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Joined: Feb 2006
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Pooh-Bah
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Pooh-Bah
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Wait... when did Bank of America buy Wachovia? I work for Bank of America and I was never told of this!!!!!
Bank of America bought Merrill Lynch. Wachovia was bought by Wells Fargo. Oops, sorry about that. The acquisitions are happening so fast, it's like the pantheon of Hindu Gods. I can't keep all the "begats" straight anymore! But I think my point about Bank of America yielding >8% is still valid. When the stock price rises to give a yield under 3%, then it will make sense. (Unless inflation jumps upwards of 10%, but we seem to be seeing deflation these days.)
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Joined: Dec 2005
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Pooh-Bah
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Pooh-Bah
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But then, that is the inherent stupidity of stock markets in general. Stocks are supposed to represent fractional shares of assets of a going company, not an exchange based upon daily marginal fluctuations of perceptions. Until we get away from that idiotic thinking, speculative bubbles will persist. I will not hold my breath for a change.
"It's not a lie if you believe it." -- George Costanza
The whole problem with the world is that fools and fanatics are always so certain of themselves. --Bertrand Russel
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Pooh-Bah
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Pooh-Bah
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But why do you think that proven investors like Warren Buffet are now buying a ton of stocks??? Because today those prices are lower than they've been in a long time and they plan on holding those stocks long term. Kap... Some people say stocks are still headed for the toilet. Some people say that this is ... or is near the bottom and that we can expect a traditional bull market rebound. Some people expect stocks to wallow around the current valuations for a an extended period of anemic consumer demand and belt tightening. Everyone has an opinion... and taken together... those opinions constitute the market price. I thinking Warren Buffet a great guy and tremendous investor, If your statements about him are correct... then it would seem that he feels that the current market is not fairly priced.... which is the post I was responding to. Further, Buffet put about 5 Billion into GE when it was trading at $20 per share. It is now trading at $16... which is a 20% discount off the price he bought in at. No doubt he will get his money in the long term.... and dividend payments in the mean time. I personally interpreted the end of world posting on this board as an indication that it was time to buy stocks... and did so. So, ultimately I agree with Buffet's opinion. But it is no more or less than an opinion about the future. But, returning to the central point I was making, the price of a stock is determined by a lot of factors. If Buffet was really a flawless pricing genius, he would have sold his entire portfolio 12 months ago... because as NWP indicated, stocks were hugely over valued. But he did not do that... why? It is not because he lacks genius. It tuns out that there is no simple pricing equation. All we can say for sure is that stocks today appear to be somewhat below typical price to earnings ratios. So, they may be a bargain. Or, on the other hand, we may face a total economic collapse... in which case stocks are still over priced. In general, a Key factor in pricing stocks is the market expectation of what the future holds. And that turns out to be a largely speculative calculation... which leaves stock prices highly vulnerable to bubbles and crashes. But, in any case, since we do not know the future, we do not know the correct price for a stock. And so all we really have is our op[inion about the future and the actual market price today.
"It's not a lie if you believe it." -- George Costanza
The whole problem with the world is that fools and fanatics are always so certain of themselves. --Bertrand Russel
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OP
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These are important parallels, numan, and more relevant to the overall question. The error, of course, is that in 2008 we have had the experience of a Great Depression and have some idea what caused it and how to respond. There are many aspects of the present situation which are unprecedented and unique. Do we know how to respond to them? Up to now, apparently not. Are the worst actors chastened? I doubt it, but I am hopeful that the worst actions can be countered. The vampires who run the system are prepared to make profits out of any economic situation, good or bad ---- whether the rest of us are turned into hamburger meat or not. Countered by whom? The vampires who make the laws? -
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I remember a story I heard about a high government minister in the Guomindang government of China ----- the one before the Communists took over. He wanted to have a party at night, with his extensive gardens lit by innumerable electric lanterns. To save money, he ran a line out to the power poles near his mansion, so that he got free electricity.
The very same minister sank all his wealth into Guomindang government bonds, and lost everything when the Guomindang fell.
