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Better yet: Option credit spreads in calls for the hi-flyers (hi PE) and
credit spreads in puts for the value plays. If the market meanders, you
clean-up.
> -----Original Message-----
> From: Norman Winski [mailto:nwinski@xxxxxxxxxxxxxxx]
> Sent: Monday, November 12, 2001 5:48 PM
> To: realtraders@xxxxxxxxxxxxxxx
> Subject: Re: [RT] Layoff's continue to increase
>
>
> M Simms,
>
> I don't find that concept so unusual. The stock market tends to over
> discount possible future events in both directions. During the very cyclic
> 60s and 70s, Nobel Prize winning economist Paul Samuelson said that the
> stock market had forecast 11 of the past 6 recessions. On the
> other side of
> the coin, it was very unlikely that the Japanese economy would
> meet the late
> 80s expectations reflected by the 100 and 200 price to earnings ratios of
> many of their leading stocks even during prosperous times. The result is
> that their stock market bubble is still unwinding. It took 25
> years for the
> DJIA to get back to even after the 1929 peak. In reference to
> our NASDAQ and the unwinding of the 2k internet bubble, I quote Karen
> Carpenter, "We've only just begun". A good analogy would be to check the
> performance of the growth stocks of the late 1920s such as RCA and GM. and
> plot their performance for the ensuing 30 years. Yes, given the right
> timing one could have made an excellent return buying these
> stocks, but that
> "IF" is the "if" that made all of the difference.
>
> What this means for the next few years is that even if we get a few
> boomlets, the stock market is likely to underperform the underylying
> economic results. This is due to major forces now coverging that should
> cause a major long term contraction of price earnings ratios. These forces
> are 1) stock PEs are historically way overpriced despite an 18 month
> correction. 2) Major fiscal and eocnomic stimulus is the
> current only hope
> to revive this economy and avert a possible depression. This
> stimulus isn't
> free and will come from borrowing from the future. It will also cause some
> inflation if and when there is any economic recovery. The ensuing
> inflation
> will cause further PE contraction because PE ratios are optimized
> when there
> is a very low inflation rate. We can expect an economy more like the late
> 60s and early 70s for the next few years. After the current
> recovery, which
> I think may have begun last week, we can expect a bigger and deeper
> recession which may result in the stock market getting market down to a
> median historical level in terms of valuatoin.
> So, how does one make money in this enviroment? In order to play the
> coming economic recovery, forget about over valued high PE
> stocks. You will
> have to be very selective if you buy stocks and hope to make a good return
> on the long side. The best bet currently is to invest in one of
> the several
> very depressed commodities such as Coffee, Cotton, Copper,
> Soybeans, Sugar,
> or Silver. All of these markets could easily appreciate 50% and
> barely get
> back to prices that they were trading 30 year ago. Check it out.
> Save this
> note and check back in February 2002.
>
> Cheers,
>
> Norman
>
>
> ----- Original Message -----
> From: "M. Simms" <prosys@xxxxxxxxxxxxxxxx>
> To: <realtraders@xxxxxxxxxxxxxxx>
> Sent: Monday, November 12, 2001 3:36 PM
> Subject: RE: [RT] Layoff's continue to increase
>
>
> > Hmmm....attached chart shows the Nikkei average down 70% since 1990.
> > I guess their stock market acts independent of their economy then ?
> > Wow - that's a first.
> >
> > > -----Original Message-----
> > > From: bruce.larson@xxxxxxxxxxxxx [mailto:bruce.larson@xxxxxxxxxxxxx]
> > > Sent: Monday, November 12, 2001 2:14 PM
> > > To: realtraders@xxxxxxxxxxxxxxx
> > > Subject: Re: [RT] Layoff's continue to increase
> > >
> > >
> > > That's a popular misconception. Japan's gdp growth outstripped that
> > > of the US for the first half of the 90s. Real estate did OK in the
> > > early 90s as well. Initially, the pain was isolated to the stock
> > > market. Yen strength into 1995 which interestingly coincided with
> > > the Kobe earthquake and Nick Leeson hit hard. Short-term rates were
> > > 3-4% from 1986-89, they were 3-4% in 1992-93. Short rates dipped
> > > below 1% after 1995.
