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starbucks4ever (94.57)

My crystal ball is not working as well as I'd like

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14

September 20, 2010 – Comments (5)

The rally in the stock market occurred quite naturally. In fact, I called the bottom accurately on Aug 31

http://caps.fool.com/Blogs/looks-like-we-have-another/440797

This was an easy call. If the Asians provide enough cash to America for general bubble-reinflating purposes, then it's surprising that the bubble does reinflate.

My bullish call is unchanged: S&P 1200 by November, 1400 by January. 

What still confounds me is surprising strength of emerging markets. If America has a reason to go up, these markets have nothing to cheer at all. Their money is now in America, locked in10 year contracts to yield 2.5% - essentially gone. An impartial look at their central banks' balance sheets will reveal a colossal multi-trillion dollar malinvestment in the biggest bubble in history. The waste of capital was far worse than whatever mistakes Lehman made in the mortgage market.

They never read Keynes, and they let US propagandists convince them that Keynes was irrelevant. So they still don't have a domestic market for their products. That's why they never decoupled. How can they decouple when they squeezed their consumers dry? They now have to keep selling stuff to America, get funny money in return, and incinerate that funny money in US Treasuries. Where is the growth prospect in this bankrupt business model?  

US stocks are not cheap, but they continue to offer more bang for the buck that emerging-market bubbles that will grow for a while and then will crash spectacularly, leaving bagholders with 80% losses. My red thumbs on BRIC stocks will remain open.

 

  

 

5 Comments – Post Your Own

#1) On September 20, 2010 at 2:22 PM, starbucks4ever (94.57) wrote:

typo: should read "then it's NOT surprising that the bubble does reinflate."

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#2) On September 20, 2010 at 3:11 PM, SultanOfSwing (95.59) wrote:

zloj,

How can they decouple when they squeezed their consumers dry?

Can you explain this with respect to Chinese consumers?  I'm not saying I disagree with you.  It's just that I read so much news about Chinese consumerism exploding or at least growing at a healthy clip in terms of durables (cars, houses, jewelry) and non-durables (McDonalds, Wal-Mart), etc.

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#3) On September 20, 2010 at 3:16 PM, starbucks4ever (94.57) wrote:

#2,

Not enough. It's growing too slowly and it's limited to the top 5% in the cities. The overwhelming majority is still working for a daily bowl of rise, and they see no improvement at all. 

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#4) On September 20, 2010 at 3:20 PM, Griffin416 (99.97) wrote:

Why emerging market (EM) strength? The only country of the EM's that "needs" to buy US treasuries is China, and China's currency is pegged to the US dollar. So as far as the balance of trade goes, it doesn't really matter. The other EM countries are growing at a furious pace growing internally and exporting to more than just one partner. EM is the engine of growth in the world...the US is the caboose being dragged along for the ride.

Secondly, for a numbers reason. If the dollar continues to be weaker (which the trend seem to be going in) EM stocks will appear more expensive due to the weak dollar, so the ADR stocks will rise more than the S&P

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#5) On September 20, 2010 at 3:47 PM, EPS100Momentum (72.67) wrote:

Griffin , The Foreign Institutional investors or FII's are loading up in India. They have invested over $2B in India in just the last 11 trading days. The peak buying in India should be in Nov. , the wedding season in India ends in Dec.

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