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mmmparsley
14 Comments
Multinational Corporations Step Up the Search for the Next China
Have you been to these countries? I have. Do you know what you'll be destroying? I certainly do.
This is one of the last great places on earth. Please. Hands off.
Investor Sentiment and Market Returns: Now's the Time to Be Bold
Who's fearful it's going to end up in Joe Sixpack's pocket? Not I.
Who thinks it is going to end locked in commodities sending them to levels that cause commodity prices to fall sharply on their own weight, while destroying economic growth? Not I.
Who think it's going to end up in companies that are innovating and creating new efficiencies (alternative energy, distribution technology) instead of just extracting stuff from the earth? I do.
Stocks are going to rise from here - especially China Stocks.
Buy EFUT, WX, XFML now, and you'll be sitting pretty in 10 years.
Bear Stearns: 'Remain Calm! All Is Well!'
4 Recommendations to Defend Against a Financial Armageddon
I own a company right now with 24 million in assets which is trading for 14 million today. After writing off their unprofitable operations, they earned 800K after tax last quarter alone. With a real PE of 4 trading at 40% lower than book value, there is plenty of room to absorb an economic slowdown.
From a pure valuation standpoint, many companies are cheap right now. As more cash is injected into the system, that cash is likely to fall somewhere - and I doubt it will continue to be buying commodities unsustainably or a rush to lower 2-month treasury yields to under 1%.
Correct me where I fail in understanding...
Tongjitang Chinese Medicines: Finding Value in China
“A Whiff of Panic...”
Pardon my ignorance. I have one last question.
Don't you think investments banks, for the sake of the broader economy, should start going back to their roots and doing more banking and less investing?
It's been mentioned that if the Fed Rate is considerably higher than the market rate for bonds, that banks would rather park their money in government bonds instead of take unnecessary lending risk at a lower return.
I am a believer that the international market panic we noticed early this week was a result of western institutions bailing to provide immediate liquidity to stay solvent. After all, there is no more liquid asset, other than cash, than equities.
How I'd approach the market:
If I had any free cash after buying some OPTT and TCM, I'd be an aggressive buyer of Asian ETFS or Precious Metal Miners. GFI, perhaps?
What about you?
Dave
“A Whiff of Panic...”
Do you think this portends to more aggressive rate cuts? If so, I think gold/international equity markets are safe havens from the US government printing press.
Also, do you think these numbers may be the reason we're seeing heavy selling on international markets. I see from the published spreads that individual Thai and Indian investors (among others) have been accumulating in the SET and SENSEX, while international holders (likely large banks) of foreign stocks are bailing - perhaps only for liquidity purposes.
Don't you think this is a reason for buying at these levels? The depressed prices have nothing to do with valuation reasoning.
“A Whiff of Panic...”
Growth would have to go deep into the red for a considerable period of time before investments fairly valued at these prices. Companies with 30% growth are priced at 10-12 PE's right now. I'm looking at a few companies that traded for under cash value today - one includes OPTT which may in the next decade post First Solar-like earnings growth. OPTT was free this morning - with a rebate! If I can buy a house for $100,000 in a nice neighborhood, get a green pasture with horses for free, and find $100,000 neatly stacked in "Benjamins" in the front hallway - I'd be a fool not to buy that. That is, effectively, what happened this morning when a few companies - such as OPTT - went into panic mode.
The recoiling we saw this morning was strong, and it appears almost certain that many stocks have hit a bottom. I'm only bearish on strowth growth companies with PE's over 25-40 (EG Goog, Appl) that merit strong earning's growth in the future to validify current prices. Still, those companies are a lot cheaper now than they were a few months ago when irrational speculators were taken ill-advised risks in high-growth companies.
I may be wrong - but I think this is a long-term bottom. All the fed did was inject more liquidity into the system. That has to be a good thing for financial markets - unless you are afriad all that cash is going to end up in the piggy-banks of the struggling American middle-class! HA!
I've been wrong before. Don't quote me!
