sheila

Macro Trends Spell Doom for Banks and Their Profits

Dear Savy,
Thank you for your comment. It made me mindful that there truly are "good" things amongst the doom/gloom news and analysis. It gives a refreshing perspective. As a novice, the negative news still has me anxiously holding my breath, second guessing myself, and fearful of taking decisive action to dig my accounts out of their hole. My IRA is in a variety of bond funds and cash and unfortunately, I've missed most of this rally. I hope to buy in little bits to get back into the equities market and was already considering some of those companies you mentioned. Thanks again.

On 2008 Aug 26 09:17 AM savvy investor wrote:

> I apologize for being so critical, but this is typical of all the
> negativity that is driving investor sentiment that is NOT commensurate
> with the overall financial facts.
> You are too negative on the world and US economies. You do not mention
> record exports from the US, the worldwide record GDP growth especially
> in emerging economies, the endurance of the US consumer, the relatively
> benign US inflation (yes food will be up around 5% this year and
> energy is up but only related to about 7% of GDP and a smaller percentage
> of income than anywhere else in the world), historically low or moderate
> unemployment, low home interest rates. All the talk about our national
> debt is wrong too--the US government needs to be looked at like a
> business. If it can borrow at a lesser interest rate than it return
> on assets, then debt is good (and 10 year bomnds are below 4%!).
>
> Corporate profits are BEATING the estimates -- outside of financials,
> airlines and autos, and housing, the US economy is simply GREAT.
> Winners are Info Technology companies like IBM and others, McDonalds
> had record revenues and profits as did Walmart, industrials like
> MDR/ABB/Corning/Cummin... mineral and commodity producers like Freeport
> McMoran/Rio Tinto/BHP/Vale/Exxon/e... energy services companies like
> Schlumberger/Pride/Tra... ag equipment like Deere and ag chemicals
> like Mosaic/Monsanto/Potash... generic chemicals like Dow/Monsanto/etc,
> commercial construction (offsetting the residential construction
> woes) with strong business done by CAT and Terex, Boeing is doing
> noicely and a huge US employer.
> Get a balanced perspective and don't dwell on the negatives like
> the "ain't it awful" US press.
> You must be short the market to only report negatives. Unfortunately
> that is typical of the vast majority of the US press and media that
> can't wait to deliver negative news, or make it up if it isn't there
> to report. Most of the press/media folks are 'newbies' as part of
> cost reductions, their industries are in a cost reduction and "change
> period" where print advertising and media advertising are migrating
> to on-line services. Their perspective is coloured by their own situation.
> Energy in the US is still cheaper than almost any other stable economy
> in the world, the US is the most prolific and productive economy
> in the world (our GDP is GROWING), our food is cheaper as a percentage
> of income than most developed economies, the 'savings rate' does
> NOT count 401K/IRA/home equity/etc so is only a distorted picture
> of REAL net worth (and that is GROWING per capita in the US). <br/>We
> generally live in a free, safe, productive, healthy, comparatively
> wealthy, enjoyable society that is the envy of the world. We're are
> all very lucky to be living in the US in 2008!