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Lionel
I'm just starting to organize my thoughts about this scenario.
With the 'world wide' economy, everything is so intertwined that my thoughts
are as soon as Europe starts to fall, we will be on the slippery slope right
behind them.
One of the things we've done, as a country, is to cannibalize our
manufacturing capabilities and locate them off shore, so that even a
beginning recovery will not help us until later in the cycle. We're
primarily a service and hi-tech economy, IMHO. That includes finance,
information, electronics, etc. I have varying thoughts about what
industries would be the next 'generation' oil and automotive companies.
Here are some of my thoughts, FWIW.
First, you have those industries that concentrate in entertainment, news and
information, sports and other escapist outlooks. Granted the economics will
change greatly in sports, etc. This might even bring the TV networks back
to life.
Next, you have those industries that support rebuilding, repairing and
otherwise fixing things because people won't be able to afford new. So,
instead of Republic Industries (or whatever that's called) being the play,
you would buy stock in that other company from Virginia that's building a
network of used cars dealerships with some supplemental new car dealerships
added in. Just the opposite of Republic's business model.
We do have a significant advantage over the rest of the world, in so far as
we already went through our downsizing and restructuring here, while they
haven't. They've been hiding behind cheap labor and low interest rates to
cover their inefficiencies in organization and management. We also bit the
big one when we set up the Resolution Trust Corp. to get rid of all the bad
real estate loans. Japan and the rest of Asia hasn't even begun to address
their real estate problems. I'm hoping that since we've already done a lot
of the social restructuring here, we'll miss a lot of the upheaval that will
impact the rest of the world.
With regard to the economic safety net, I'm not sure I agree with you,
having seen our Government in action over the years. We have wasted
trillions of dollars during the last 40 years and are in worse shape than
when we started, IMHO. At least when it comes to education, healthcare,
family values, etc. We're currently seeing the systematic destruction of
the medical industry in our country under Clinton. Ever since they were
unable to get their socialized medicine plan through, they have undermined
the entire fabric of medicine in this country. In the San Fernando Valley,
in LA, only one hospital is profitable. The remainder are all losing money.
In LA there are probably not 2 hospitals making money. A couple of our
famous ones are so mismanaged that the only way they stay in the black,
after their 1,200 staff downsizing, is to live off their endowment. Don't
want to get into that, but we're seeing the development of a two tier
medical system. Private pay and the rest.
Regards
Guy
-----Original Message-----
From: owner-metastock@xxxxxxxxxxxxx [mailto:owner-metastock@xxxxxxxxxxxxx]
On Behalf Of Lionel Issen
Sent: Friday, August 14, 1998 3:33 PM
To: metastock@xxxxxxxxxxxxx
Cc: Guy Tann
Subject: Re: Preparing for the worst??
Guy:
I think that your posting is timely.
It took 20 years, from 1929 to 1949, before the Dow-Jones Industrials reach
the same level as in 1929.
In past periods like this, people would put their money into government
bonds, gold and producing gold mines. BUT gold is way down, and unlike
1929, interest rates are also way down. In 1929 the brokers interest rate
was, I think, 20%, so that putting money into government bonds, which paid a
bit less than this, made sense.
In the 1930's, I've been told that the only industries that expanded were
oil and aircraft. What would be the equivalent ones today?
In the 1930's municipal and county governments confiscated houses when the
owners couldn't pay the taxes. At that time, mortgages were callable (they
were actually either 30 days or 6 month renewable mortgages) so that
mortgage banks got a lot of property for next to nothing ( yes I know that
many mortgage banks also went bust). Similar things could happen nowadays
because the Republicans have largely dismantled the welfare system and the
banks have very much the same unregulated powers that they had then. Please
note, I am not advocating a welfare state, but our industrial society is
very fragile and the so-called safety net is almost non-existant. What
should we and our governments do to ameliorate the kinds of conditions that
could/would develop here in world wide depression? Here in Texas, many
people suffered enormously in the 1980's oil crunch. Some people have not
been able to recover even now.
Any ideas?
Lionel
-----Original Message-----
From: Guy Tann <grtann@xxxxxxxxxxx>
To: Metastock <metastock@xxxxxxxxxxxxx>
Date: Friday, August 14, 1998 5:03 PM
Subject: Preparing for the worst??
>I wrote something about this the other night, but can't find a record of
>sending it or of receiving it back from the group. Probably sent it on to
a
>XXX site somewhere :) ,
>
>Anyway, with the 'depression' in Asia, the near collapse of the Russian
>market and the potential collapse in Europe, I wonder if anyone here in the
>group has done any experimenting with various indicators that appear to
work
>better in a bear or depression type market???
>
>I got the following missive from my dad last week, FWIW:
>
>"HI
>
> DOW DOWN 250 RECOVER TO CLOSE AT 112
>
> Asia in DEPRESSION wait for EUROPE to confirm if when they are hit the
>WORLD will
> also be in depression Could last several years I sincerly hope not
> Socialism will triumph
>
>LOVE DAD"
>
>I realized that it's been 20 or 30 years since I've had to deal with this
>type of market. It's hard to imagine making a living when the equity
market
>might move just 2% the entire year.
>
>So I pose the above question as something we might want to discuss. Not
>only which indicators might work best, but what vehicles would be best for
>investing, such as equities (type of industry that best weathers this type
>of downturn), options, futures (metals, food stuff, etc.), and whatever
else
>there may be.
>
>Indicators don't look promising. In additional, my latest issue of Road
and
>Track has more $200,000+ sedans in it than were being built in the
1920-1930
>era. Look how many of those survived, other than in collections. Look at
>housing! We visited my folks and my wife's family in March. I expect
>ridiculous prices here in California, but Toledo, OH for gosh sakes :) !!!
>There were several areas with houses from $500k to over $1mm. Granted you
>get more there than we do here in California, but come on, let's be
>realistic.
>
>Do we take our housing profits and sit on the sideline for a couple of
years
>and rent? It's hard to believe that my house will appreciate much more in
>value than it has. Our median prices are up over 25% from March, 97 to
>March, 98.
>
>Anyway, I need to start thinking about a defensive posture in trading.
Most
>of our stuff is short term anyway, so our basic trading strategy won't
>change, other than building in a negative bias similar to the positive bias
>we built in for this long bull move. I'd like to look at some long term
>ideas. With the market still up there, we should be able to take some
>longer term defensive positions without a lot of risk as a hedge against a
>multi year stagnation (you'll notice I don't use the word depression?).
>Granted, we can short 'stuff', buy OEX Puts (longer term) on recoveries,
>etc. I would still like to think we will get another run up which will
>enable me to take some reasonably priced Put positions, but I haven't seen
>the impetus for the run up.
>
>Any thoughts would be appreciated...
>
>Guy
>
>
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