The Bear Turns Mildly Bullish
I totally agree with you that the US markets that operate and sell their products within this country are going to struggle. However, with inflation running rampant, do you really think the DOW is going to go down when it's pegged to the dollar? I'd rather have my money in producers than in cash.
That being said, I wouldn't put my money in one of those companies. However, as paper money loses its value, what do you think is going to pick up the slack? International stocks are trading at very attractive PE's after today. Those economies are still going to grow despite trouble in the US. In fact, they developing countries may stabilize their economies more than ever in the past as they stop subsidizing our debt and begin consuming their own resources.
Do you really think that with all the American companies which are world-class innovators with current of potential global products are going to go down in dollar value? The way I see, as new money hits the market, all speculative innovations go up in dollar terms.
The one thing I wouldn't want to be in is bonds. 2008 is going to be the year of inflation.
The Bear Turns Mildly Bullish
Volume is not higher than in mid-August. What you are seeing is a bubble bursing stemming from heavily margined accounts. Corporate earnings are slowing, but global growth remains strong. Even if it didn't, the cash printing press is flooding the market with new cash, so unless you think none of that cash is going to find it's way into the equity market you should be holding tight through the drop.
International growth is still very strong and most country's PE's are still rather low - especially considering the torrid growth rates. Slowed growth is more than priced into foreign equities right now, so put 2 and 2 together and realize that the heavily margined are paying a severe price for their greed right now. We're putting the flailing out of their misery while rewarding those who put capital aside with very cheap prices on equities.
The Bear Turns Mildly Bullish
The market is way oversold, and we're seeing traders heavily margined forced to capitulate to savvy trader who are scooping up shares at a bargain.
There is no reason for Asia to go down. Many countries are still trading at 10-15 PE's and have very significant positive balance of payments. Asian consumers have only begun their spending spree. Many of these companies are trading at VERY low PEG ratios so there is plenty of room for slowed growth already priced into these foreign equities.
The only market that is still arguably overbought is in Shanghai. US traded Chinese ADR's are valued rather nicely right now, with a few expections such as BIDU, CTRP etc.
Fundamentals are all that matters in the long run - and stocks are fundamentally undervalued even when adjusting for slowed global growth.
Fundamentals Suggest Oil's Headed Much Higher
Investors Vote 'No Confidence' in TCM's Management
It seems that TCM has demonstrated that they understand value propositions as well as the analysts whining about their recklessness. I believe that to be the case by simply seeing how they have increased value within their own company. I'd imagine that having access to industry trends by monitoring their own business environment, they will be in an enviable position to know when to pull out their speculative plays.
What doesn't make sense to me is why a company would tank 30% when a meager 1.6% of its total value (5M out 300M) MAY be subject to losses.
From my experience chatting in Asia with the investment class, intelligent Chinese are proving themselves to be very intelligent evaluators of markets.
Regarding confidence in Tonjitang management, there is still no good argument that a company with 20% revenue growth (and potentially much higher) should be trading at 6x Enterprise Value/Earnings and an under .5 PEG ratio. (at least I haven't heard an argument which merits the current valuation).
Investors Vote 'No Confidence' in TCM's Management
It seems that TCM has demonstrated that they understand value propositions as well as the analysts whining about their recklessness. I believe that to be the case by simply seeing how they have increased value within their own company. I'd imagine that having access to industry trends by monitoring their own business environment, they will be in an enviable position to know when to pull out their speculative plays.
What doesn't make sense to me is why a company would tank 30% when a meager 1.6% of its total value (5M out 300M) MAY be subject to losses.
From my experience chatting in Asia with the investment class, intelligent Chinese are proving themselves to be very intelligent evaluators of markets.
Regarding confidence in Tonjitang management, there is still no good argument that a company with 20% revenue growth (and potentially much higher) should be trading at 6x Enterprise Value/Earnings and an under .5 PEG ratio. (at least I haven't heard an argument which merits the current valuation).