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  • in 2000-2002 period. All I heard is tech tech tech

     

    The Hammer (From Seeking Alpha)

     

    I have to disagree that this is the best buying opportunity in 30 years.

    Two periods before this had better valuations and less baggage of an enormous debt lead carried today at 350% debt to gdp. 1982 and 1987 post crash. In the case of 1982 p/e's were single digits and dividend yields were higher than today. Of course interest rates were double digit and no where to go but down. 1987 post crash priced securities at real low double digit valuations. All of this in both periods mainly without the gross rewarding of stock options to company execs which dilute shareholders like today.
    We have a federal reserve monetizing debt and lending money to various deadbeat constituents in TARP and TALF. We have a corrupt runaway political process and lack of social constraints to prevent such malinvestment. So yes there are some good values today, but is it the best I have ever seen?NO.
    One last measurment. Look at the Q-Ratio stock market value to asset replacement costs and the market is trading something like 80% of this value. back in 1982 this value was near 40%.
    So the markets can overshoot in times of major distress.

    Never seen so many predictions calling for a bottom in the economy, kind of like all the calls from the NAR that housing has bottomed all the way back to the peak.

    Another thing, back in 2000-2002 period. All I heard is tech tech tech. Tech started going down and many said crisco was down 50% it was a bargain. Just because something is down x% does not make it a bargain. You need to look deeply at the business and asset values to really see if it is priced at a bargain price. Crisco went from $30 to near $15 today or 75% cheaper.
    So the next time you hear something is down 50% look closer to make sure it is really cheap.
    One last point, take a look at crisco stock option reward plan. The buybacks barely make a dent in lowering share count after stock options rewards. Buybacks in this case should be looked at as ongoing capital expenditures to maintain shareholder value.

     

    May 10 8:49 AM | Link | Comment!
  • Past Performance

    PAST PERFORMANCE IS NO GUARANTEE OF FUTURE PERFORMANCE.

    This is not said as a standard disclaimer, but rather a core belief. No one cannot accurately predict the future value of the stock market. Just because stocks have returned 12%/year it does not mean that they will continue to do so over the next 20 years. Stocks and Markets have a mind of their own. One exception to this rule: Because the human beings haven’t changed much in the last 2000 years,   the Past Performance of people and institutions is a good indicator of their future performance of people and institutions.

    May 10 8:48 AM | Link | Comment!
  • quote

    “The rate of profit is always highest in the countries that are going fastest to ruin,” said Adam Smith in The Wealth of Nations on the dangers of “overtrading.&am...

    May 10 8:37 AM | Link | Comment!
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