SwingTimer

Investing in Deflationary Times

Interesting article; and lots of relevant and well-considered reader comments. But I do have a problem with this article and the many comments! (And to almost every blog I've read in recent months.)

Quite simply, it smacks of HERD MENTALITY, where everyone is confortable assuming that because a trend is underway (in this case Deflation) that it will continue forever - because it is, after all, self-perpetuating and in likelihood can only continue in perpetuity.

Remember the Internet Bubble?; remember the Real Estate Bubble?; Remember forecasts of oil going to $200 by so-called "experts"; now, because of a serious correction, "expert" forecasts are calling for $30 or lower crude oil prices. Why not $5.00 oil, in total disregard for supply/demand factors? Yeah - right...?. Similarly, why not assume that we'll return to the horse-and-buggy days and exchanging a bunch of carrots for a pound of sugar.

True, there is that element of negative feedback and creeping reinforcement in the perception of consumers and investors regarding prospects for the world economy at the moment - which can't be denied as being quite relevant to the current situation. It's human nature to seek safety. But it's also quite naive to assume that human ingeniuty will not prevail.

A half-century in the stock market and twenty years as a full-time investor leads me to suspect that a simplistic view accomplishes little except to perpetuate a problem. It's relevant to note that the severity of the recent market decline probably discounts much if not all of the evolving, dismal, economic developments.

No, I'm not pounding my drum here; just invoking common sense based on experience. The world and the economy as we know it is not approaching its final days, as perhaps some of the bible-thumpers (and more than the odd economist) would have you believe. Bubbles - take your pick - are driven by mass histeria and so are the inevitable corrections - such as we have today. We'll get over it, and emerge the better for our hard knocks - it's called experience.

In the end, the investors who will profit are the ones who can take defensive action in the face of a serious threat, but then muster up the courage to stand on the merits of their own sensible (and informed) evaluation - making a commitment when few others will. Blindly adopting the ill-founded opinions of others seldom, if ever, produces a desirable outcome.

It might seem trite, but consider this: begin with a conclusion, either your own making or as presented by someone else, and you'll easily rationalize yourself into believing it! Dangerous stuff when it comes to investing in the stock market, in my opinion.

Just a thought....Best wishes for the Season, and for your investment portfolio.

Letting the Reinflation Genie Out of the Bottle

I've been reading Seeking Alpha for some time and have found many contributor as well as reader comments to be informative and of interest. Seldom, however, have I found as relevant an issue being discussed with insight, and with informed opinion among the readers (for the most part), as I have on this site. I've added you to my favorites list and will look forward to further relevant insights from you and your readers in the future. Thank you!

Stryker: Just What the Doctor Ordered

Welcome back Paul. But what's your option strategy on this one.

Consumer Credit: An International Crisis

Andy,
Don't let user 52095's comments influence you adversely. I've read many of his comments - enough to get a measure of his "sophistication" - and I'd say he falls somewhere between an idiot and a moron. Your article was great in that it portrayed the broader picture of the difficulties facing the consumer, the financial industry, and (by inference) the retailers. That's one reason why I have you in My WatchList. Investors with a proper frame of reference can take it from there (excluding 52095, of course).

First Comes Deflation, Then Comes Inflation

Simit,
Please...get rid of that photo of yourself. (Sorry, but had I not read your bio before reading your comments, I wouldn't have bothered reading your article.) It doesn't do justice to your insights and the many intelligent comments you ellicit from reasers.
MG

The Financial System is Finished

Umm...sounds like yet one more professional is capitulating. Can the herd of non-professionals be far behind?

My motto - "Nothing is ever either All White or All Black". You can extend that notion to infer that no one person/group is responsible for the debacle. As they say, "It takes two to tango". In this instance the finger can equally and justifiably be pointed at the lack of adequate governmental regulation AND the naivity of EVERY INVESTOR WORLDWIDE.

Admitedly, the current financial structure - once resurrected - needs a serious revamp of the oversight system. But let's not pretend that we can remedy the present situation by throwing out the baby with the bathwater.

Investor greed is a built-in human characteristic, and that won't change one iota by thinking that we can redefine our financial system to material advantage from scratch.

Just a thought for anyone on the edge of the precipice.

Global Market Roundup: Will the Bailout Work?