> > > You know what I also find interesting? Everytime I talk to people I
> > > know in Japan, they say its business as usual. Its primarily
> > > manufacturing and brokerage that are suffering. Otherwise, Tokyo is
> > > bustling. I remember in the go-go 80s these same people said the
> > > stock market boom didn't really effect them either. Just made real
> > > estate prices sky-high. But they already owned homes and weren't
> > > planning on moving so it didn't make any difference. For others,
> > > what was then beyond their reach is now affordable. If you leveraged
> > > your home and bought more real estate or stocks at the late 80 early
> > > 90s mania you're screwed. No different than the Nasdaq mania. If
> > > you weren't in it, you never got rich nor poor. Just a sonic boom
> > > that rattled the windows. I'm sure if you bought Silicon Valley real
> > > estate in the mid-90s, your home has doubled in value. The only
> > > people worried are those that bought in the past 2 years.
> > >
> > >
> > > --- In realtraders@xxxx, "M. Simms" <prosys@xxxx> wrote:
> > > > Yeah, that's exactly what happened to Japan.....interest rates went
> > > to zero,
> > > > prices went to near-zero......and they've been in recession for 10
> > > YEARS.
> > > >
> > > >
> > > > > -----Original Message-----
> > > > > From: bruce.larson@xxxx [mailto:bruce.larson@x...]
> > > > > Sent: Monday, November 12, 2001 12:33 PM
> > > > > To: realtraders@xxxx
> > > > > Subject: Re: [RT] Layoff's continue to increase
> > > > >
> > > > >
> > > > > Sorry but I'm simply astonished at how cheap everything is. The
> > > rest
> > > > > of the US pumps its gas for 90c-$1.30/gal. We were all
> > > incredulous
> > > > > the other day that our favorite PapaJohn's pizza is offering 2
> > > large
> > > > > pizzas for $12.99. I used to pay $15 for one large pizza at
> > > > > RoundTable 20 years ago. My wife is going crazy buying clothes
> > > > > because they are giving'em away. Everyone in my neighborhood
> > > bought
> > > > > brand new Mercedes from their 5% cashout refis. Mortgage rates
> > > are
> > > > > down making everything more affordable, tax rates are going down
> > > > > making everything more affordable, airfares appear half price
> > > from a
> > > > > few months back, zero interest rates and deferred payments on
> > > > > everything from cars to computers to furtniture, soon everything
> > > will
> > > > > be free.
> > > > >
> > > > > --- In realtraders@xxxx, Ira Tunik <irat@xxxx> wrote:
> > > > > > In the bay area a lot of high priced people have been laid off.
> > > > > 500 from
> > > > > > Medtronics, several hundred from Agilent, and many of the
> > > telecom
> > > > > companies
> > > > > > have folded their tents. Some of the big telecom companies have
> > > > > laid off
> > > > > > hundreds. Those $700,000 to million dollar homes that where
> > > going
> > > > > like hot
> > > > > > cakes last year might just come back on the market. Even the
> > > wine
> > > > > industry
> > > > > > which is big in Sonoma and Napa counties is taking a hit with
> > > > > layoffs. Yet
> > > > > > the owners of retail space keep raising the rents, Apartment
> > > houses
> > > > > have a 2%
> > > > > > vacancy factor and their rents keep climbing. Everyone says
> > > that
> > > > > we are in a
> > > > > > deflationary spiral and prices are coming down. Air fares are
> > > > > supposed to be
> > > > > > a bargain. forget it. Checked on flights to Hawaii, they are
> > > twice
> > > > > what they
> > > > > > were the last time I went just over a year ago. I am wondering
> > > > > what good the
> > > > > > producer price index is when we import almost everything we use.
> > > > > Cloths and
> > > > > > shoes from the far east, food and vegetables from South America
> > > and
> > > > > > Australia, timber from Canada, oil from the middle east,
> > > > > electronics from the
> > > > > > far east and auto parts from all over. We do produce missiles
> > > and
> > > > > airplanes
> > > > > > here and I am sure that every household has at least two or
> > > three
> > > > > of each.
