ezrasfund

Getting Out of Today's Bear Market

Very little in this world, including the t-shirt stiched together in China, is made in just one country. Components are manufactured around the world and brought together to be assembled.

I think we agree on most of this...bearish...less manufacturing jobs in the US...middle class in deep trouble...

But we still manufacture more than anyone one the planet (measured in $ not lbs.)

Getting Out of Today's Bear Market

"a country that doesn't manufacture anything anymore"

I'm a bear on the US ecomomy today, but why do people keep repeating this falsehood?

We are 5% of the world's people making 20% of the world's manufactured goods in dollar terms. We don't make the stuff you buy at Walmart, we make airplanes and computers and cancer fighting drugs and lots of other stuff (including Toyotas and BMW's).
We make them with much less labor per dollar of goods produced than you can make a towel or a plastic toy. So many less people are employed in manufacturing, but they have the world's highest productivity. One person in a high tech automated factory can produce a lot more (in $ terms) than 100 people sitting at sewing machines.

Getting Out of Today's Bear Market

Which sectors would a blue collar guy be buying today? Autos seem like a better fit than financials when shopping for real bargains.

Getting Out of Today's Bear Market

A dying man will often sit up and have a moment of unusual strength and lucidity before he expires. And a plunging market often has some very strong days. Yes, oil prices will fall, but the "great deleveraging" will continue.

Is Oil a Bubble? Part One

Supply and Demand 101....Just because you get a PhD, it doesn't mean you can forget the first day of school.

Prices will increase until demand shows some elasticity. When a rise in price causes a drop in demand large enough to create a net drop in revenue prices will stop going up.

Of course the reaction is delayed, and we are still waiting for the demand side of the equation to react, but it is inevitable. Then comes the price correction.

Timing the inevitable can be a bit tricky.