Record Dow! Whee!

[Spanky]

Frankly in GOOGs case, I am not sure the stock is overvalued.

By what means or criteria do you use to arrive at that conclusion?

 

[twaddle]

I think we need a new valuation metric for GOOG. Eyeballs are so 1999, so let's go with brainpower.

GOOG has 13,786 employees. If we assume that each GOOG employee is worth $15 million, we can justify their $200 billion market cap. Just imagine that every GOOG employee is equivalent to a super sports star, and it's easy to justify their current valuation.

BTW, no way I would short them. Beware the "fourth factor" that Fama and French never told you about: momentum.

 

[clifp]

By what means or criteria do you use to arrive at that conclusion?

Well it has PEG of 1.0 and PEG payback period of 7.6 year both of which are slightly below the industry average.

To be honest I can't justify the price. Perhaps 300 with PE of 25-30. However, it is my view that GOOG is this centuries Microsoft. I bought Microsoft several times in the 80s an early 90s and made a nice profit but it always made me nervous. But betting against Microsoft was almost always a bad bet until GOOG has come along.

For me GOOG is sidelines stock, I root for them to pass a $1,000 but I won't be surprise to wake up some day I find there are back down to $100

 

[Spanky]

but I won't be surprise to wake up some day I find there are back down to $100

That's a scary thought .. However, it might be the stock splits 10x.

 

[Razor]

Geez, you're right and the sky really is falling. It's amazing how all the blissfully ignorant have survived this long.

An economy based on "consumerism". What the #$%^ else would an economy be based on? I'm not even going to touch that "unchartered waters" comment, although I suspect that the 20th century affords ample precedent for your assessment of the world's ability to survive your other dire reporting.

Luckily the Plunge Protection Team is taking care of us all today, and we can't even tell...

Keep posting those economic summaries, because without them we wouldn't have a wailing wall of worry to gather around. I'm going to keep sniffing around for 75-cent dollar bills under the flashing-blue-light-specials, the ones where the crowds are running away screaming from the "On Sale Now!" signs. Doesn't seem like much consumerism in action there.

[MODERATOR EDIT]. You must first know what consumerism means. Look it up, but simply put, it means people buying things they don't need. That can of Coke, 6 dollar coffee, the Iphone, a Hummer, that boat that sits in the driveway all summer, a big house full of junk that they can't afford. Americans are materialistic spenders and spending drives this economy. Other countries have different things driving their economies. Some under developed countries economies are still based on agriculture, some totally depend on tourism, some economies like China are driven by using cheap labor to manufacture goods for export, there are countries that prosper by providing financial services to other countries and of course can you guess what drives the economies of Arab oil producing and exporting countries? You are right if you you said oil exports. Now you're getting it. Not all economies are like ours.

What the hell else are economies based on? I hope this give you a little understanding so you don't appear to be so ignorant the next time you post.

 

[Delawaredave5]

What the hell else are economies based on? I hope this give you a little understanding so you don't appear to be so ignorant the next time you post.

That wasn't nice ! Usually this board doesn't get this pissy.

There's a economics concept called "Comparative Advantage" - successful countries focus on what they do best in the world.

You could argue that the US understands comparative advantage better than any other nation - where the US focuses on innovation and services and leverages "making stuff" to low cost countries. This approach has rewarded the USA with "a lotta stuff" and a great standard of living.

The other argument is that we've "gone overboard" and "hollowed out" the value adding portions of our economy outsourcing stuff - and it will come back and "bite us in the a__". In addition, we've borrowed from the future through debt.

Stephen Roach is well respected guy, albeit a little too "permabear" to me. There's an interesting article by Roach on Mauldin's site (another permabear). He talks about it being "game over" for the American Consumer - real earnings stalled and no asset inflation (houses) to sustain the consumption. Here's link:

InvestorsInsight : John Mauldin's Outside the Box

But let's be nice........

 

[brewer12345]

That wasn't nice ! Usually this board doesn't get this pissy.

