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John,
It might be a rush to something warm and fuzzy. But you know what they say, it
doesn't matter what you or I think, as long as there is a big enough crowd that
thinks otherwise.
I wish I would of studied more econ in times like these. I did here on the news
that the Fed helped to facilitate the bailout (per say) of Long Term Capital
Management because the Fed thought that US depositors would be effected if the
hedge fund failed. (I believe LTMC had 1.4 trillion under management.) To me
this tells me that the problems that have been effecting the world economy as of
late are beginning to knock on our door here in the USA. And from Greenspan's
comments, from his speech the other day, I suspect that what ever is knocking
(at the door of the USA) is not small in size.
One last thing, knowing some economics and enough mathematics I will suggest
that the world economy could get pretty ugly before it is over. The problem lies
in divergence. One very simple way to explain it is that all economies prices
change in a non-linear fashion. But all accounting methods are linear. Hence,
some where down the road when you start to add things up, the books don't
balance. From time to time countries make adjustment by devaluing their
currencies, adjusting their capital expenditures, etc. But now we are beyond
these mechanisms for making adjustments on the books. In a nutshell, Greenspan
and the Fed can lower interest rates as much as they want and it won't do
anything. Why? Changes in interest rates effect the economy slowly. i.e., the
results take 6 months to a year before the changes are felt. What is knocking at
the door of the USA is of unknown size and is moving at a much faster rate than
what any change in interest rates could subdue. And one problem to keep in mind,
if the fed moves too fast to cut rates they could add to the problem.
Harley
John Manasco wrote:
> Bill
>
> While I agree with the conclusion I believe the Fed was raising interest
> rates to fight inflation not cutting them. But now they are cutting them
> which makes utilities a good investment. Look at the recent rise in the
> Dow Jones Utility average. What I don't understand is why precious
> metals are rising in a deflationary environment if they are a hedge
> against inflation, which I also question. Is this just a rush to
> something that makes us feel warm and comfy or are we really going to
> see a rise in precious metals? Good question.
>
> John
>
> Bill Saxon wrote:
> >
> > Still more grist for the mill. To me this is scary. Any comments?
> > And the dollar is going to H..*
> >
> > Henry T Lee wrote:
> >
> > > Hi -
> > > One of my friend is a really bright econo type
> > > from the London School of Eco who just called
> > > me today about his thoughts on the world
> > > economy. Here what he said in a nutshell.
> > >
> > > The world's economies are going into a deflationary
> > > recession. Prices for commodities have been
> > > dropping for a while now. He thinks that the Fed
> > > will try to "inflate" the economies to fight a deflationary
> > > recession. One way to do that is to cut interest rates
> > > which is what the Feds are currently doing and will
> > > probably continue to do in the future.
> > >
> > > He believes that the recent rise in the gold prices
> > > reflex this change in the Fed's policy. And that
> > > precious metals will be a good investment now.
> > > He also thinks that the difference between now
> > > and the last ten years is that we are entering
> > > a deflationary recession whereas from 1980 to
> > > now - the Feds were cutting interest rates to
> > > fight the inflationary fears from the 1970's.
> > >
> > > So with that in mind - I checked the most recent
> > > performance of the following mutual fund types:
> > > 1. Precious metals
> > > 2. Energy Prices
> > > 3. Zero bonds
> > > 4. compared to the DJ-30 and Rydex Ursa fund
> > >
> > > So here are the % numbers based on the last
> > > 15, 30 and 60 trading days
> > >
> > > Investment_Type------15days------30days-----60days
> > > DJ30------------------------- -4 ---------- -10 ---------- -15
> > > Rydex Ursa fund-------- +5 --------- +9 ----------- +17
> > >
> > > Avg (gold funds)---------- +17 --------- +25 --------- +10
> > > Rydex Prec Metal fund +23 -------- +31 --------- +19
> > > AmerCent Global gold +22 -------- +34 --------- +17
> > > Fid Sel Prec Metal------ +21 -------- +32 --------- +13
> > >
> > > Avg (zeros bond funds) +6 --------- +8 ----------- +11
> > > AmerCent2025----------- +11 ------- +15 ---------- +20
> > > AmerCent2015----------- +6 --------- +9 ----------- +13
> > >
> > > Avg (energy funds)----- -3 ---------- -2 ------------ -16
> > >
> > > Any thoughts on this are welcome
> > >
> > > Yours,
> > > Henry
> > >
> > > -
> > > To unsubscribe: mail majordomo@xxxxxxxxxxxxxx with
> > > unsubscribe fasttrack <email>
> > > in the body of the message, substituting your actual
> > > email address for <email>
> >
> > ------------------------------------------------------------------------
> > [Image]
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