news or bad it just doesn’t seem to matter, right now. But that won’t last.

My “day job” is to be neither optimistic nor pessimistic, but rather, to sift thru the economic and market data to determine the reality beneath.

If the reality is not lovely, well, that’s irrelevant to me.

As noted back on Jan 23, and again on April 1, I do not think this is an environment to be short in. We are mostly neutral, running decent amounts of cash. (Is that positive enough?)

But happy talk for its own sake? You’ve come to wrong place . . .

Barry I’m wondering if your shop does any fundamental valuation research, or do you rely on sentiment/market/macro driven?