The funniest thing about it is that I am pretty sure Nords already has Razor on ignore, so this likely had the effect of throwing a meringue into a black hole.

 

[chinaco]

... You must first know what consumerism means. Look it up, but simply put, it means people buying things they don't need.
...

I am pretty sure the term can have slightly different meanings depending on the context in which it is used...

Look it up... But "Don't Taze me Bro"

 

[ladelfina]

I don't know if I am bearish like Razor (I don't invest like it), but I think he has some good points. Like ha & others I wish he wouldn't use such arrogant language as it detracts from the matter at hand. Saracasm => fun; surliness => not so fun. Brewer is one of my favorite posters; I think he's got a quick mind and no doubt partly because he's young. When you get older you tend to get into mental "ruts".

I kinda see both sides. I don't think America will be outright hitting the skids for a while. I don't see immigration as a big deal; the majority of immigrants help grow the economy more than a minority may drag it down. They add to the younger, striving "consuming" generation!

OTOH I like to look at the bigger picture with philosophy. Just off the top of my head, who were the world's economic powerhouses in the 15th-16th century? Spain? Venice? In the 17th? the Dutch? In the 18th? (boh? Europeans of one stripe or another) The 19th? The British. The 20th? The USA. The sun has set on the British empire. It did on the Roman Empire, and one day it will on the American Empire.

Watching the History Channel I came across a show about Shanghai. What American thinks about Shanghai except for knowing it as a synonym for kidnapping? But in the 1920s and 30s it was the economic equivalent of maybe Hong Kong in the 80s with HUGE amounts of investment money coming in -the 3rd largest financial center in the world after London and NY- plus the added interest of no passports needed, the major point of opium distribution, big-time gangsters and prostitution, etc. Mix a "Wild West"-type boomtown/gold rush with City bankers and Al Capone for good measure. Shanghai today is a shell of its former self.. (but is still the eighth-largest city in the world, with the largest cargo port).

Who knows where the currents of history are taking us?


I like Delaware dave's post about comparative advantage.

It think Razor gets it kinda right too, in identifying a lot of our consumption as "needless", but you have to take this with two grains of salt:

1.) define "need".. anything over a diet of rice/beans and a wood fire is not "necessary", yet producing goods and services beyond subsistence level is exactly what does drive and has driven the US economy (and most 'economies' in the usual way of thinking).

2.) the US market may get saturated or not, or be too debt-ridden to continue consuming apace. But you can't underestimate the hunger of the world market for US-branded or US-developed goods. I think that is still doing a brisk business and will for a long time. I'm not really into trading stocks, but if I buy US companies anytime soon I will concentrate on ones that have a global reach.


I have a pretty simplistic view of the world and have trouble following the fed machinations and what they are supposed to tinker with. I don't have anything like a PhD. (or an MS or a BA) in economics. This statement of Brewer's makes sense:

earnings are what drives stock prices.

except I think it needs to be modified to "earnings are what attracts investment". Will stock PRICES always go up? No. But will there always be some amount of "earning" happening somewhere? Most likely. Unless you expect across-the-board worldwide negative earnings for some period of years.. like the Great Depression, which seems too alarmist to consider (but I could be wrong!).

This looks kind of interesting:
Corporate earnings and the equity premium

From the first-order conditions of the representative agent, we obtain an explicit closed-form expression for the stock price. In turn, this allows us to derive a simple expression for the equity premium in which there are three distinct components. The first is the standard Mehra and Prescott (1985) equity premium proportional to the variance of consumption growth, which we call the consumption-risk premium. The second is proportional to the probability of a jump times the product of the jump sizes in consumption and the stock price. We designate this jump-related component the event-risk premium. The third is proportional to the covariance between the growth rates in consumption and the corporate fraction, and is designated the corporate-risk premium. This three-component model of the equity premium nests many of the previous models in the literature and provides a number of new insights about the determinants of the equity premium.

um, yeah.. what they said!

