Ravi Nagarajan

Dow 10,000 and the Lost Decade

Something seems to be wrong with the picture URL in the article above. Here is the link to the image of the WSJ front page from 3/30/1999 on my blog - just a picture, not a scan:

www.rationalwalk.com/w...

Was That the End of the Rally?

Unemployment peaked in 1982 and steadily dropped throughout the rest of the decade ending at 5.3% in 1989. This was also a decade in which nearly 17 million new jobs were created.

www.bls.gov/cps/cpsaat...

In an economy with consumption accounting for consistently over 2/3 of GDP, a healthy labor market is essential for economic growth. Isn't this obvious?


On May 13 03:00 PM thiazole wrote:

we had pretty good economic growth throughout the
> 80s, yet unemployment was persistantly high during that period as
> well.

Was That the End of the Rally?

How do you square the idea of permanently higher unemployment with your bullish case for the economy given that over 2/3 of GDP is accounted for by consumption and unemployment and consumption are necessarily highly correlated. The consumer cannot forever go deeper into debt and savings rates have already crept higher.


> Also, maybe job loss isn't as important anymore because economically
> inefficient jobs are being shed. A 'new normal. for unemployment
> may be 7-8% instead of the historical average of 4-5%. Having too
> much employment hinders technological progress, and creates inflation.

What Is the Real Unemployment Number?

Yeah, only 70% or so of GDP is consumption. Unemployment isn't relevant. Is there a mathematical formula showing this?

On May 11 03:34 PM Cetin Hakimoglu wrote:

> Can we stop dwelling on job loss? Those aren't important.

The Virtue of Pessimism

Continue the dialog on my discussion forum dedicated to this topic:

tinyurl.com/co7wmo

The Virtue of Pessimism

Northstar, nothing could be further from the truth. There are crazy bargains out there right now - we know the value will materialize for many situations at SOME point, but I can't tell you exactly WHEN. I've never known a rich daytrader.

The Virtue of Pessimism

I think that Berkowitz's phrasing of the concept as "killing the company" was just a great way to illustrate how important looking at the downside can be. During the bubbles of the past decade, everyone looked on the bright side. Dot coms could measure results by number of eyeballs looking at their sites, traditional measures like earnings and cash flow no longer matter, housing prices could escalate to multiples of median income never seen before, etc. All of these manias were driven by optimism -- irrational optimism. There's a place for cold hard reality. Alot of people call that pessimism but it's simply prudent. When looking at bargain basement stocks, it is just critical to try to kill the company to avoid value traps. I'm sure I'm going to fall into a few value traps in this market, but it won't be because I'm smoking funny stuff and wearing rose colored glasses.

The Virtue of Pessimism

You don't want to apply pessimism to day to day life. My original blog post was "The Virtue of Pessimism for Investors" but for some reason the Seeking Alpha editors changed the title to be more general.

Actually, my intent was even more specific than investments in general. I was referring more specifically to stocks with market prices under net current asset value. In such cases, the value of pessimism involves the ability to separate the potential values from the sinking titanics.

G-20 on Protectionism: A Cause for Optimism?

"Buy American is ill-conceived? Obviously, you are not an American. Reader beware -- author has a biased viewpoint and clearly something to sell. ANY citizen that does not prefer the purchase of his own country's goods, in preference to anothers...is DISLOYAL."

I was going to respond to your comment until I read this section ... frankly, my time isn't worth responding to this type of nonsense.

G-20 on Protectionism: A Cause for Optimism?

"I think the problem with mexican truckers should have been solved by requiring all who use the US roads to be treated fairly according to the laws. Which means what ever the US requires of it's truckers should be required of anybody entering the US. That is not protectionism but rule of law. "

I agree. The economist article I referenced in my blog post (www.rationalwalk.com/?...) on this indicates that Mexican trucks actually have a safer overall record and many companies purchased newer trucks.

G-20 on Protectionism: A Cause for Optimism?

"First of all there is no free trade when you allow either capital or labor to cross borders. "

Hmmm, that's a novel statement. Care to elaborate?

G-20 on Protectionism: A Cause for Optimism?

Unfortunately, I share some of your cynicism regarding the situation, particularly given the fact that the United States isn't taking a leadership role when it comes to actions. Still, I found the statement on protectionism to be a good sign. It could just as easily have been left out entirely. If Obama wants to show some leadership here, this is a great opportunity for actions rather than mere words.