Re: Hope fellow investors are doing well lately!!

John Galt wrote:

"Alan Lichtenstein" <arl@xxxxxxxxxx> wrote in message news:vcidnfZsgaKCVgbbnZ2dnUVZ_j-dnZ2d@xxxxxxxxxx

John Galt wrote:


"Thumper" <jaylsmith@xxxxxxxxxxx> wrote in message news:n5dn93t49dfvbejuviegahtnlfl4v6r9jj@xxxxxxxxxx


On Mon, 16 Jul 2007 08:08:10 -0400, Alan Lichtenstein <arl@xxxxxxxxxx>
wrote:



jimstevens wrote:



Yippee! Will be selling a bit next week but do have a short buy list
just incase there is a slide of 3-5%.

After reaching records who is not doing well? This can't continue, and
with durable goods orders down and housing still in a funk, as well as
the recent hedge fund failures, one has to wonder what actually IS
keeping the market afloat? Retail sales weren't as bad as thought, but
that applied only to the large discounters. Overall, those sales were
just so-so. Yet the investors bulled the market up. After all, Apple
isn't selling THAT many iPhones.

You're correct Alan. Consumer sentiment isn't very good and the
consumer is what drives the market.
Thumper


Well......I think the point to the thread is that although consumer sentiment is of course a significant driver to the market, the "consumer sentiment" that matters is not only that of consumers in the US.

What the Europeans buy does not have the effect on our stock market that you would like to believe. Investors in U.S. markets look to U.S. data.


Not in my experience. Investors look at "revenues." If I want to invest in Intel or Exxon, it matters not to me what sales breakdown is geographically -- what matters to me is the quarterly increase year-over-year, and the FUTURE quarterly projections year over year. If I see a surprisingly big hop or drop in that comparison, I might look at the notes from the analyst call to see if a big deal closed or fell out, but even THAT isn't all that geo-related (it can be, but not usually).

Perhaps you should give Warren Buffet the benefit of your experience. He recently purchased a rather large position in burlington Northern, a company which reported that its earnings and revenues actually DECLINED, and whose projections are for continued DECLINE. Yet the stock price( as has the price of other railroad stocks, which reported similar statistics ) continued to RISE. And recently Merril Lynch reported an increase in revenue and earnings, yet the stock price declined.

Revenues and earnings taken in isolation, along with their projections are deceiving. There are other factors which taken as a whole should be the ones used. On an elementary point, profitability is one. In the case of the railroads, their profitability increased nearly 20% on declining revenues, yet Merril's profitability actually declined around 24%. One needs to look at other things. And those are NOT geo-related, but related to sector performance, some in industries particular to the United States. Railroads, for one.

They may move their money to other markets, which they are doing in increasing amounts, but still and all, the consumer bubble will burst, because much of that spending is on credit, and not with money earned as a result of producing something.


Two points there: First, a lot of stock market movement is by companies that don't see business-to-consumer. I don't have any friends that buy tankers of oil from Exxon for their own consumption, and Caterpillar sells sparingly to the consumer market.

No, but you do have friends who purchase gasoline and other small machines. And if the credit market dries up, they might have to sell the SUV they leased or actually mow their own lawns with a walk-behind mower. Thus impacting on the profits and earnings of those corporations.

Secondly, your last sentence assumes that credit isn't cash. Credit is simply deferred cash, and sooner or later, the cash flows, and the small amount that defaults is already accounted for in the balance sheet. Also, there's an assumption there that widgets are a superior manufactured product to intellectual capital. I personally don't see it that way, but time will tell.

Tell that to Bear Sterns. I don't think they factored in those recent defaults.

.

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