No, but seriously:

while aggregate consumption declined nearly 10% during the early stages of the Great Depression, aggregate corporate earnings were completely obliterated, falling more than 103%.

Is this possible today?
http://en.wikipedia.org/wiki/Great_depression

Keynesian economists called for governments during times of economic crisis to pick up the slack by increasing government spending and/or cutting taxes.

Hmm.. have we not done that already? Razor appears to think that, far from being a cure, that's part of what ails us.

I guess I am whistling in the dark because I think the int'l. market is more open, accessible, and diverse than it was in the 1930s. (OTOH we can't underestimate the oil aspect which has been underlying basically all the prosperity of the 20th century. Fuel for factories, travel, plastic Wal*Mart crap.)

Aside from buying a tiny house fueled by wood, storing 2 years of food and buying gold bullion, what industries/investments are most likely to withstand a global depression? Which ones recovered most quickly during the last one(s)?

 

[brewer12345]

Aside from buying a tiny house fueled by wood, storing 2 years of food and buying gold bullion, what industries/investments are most likely to withstand a global depression? Which ones recovered most quickly during the last one(s)?

Its been so long since the Depression that it probably doesn't matter what it was last time. Realistically, if there is going to be a global depression , the best investment you could make would be 30 year fixed rate bonds from countries that will never default (US, UK, Japan, Swiss, etc.).

But I think t he likelihood of that happening is so small taht I am not going to be out there buying the long bond.

 

[unclemick]

Angus Maddison.

But only for long winter nights when there is no football on cable - and you you actually think - economies of nations and civilations is worth worrying about.

And only after you've taken care of the serious things in life - like offense/defense in balanced index funds and a cable package with football!

Remember Bear Bryant's linebacker - agile, mobile and hostile.



heh heh heh - 'the three stocks' I buy next week to cut thru all this are

 

[NinjaPigeon]

Let me help you before you make a total fool of yourself. You must first know what consumerism means. Look it up, but simply put, it means people buying things they don't need. That can of Coke, 6 dollar coffee, the Iphone, a Hummer, that boat that sits in the driveway all summer, a big house full of junk that they can't afford. Americans are materialistic spenders and spending drives this economy. Other countries have different things driving their economies. Some under developed countries economies are still based on agriculture, some totally depend on tourism, some economies like China are driven by using cheap labor to manufacture goods for export, there are countries that prosper by providing financial services to other countries and of course can you guess what drives the economies of Arab oil producing and exporting countries? You are right if you you said oil exports. Now you're getting it. Not all economies are like ours.

What the hell else are economies based on? I hope this give you a little understanding so you don't appear to be so ignorant the next time you post.

I appreciate that you have a different opinion than some of the other regulars here. I am in my late 20s and have never even passed an Econ 101 class, but I am here to learn. So a variety of angles on these things is a good way to do so.

Perhaps you could use the preview button when you post and imagine that someone else had just said your words to you. They come off very condescending and it's detracting from the conversation.

I hope you don't leave, as the more opinions there are on this, the more opportunities there are for us newbies to pick up some good information.

 

[Spanky]

Americans are materialistic spenders and spending drives this economy.

Agreed -- it's also multi-cultural and non-geographical, as seen today in other parts of the countries, such as Taipei(Taiwan), Hong Kong(China), Singapore, and most European countries. The virus is spreading.

 

[Bestwifeever]

The funniest thing about it is that I am pretty sure Nords already has Razor on ignore, so this likely had the effect of throwing a meringue into a black hole.

mmmm--meringue....

 

[Razor]

I am pretty sure the term can have slightly different meanings depending on the context in which it is used...