> > > > > > The made in America symbol means very little. It should read,
> > > > > assembled in
> > > > > > America, parts made elsewhere. So when you see all those fancy
> > > > > numbers, look
> > > > > > at the balance of payments and see where your dollars are really
> > > > > going. Of
> > > > > > course gas prices are back down to $1.75, a real bargain.
> > > Medical
> > > > > costs are
> > > > > > up, health insurance costs are up, dental work costs more,
> > > almost
> > > > > everything
> > > > > > you buy to sustain life is up in cost. Of course you can buy a
> > > 2
> > > > > MHz
> > > > > > computer for under $2000 and that is proof that prices are
> > > coming
> > > > > down. How
> > > > > > many of you buy a computer on a weekly basis? Is it really 0%
> > > > > financing on a
> > > > > > new car or is the cost hidden in the price? What is truth and
> > > what
> > > > > is
> > > > > > fiction in the numbers that are thrown our way? Could you
> > > maintain
> > > > > the same
> > > > > > life style on last years income or on the income from 5 years
> > > ago?
> > > > > As the
> > > > > > powers say, we haven't had any inflation for the past 5 years.
> > > Is
> > > > > there any
> > > > > > correlation between the governments CPI, PPI and inflation
> > > numbers
> > > > > and the
> > > > > > cost of living. They produce the numbers, we have to pay to
> > > live.
> > > > > Oh, yes.
> > > > > > You did get a tax rebate and immediately went out and bought
> > > that
> > > > > cabin
> > > > > > cruiser you where looking at with all that money the government
> > > > > returned to
> > > > > > you. Have a good week. Ira.
> > > > > >
> > > > > >
> > > > > > bruce.larson@xxxx wrote:
> > > > > >
> > > > > > > I've read plenty about hospitality and tourism being hit in
> > > Orange
> > > > > > > County(Disneyland) where I live. But these are all minimum
> > > wage
> > > > > jobs
> > > > > > > (restaurants, airlines, hotels) where there was a labor
> > > shortage
> > > > > > > several months back. These aren't people who buy expensive
> > > homes
> > > > > and
> > > > > > > cars.
> > > > > > >
> > > > > > > --- In realtraders@xxxx, "Me Tarzan" <ibe98765@xxxx> wrote:
> > > > > > > > "I, for one, don't personally know anyone who is out of a
> > > job"
> > > > > > > >
> > > > > > > > Consider yourself lucky. I know way too many. With all the
> > > > > > > defense
> > > > > > > > spending going on, So. CA might not get hot too bad. But
> > > IMO,
> > > > > the
> > > > > > > SF
> > > > > > > > Bay area is the harbinger for much of the rest of the
> > > country in
> > > > > > > this
> > > > > > > > regard. We even have a web site for out of work people to
> > > get
> > > > > > > > together and do other activities <g>
> > > > > > > (http://www.recessioncamp.com).
> > > > > > > > I'm a few miles from SF Airport where United Airlines has a
> > > > > major
> > > > > > > > hub. They have laid off a good number of people here. I
> > > hear
> > > > > that
> > > > > > > > In-n-Out burgers has lowered their starting hourly rate from
> > > > > $10/hr
> > > > > > > > to $8 because their are so many candidates. Hotels are
> > > mostly
> > > > > less
> > > > > > > > than 50% full and are laying off or cutting back the hours
> > > of
> > > > > > > > workers. Restaurants are cutting staff because people are
> > > not
> > > > > > > eating
> > > > > > > > out as much or spending as much when they do. There are
> > > rental
> > > > > > > > vacancy signs all over my neighborhood as people without
> > > jobs
> > > > > have
> > > > > > > > either moved in with someone else or left the area.
> > > Recruiters
> > > > > are
> > > > > > > > going out of business left and right, saying businesses are
> > > not
> > > > > > > > hiring. People are hurting.
