Of course a sovereign can print money to pay its debt service or any bill for that matter and an individual cannot. It works great: ask Zimbabwae. Inflating your way out of debt by printing currency is just default by another name.
'A Terrible Realization Is Dawning' For Investors [View article]
@chadclew No argument here. America's geopolitical domination is unquestionable. I enjoyed Friedman's book, "The Next 100 Years" also. Napier points out that over the last 150 years, while America rose to complete world-domination, it experienced 4 bear markets that culminated in equities reduced to a 70% discount to the replacement value of their assets. Only then did the bear market end, and the next great bull cycle began. A prognosis of a severe bear market certainly does not preclude America's geopolitical position, as the two are certainly not mutually exclusive. The article was not meant to be unpatriotic - god bless America!
'A Terrible Realization Is Dawning' For Investors [View article]
@ Logic and Tack, thanks for the comments. As easy as it is to say, I-told-you-so in retrospect, it is just as easy to dismiss historical precedence looking forward. S & P 500 at 400 seems very unlikely to me as well. But who am I to argue with history. We are still very complacent, but the fact is that historically bear markets are excruciatingly slow train wreaks (with the exception of the great depression when the market fell over 85% very quickly). We forget that stock markets can, and do, get to nauseating levels. I don't think acknowledging, and perhaps preparing for events that history assigns a significant probability to occurring is "unsophisticated" or "not sensible". I think you have it backwards, as it is better described as cautious and prudent.
'A Terrible Realization Is Dawning' For Investors [View article]
Good points David. If you have not read "Anotomy of the Bear" you should. The last 4 bear markets display a remarkable similarity. Napier is simple pointing out that if this bear market, that began in 2000, rhymes with the previous 4, then we should see a bottom around 600 in the S&P.
IBM: Buffett Gets An All Star For A Great Price [View article]
I think the main tenant to the IBM investment thesis is the consistency of their earnings. There are really only a remarkable few companies that aren't lead by the business cycle and post consistent earnings. The power of IBM is the continual and uninterrupted churn of cash flow. The only question is: will the earnings remain uninterrupted? And this is where you must establish a quantitative estimation of the robustness of the moat surrounding IBM. This is what; "hit Warren Buffett between the eyes", when he was reading the 2010 annual report. Once IBM has a client they keep that client forever. There is too much friction for companies to change over from the services IBM provides. This all Buffet cares about. This is why he purchased Burlington Northern - there is zero chance Burlington will have new competition in the future. Nobody is about to build a railroad next to theirs.
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Everything else is to a large degree irrelevant.