Look it up... But "Don't Taze me Bro"

Consumerism

From Wikipedia, the free encyclopedia

• Ten things you may not know about Wikipedia •​

Consumerism is the equating of personal happiness with the purchasing of material possessions and consumption. consumerism can also refer to economic policies that place an emphasis on consumption, and, in an abstract sense, the belief that the free choice of consumers should dictate the economic structure of a society

Although consumerism is commonly associated with the Western world, it is multi-cultural and non-geographical, as seen today in Tokyo, Singapore, Jakarta, Hong Kong, Shanghai, Taipei, Tel Aviv, Bahrain, New Delhi and Dubai, for example. Consumerism, as in people purchasing goods or consuming materials in excess of their basic needs, is as old as the first civilizations (see Ancient Egypt, Babylon and Ancient Rome, for example). Since consumerism began, various individuals and groups have consciously sought an alternative lifestyle through simple living.
While consumerism is not a new phenomenon, it has only become widespread over the 20th century and particularly in recent decades, under the influence of neoliberal capitalism.


My apolgies to those offended, but I would like to point out that he started the nastiness. I was just returning fire. If someone disagrees with my opinion tell me why. I am very open minded. If I am attacked personally, I will respond accordingly.

 

[Martha]

My apolgies to those offended, but I would like to point out that he started the nastiness. I was just returning fire. If someone disagrees with my opinion tell me why. I am very open minded. If I am attacked personally, I will respond accordingly.

This is how flame wars start and is not acceptable.

 

[Martha]

Trombone Al not long ago suggested that a book for reading called How to Win Friends and Influence People, written by Dale Carnegie way back in the 1930s.

The book includes these principles:
Twelve Ways to Win People to Your Way of Thinking:

• "Avoid arguments."
• "Show respect for the other person's opinions. Never tell someone they are wrong."
• "If you're wrong, admit it quickly and emphatically."
• "Begin in a friendly way."
• "Start with questions the other person will answer yes to."
• "Let the other person do the talking."
• "Let the other person feel the idea is his/hers."
• "Try honestly to see things from the other person's point of view."
• "Sympathize with the other person."
• "Appeal to noble motives."
• "Dramatize your ideas."
• "Throw down a challenge."

Nine Ways to Change People Without Giving Offense or Arousing Resentment:

• "Begin with praise and honest appreciation."
• "Call attention to other people's mistakes indirectly."
• "Talk about your own mistakes first."
• "Ask questions instead of giving direct orders."
• "Let the other person save face."
• "Praise every improvement."
• "Give them a fine reputation to live up to."
• "Encourage them by making their faults seem easy to correct."
• "Make the other person happy about doing what you suggest."

How to Win Friends and Influence People - Wikipedia, the free encyclopedia

My father would summarize the principle as "you get more bees with honey."

If your goal is to change minds, attack seldom works. Of course, I don't expect that we will avoid arguments, but many of us can work on our style.

 

[Running_Man]

This is how flame wars start and is not acceptable.

As I pointed out before Razor, attacks by the massive posters for anyone who thinks the market is going down are considered understandable, any retaliation is totally unacceptable. I believe a non-biased review would show Razor is correct, however the community enjoys the negative comments from the massive posters who cheer stocks on against any bears. This thread was littered with them prior to Razor's comments. They may claim they know more about the economy than anyone on TV and are smarter than the rest of us and bristle with negative comments when merely challenged and ask where you got your PHD. Any biting comments in retort though brings gasps from the crowd and are dealt with swiftly to reign you in line to be the most humble of bears.

Really quite humorous to follow the most predictable of conclusions. However despite that they do have very strong and valuable ideas, that I for sure would not have thought of. They just don't like to have to defend them much with logic or have the occasional flaws in the logic pointed out.

 

[Razor]

As I pointed out before Razor, attacks by the massive posters for anyone who thinks the market is going down are considered understandable, any retaliation is totally unacceptable. I believe a non-biased review would show Razor is correct, however the community enjoys the negative comments from the massive posters who cheer stocks on against any bears. This thread was littered with them prior to Razor's comments. They may claim they know more about the economy than anyone on TV and are smarter than the rest of us and bristle with negative comments when merely challenged and ask where you got your PHD. Any biting comments in retort though brings gasps from the crowd and are dealt with swiftly to reign you in line to be the most humble of bears.

