prudentinvestor

The Stock Market's Illusion

"...With between 300,000 and 600,000 people loosing their jobs each and every month ..."

I think you mean "... losing their jobs ...". This has become a very common misspelling on SA.

To SA editors: Please improve spelling checks on SA articles. Thanks.

China and India Vie for the World's Natural Resources, Part 1: China in Australia

While we are busy subsidizing our incompetent bankers and McMansions; China and India are accumulating resources for their next move up the economic ladder.

Looking at the Market from a Rational Perspective

" Here are some examples. Deere & Co (DE) fell from about $94 down to $25 at the March low and has rallied 88% up to $47 ...."

I had never owned DE before, but recently purchased a position in the high 20's after a little research, intending to hold it for the long term. My thoughts were intrinsic value in the mid 30's. After holding it for a few weeks, I sold most of my position in the mid 40's for an attractive return in excess of 60%.

This illustrates the enormous divergence of sense of value between different market participants. Some thought it was worth $90+ just a couple of years ago. I was glad to sell it in the mid-40's for a tidy profit, to someone who obviously thought it was a bargain. I don't think that anyone involved is smart or stupid, it's just that different market participants can look at the same thing and come up with very different conclusions regarding value.

Preview from Europe: Profit Taking Pushes Market Down

Mole, you are quite right: "..The harsh reality remains that the economic and earnings backdrop is not improving one iota...."

I would add another harsh reality, that all the desparate, misguided and inflationary policy measures undertaken by Western countries are intended to prop up artificially oversized financial sectors that have sucked the blood out of the productive sectors of their economies. Even if successful, the resulting recovery cannot be healthy, as these multi-trillion dollar bailouts are drawing away even more resources from the remaining, dwindling productive sectors.

China is fortunate that they have not had time to develop a punitively oversized financial sector, and now they have learnt, at our expense, that they need to avoid it.