The irony is that if this man and others like him had had enough public spirit not to chisel and be corrupt in small matters, the Guomindang might have survived and they might have remained wealthy.
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Joined: Feb 2004
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Joined: May 2006
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This is why I never look at this stuff; a few weeks ago someone posted a link where you could check the soundness of your bank. I did, and mine looked very strong.
I clicked on Bob's link, and the name of my bank leapt out at me.
Turned out to be a small, regional bank with no connection (that I can see) to the large bank I use. But - it did stop my heart for just a second.
grrr.
Julia
A 45’s quicker than 409
Betty’s cleaning’ house for the very last time
Betty’s bein’ bad
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I personally interpreted the end of world posting on this board as an indication that it was time to buy stocks... and did so. I hope that you have relatives who will take care of you when you are old. -
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- Debt cold turkey
Recently, the US government has continued its bailout of stricken financial institutions, even as it mulls a wider rescue of incorrigible corporate entities such as US automakers.
[SNIP]
....those looking for the bailout of G-7 economies to follow Keynesian practices are also barking up the wrong tree. This is because the experience of Japan in the 1990s is more useful, namely that firms with negative net worth will continue to repay debt even if interest rates go to zero, rather than invest in new projects carrying operational risk. The same is true of US homeowners and various others elsewhere in the world.
Debt reduction will in turn continue to cut the global economy's output. This is the "cold turkey" treatment of debt being withdrawn from habitual borrowers, much like taking away drugs from crack addicts. The rest of the world has no reason to support the efforts of the G-7 in keeping their debt addicts in the habit; indeed it has now become economically unviable for Asians to support these borrowing habits across G7. That is what I called the Fukuyama moment in finance (Asia Times Online, October 18, 2008), the idea that the history of financial markets is largely irrelevant now, particularly with respect to the building blocks such as what constitutes a risk-free asset.
The only way out is for G-7 countries to support infrastructure building and government spending in Asian countries, such as China, India and Southeast Asia. These countries have the demographics and the profit potential to repay today's borrowings, and certainly would provide a bigger boost to the global economy than whatever can be achieved by throwing money at folks with negative net worth in the US and elsewhere. Not to mention for us to support infrastructure building and government spending in the United States. Most important ---- cut military spending. The military-industrial conspiracy can be deeply wounded now, even if it cannot be killed quite yet. What a country calls its vital economic interests are not the things which enable its citizens to live, but the things which enable it to make war.---- Simone Weil -
Last edited by numan; 11/28/08 03:38 PM.
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- Icelanders Attack Police Station as Bankster Plan UnfoldsIn October, the CBC reported on the “exceedingly polite protest” in Iceland as the bankers looted the country. A placard at a demo outside of Iceland’s parliament in Reykjavik stated: “Stay calm while we rob you.” CBC asked: “How long will these people stay polite about their losses?”
It now appears they are no longer polite, even for Icelanders. Last Saturday, protesters angry over the 50 percent devaluation of the Krona and the impending third worldization of their small country clashed with police. “Police clashed with hundreds of protesters...."
According to the Associated Press, the “demonstrators blame the government for having failed to adequately oversee the banking industry.” In fact, many Icelanders blame the government not for overseeing the banking industry but working in a cahoots with it to loot the country. Iceland’s politicos are no different than their counterparts in Europe and the United States: they are sock puppets for the global elite who are determined to crash the global economy country by country and buy up goodies for pennies on the dollar.
[SNIP]
Debt is an efficient tool for leveling economies and decimating living standards. Monetary and fiscal austerity, privatization, and financial “liberalization” — as in neoliberalization — is no longer strictly for Africa and the third world, it is a prescription that will be imposed on first world nations as well. Iceland is a harbinger of things to come in New York, London, Berlin, Los Angeles, and elsewhere in the developed world.
On the day the grocery stores in America are as bare as they are in Iceland, the ensuing riots will be anything but polite. The future becomes clearer. -
Last edited by numan; 11/28/08 05:43 PM.
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