Really quite humorous to follow the most predictable of conclusions. However despite that they do have very strong and valuable ideas, that I for sure would not have thought of. They just don't like to have to defend them much with logic or have the occasional flaws in the logic pointed out.

Thanks for the clarification. Now I understand and will behave.

 

[brewer12345]

As I pointed out before Razor, attacks by the massive posters for anyone who thinks the market is going down are considered understandable, any retaliation is totally unacceptable. I believe a non-biased review would show Razor is correct, however the community enjoys the negative comments from the massive posters who cheer stocks on against any bears. This thread was littered with them prior to Razor's comments. They may claim they know more about the economy than anyone on TV and are smarter than the rest of us and bristle with negative comments when merely challenged and ask where you got your PHD. Any biting comments in retort though brings gasps from the crowd and are dealt with swiftly to reign you in line to be the most humble of bears.

Really quite humorous to follow the most predictable of conclusions. However despite that they do have very strong and valuable ideas, that I for sure would not have thought of. They just don't like to have to defend them much with logic or have the occasional flaws in the logic pointed out.

If you'd like to name names in public, please do. I am sure the mods will enjoy picking up the pieces from the resulting flame war. Or you can cry the wall of victimhood tears to yourself.

 

[Gumby]

My apolgies to those offended, but I would like to point out that he started the nastiness. I was just returning fire. If someone disagrees with my opinion tell me why. I am very open minded. If I am attacked personally, I will respond accordingly.

Thanks for taking the step back. Sometimes it is difficult to resist provocation, but for the sake of civil discourse, we must. I meant it yesterday when I said I hope you stay, because different opinions educate us all. But, as Martha points out, flame wars won't help any of us.

 

[Martha]

As I pointed out before Razor, attacks by the massive posters for anyone who thinks the market is going down are considered understandable, any retaliation is totally unacceptable. I believe a non-biased review would show Razor is correct, however the community enjoys the negative comments from the massive posters who cheer stocks on against any bears. This thread was littered with them prior to Razor's comments. They may claim they know more about the economy than anyone on TV and are smarter than the rest of us and bristle with negative comments when merely challenged and ask where you got your PHD. Any biting comments in retort though brings gasps from the crowd and are dealt with swiftly to reign you in line to be the most humble of bears.

Really quite humorous to follow the most predictable of conclusions. However despite that they do have very strong and valuable ideas, that I for sure would not have thought of. They just don't like to have to defend them much with logic or have the occasional flaws in the logic pointed out.

There is some truth to what you say. That is why in my last post I said "many of us" need to work on our style. So, let's all take a deep breath and move on.

 

[Gumby]

As I pointed out before Razor, attacks by the massive posters for anyone who thinks the market is going down are considered understandable, any retaliation is totally unacceptable. I believe a non-biased review would show Razor is correct, however the community enjoys the negative comments from the massive posters who cheer stocks on against any bears. This thread was littered with them prior to Razor's comments. They may claim they know more about the economy than anyone on TV and are smarter than the rest of us and bristle with negative comments when merely challenged and ask where you got your PHD. Any biting comments in retort though brings gasps from the crowd and are dealt with swiftly to reign you in line to be the most humble of bears.

Really quite humorous to follow the most predictable of conclusions. However despite that they do have very strong and valuable ideas, that I for sure would not have thought of. They just don't like to have to defend them much with logic or have the occasional flaws in the logic pointed out.

I have no idea what the market will do, but I do know that I would appreciate seeing a reasoned discussion between those of the bull and bear persuasion. I don't like to see either side just sling mud. It's ugly and doesn't help my own education at all.

 

[honobob]

Totally agree with Running Man. Very well said!

It also seems that after the new guy is provoked we point the blame at them if they retaliate.

 

[NinjaPigeon]

Totally agree with Running Man. Very well said!

It also seems that after the new guy is provoked we point the blame at them if they retaliate.

More so if their profession is on the "naughty list"