> > > > > > > >
> > > > > > > > As to the unemployment numbers and 5.4% being lower than
> > > what
> > > > > was
> > > > > > > > previously accepted - that was a different time. We've
> > > built
> > > > > our
> > > > > > > > current economy around low unemployment. People expecting
> > > to
> > > > > > > always
> > > > > > > > be able to find work went out on a limb to buy expensive
> > > houses,
> > > > > > > cars
> > > > > > > > and take 2 vacations a year. That drove the economy forward
> > > > > across
> > > > > > > > all industries. But up here, it generally takes two working
> > > > > people
> > > > > > > > to even begin to afford a mortgage. What happens when at
> > > least
> > > > > one
> > > > > > > > of those people loses their job? Bad news cascades and not
> > > > > only do
> > > > > > > > people not by houses and cars, but they cut back on other
> > > > > spending
> > > > > > > as
> > > > > > > > well. Predictions I have seen are for unemployment to hit
> > > 6%
> > > > > when
> > > > > > > it
> > > > > > > > the numbers are next reported.
> > > > > > > >
> > > > > > > > Here's a good economic link with a lot of info on
> > > unemployment
> > > > > that
> > > > > > > I
> > > > > > > > recently came across:
> > > > > > > > http://www.epinet.org/
> > > > > > > > --- In realtraders@xxxx, bruce.larson@xxxx wrote:
> > > > > > > > > I've been reading about massive corporate lay-offs esp
> > > > > associated
> > > > > > > > > with banking mergers for the past 5 years. Seemed
> > > everyone
> > > > > just
> > > > > > > > got
> > > > > > > > > a big fat severance package and turned around and got
> > > another
> > > > > job
> > > > > > > > for
> > > > > > > > > more money. Otherwise they got rehired as consultants for
> > > > > better
> > > > > > > > > pay. I suppose the payrolls and claims data are
> > > confirming
> > > > > the
> > > > > > > > > negative news reports for the past several months. But
> > > on the
> > > > > > > > other
> > > > > > > > > hand, a 5.4% unemployment rate is far below the previous
> > > 6%
> > > > > > > > standard
> > > > > > > > > of NAIRU(non-accelerating inflationary rate of
> > > unemployemnt)
> > > > > > > > commonly
> > > > > > > > > accepted in the early 90s. I, for one, don't personally
> > > know
> > > > > > > > anyone
> > > > > > > > > who is out of a job. Aside from some furniture chain
> > > store
> > > > > > > > closures,
> > > > > > > > > I really don't see much evidence of a slowdown out here in
> > > > > > > southern
> > > > > > > > > California...yet.
> > > > > > > > >
> > > > > > > > >
> > > > > > > > > --- In realtraders@xxxx, "Norman Winski" <nwinski@xxxx>
> > > wrote:
> > > > > > > > > > Me,
> > > > > > > > > >
> > > > > > > > > > I am forecasting a better than expected holiday
> > > shopping
> > > > > > > > > > season. The US economiy bottomed last week. You will
> > > hear
> > > > > about
> > > > > > > > > > it in February.
> > > > > > > > > >
> > > > > > > > > > Cheers,
> > > > > > > > > >
> > > > > > > > > > Norman
> > > > > > > > > >
> > > > > > > > > > ----- Original Message -----
> > > > > > > > > > From: "Me Tarzan" <ibe98765@xxxx>
> > > > > > > > > > To: <realtraders@xxxx>
> > > > > > > > > > Sent: Saturday, November 10, 2001 1:50 AM
> > > > > > > > > > Subject: [RT] Layoff's continue to increase
> > > > > > > > > >
> > > > > > > > > >
> > > > > > > > > > > Each layoff likely removes one more shopper for the
> > > Xmas
> > > > > > > > season...
> > > > > > > > > > >
> > > > > > > > > > > http://www.msnbc.com/news/555872.asp?cp1=1
> > > > > > > > > > >
> > > > > > > > > > >
> > > > > > > > > > >
> > > > > > > > > > > To unsubscribe from this group, send an email to:
> > > > > > > > > > > realtraders-unsubscribe@xxxx
> > > > > > > > > > >
> > > > > > > > > > >
> > > > > > > > > > >
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