Excellent review! The Doom & Gloom scenario seems almost universal - indicating that perhaps the worst has already been discounted. But "hold on" for more volatily until the dust settles and investors begin looking past the devastation to the inevitable economic and market recovery.

Musical Chairs - Cramer's Mad Money (10/3/08)

I digress from the topic...but it needs doing. I agree with PokerNut's and User 138602's comments above. Bear with me for a second.

My opinion...Cramer is a baffon without the costume! Why is everyone giving him the slightest credence? Yet he seems to be a mainstay on Seeking Alpha, cluttering up the field of many worthwhile selections to consider. His off-the-cuff casual "musings" aren't worth a dime to any serious investor - but he appeals to Joe Sixpack, I guess. Screeching like a serious candidate for the loonybin and waving his arms like they convey more information than his mouth is, I guess, good for CNBC's ratings (??). (A monkey's antics appeal more to children than adults.) It'll catch up with them eventually, just as an endless stream of idiot shows like "Dogg the Bounty Hunter" shows have destroyed the viewship caliber of A&E. Ten years ago it was one of my favorite networks. Now...I never watch it. The multiple listings of Cramer's "insights" on Seeking Alpha is unwarranted, to say the least.

And Fast Money, also on CNBC, well - if you have a serious twitch of some sort - I guess they'll get the same response from you and Joe Sixpack. Off-the-cuff ASSERTIONS by whoever, no matter the background or lenght of experience in the markets, is worthless to the investor who would assess the facts for himself, make his own decisions, and hold himself accountable for his own success or failure (as opposed to blaming somebody else when things don't turn out quite as planned).

More to the point, though, what makes these shows popular among the "losers" in the market is the opportunity that their in-and-out, flash-in-the-pan, behavior represents for the more deliberate, serious investor. Despite this, I would very much appreciate objective, analytical content on Seeking Alpha that reflects considered opinion based on facts as opposed to baseless assertions.

Help me out guys. Otherwise, as with everything else, "gravity" (lowest common denominator) will ultimately prevail, resulting in slow but effective degradation of the serious and valuable content that we all hope will continue to be available on Seeking Alpha.

9 Reasons Why We Are Close to, If Not Past, the Bottom

Cecil has it right - look at the risk/reward ratio (upside vs downside) for the market as a whole. Never treat the market as either all "black" or all "white" ( a sizeable rally always offers a multitude of opportunities). Then consider each potential investment for its particular merits. Most telling in favor of a bottom being not too distant, in my opinion, is the skepticism expressed in most of the responses to Alan's article.

Buy, Sell or Hold: Potash Deserves Another Look

Shiv:
Excellent overview of India's prospects, giving a perspective on where good investment opportunities may exist. Thank you.

Legg Mason: A Market Bottom?

microcapmav:

Why the babble about an issue totally unrelated to this article? Sober up and things won't be so confusing.

Using Several Stock Rating Services

Good suggestions, Richard. I've used a similar approach - supplemented by my own computerized system - for over 20 years of full-time investing. Indeed, for instance, I've had Value Line all that time for its evolving, generally sound fundamental overview of each company's situation. But I have one suggestion. They, like so many other services (Zacks, S&P, VectorVest, StockGrader, etc) tend to generate strong recommendations as a consequence of an existing momentum stock-price situation - sometimes long after the value component of the situation has been adequately discounted - on the sometimes dangerous assumption (I suppose) that a price trend remains valid until broken. Risk rises accordingly, due to the inevitable "reversion to the mean". Thus, I would reinforce the notion that no investor should follow ratings blindly just because two or more respected services favor a stock. An investor's own due diligence is essential. But you're correct, Richard, it's a useful approach which can help focus attention on some potentially sound investments.

Shifting Emphasis from Inflation to Growth

Excellent review! Thnak you.

Game Changer in Solar Energy: PG&E Inks Deal

All comments do indeed raise valid points and therefore have merit - thanks to all. But Jack Yativ's observations seem most balanced (neither all-black or all-white) and worthy of re-reading I think. Thanks Jack.

Friday Outlook: Commodities, Emerging Markets

Good observations...witty sarcasm...most enjoyable! But an OPINION re prospects for the next week or two - based on your experience - would be welcomed.