goldfinger

Happy new year to all of you!

Same here! 8)

They were very bullish and Buffett was saying that the market is not cheap but he was not calling a bubble a bit like today. Everybody was finding reasons for why the market has more upside and we can see very similar behavioral patterns today. I am not implying we are going to crash like in 2007 but...

Buffett: "We are having a hard time finding anything to buy." Witmer: "A bit of a bubble in stocks" Things aren't cheap. Could stocks correct by more than 20% (cyclical bear): absolutely especially given interest rates volatility, relationships in between earnings and deficits and additional concerns about many economies of the world.

I would tend to agree with that too. I would add that you do not really have the right to fail in Europe (at least in the countries I know well) and the way to deal with debt is only one part of the equation.

Yes. There are a few schools that lead to a few elite programs where many leaders of government and industry are recruited from. But it just happened that Sarkozy did not study there and was a lawyer by training. Mitterrand also by the way (arguably the most influential president since de Gaulle who himself was not part of that elite!). All this meaning that it is true to a certain extent to say the least.

Sarkozy however was a lawyer and therefore not part of that elite you are talking about.

Packer you saw it clearly. It is very difficult to govern and change anything in France, and it has been like this for a long long time. Most political discussions are complete hot air there from one ideology to the next. The French seeing the current crisis got scared of loosing their entitlement programs and then voted for the left but not even them believe in it! It is kind of a desperate situation politically but if the economy goes under (and it is looking like it is really possible - the markets have maintained rates low for now as they fled the southern states bonds, but how long will it take until they realize their mistake?) things could go rapidly into unrest and brutal change as many people do not know what to do anymore and are growing scared.

There is always the possibility that some countries elect nationalistic and/or far right oriented governments. It would not surprise me at all to see France go into very severe economic stress pretty soon (it is kind of already happening) and then put the far right on top. How is Europe doing then???

Also another thing to understand about Europe is that the union itself is not a reality in the minds of europeans at all and that their mentality about economic matters is really really far from the pragmatism displayed here in America.

If only all the problems of Europe were contained within the boundaries of the southern real! :-[ I think Europe has much much bigger problems than that Packer.

The 2000-2002 decline was not too far from the 2008 decline. When did we see another instance of QE3 in history? Where does sentiment matter when professionals feel they have to buy no matter what? There was no volatility whatsoever in the last 6 months almost.

That's going to be my last post here. But Buffett and Berkowitz were buying right before the crash. And Buffett was not trashing the market before the crash either if you remember. Etc... I do not think people here use the Shiller P/E to make investment decisions but Siegel seems to have selective memory to prove his points. Finally I bow to your opinion and you are right.

Look Wellmont I just do not want to argue with you and spend too much time on this but who spoke of market timing here? It is just a measure of valuation that tries to take away the influence of the earning cycle. But since you spoke of people that are rational what about market cap to GDP since it is a Buffett approach? It's at 120% right now: http://www.vectorgrader.com/indicators/market-cap-gdp. Maybe the 67% median value doesn't mean anything because it spent most of its time above that in the last 20 years?

In stocks for the long run Siegel uses more than a century of data to explain why stocks are where to be all the time but then he says to ignore Shiller P/E because they are lower pre-1990? I remember that Munger called him demented a while ago (at a Berkshire annual meeting): http://www.valuewalk.com/2012/02/charlie-munger-i-think-jeremy-siegel-is-demented/

http://thehill.com/blogs/on-the-money/budget/316015-budget-deficit-reaches-606-billion-cbo The federal deficit seems to be shrinking by 368B$ this year and 100B$ of it seems to be unrelated to tax revenue increases.

From Hussman's last weekly commentary: "First, as job losses accelerated and household savings collapsed in order to maintain consumption, U.S. fiscal policy responded with enormous government deficits approaching 10% of GDP. Since the deficits of one sector always emerge as the surplus of another, the record combined deficit of governments and households was reflected – as it has been historically – by a mirror image surplus in corporate profit margins, which have surged to record levels in recent years. Essentially, government and household deficits have allowed consumer spending and corporate revenues to remain stable – without any material need for price competition – even though wages and salaries have plunged to a record low share of GDP and labor force participation has dropped to the lowest level in three decades. This mirror-image behavior of profit margins can be demonstrated in decades of historical data, but investors presently seem to believe that these profit margins are a permanent fixture, and have been willing to price stocks at elevated multiples of earnings that are themselves elevated over 70%, relative to historically normal profit margins."

Deleveraging might not end anytime soon: http://www.nakedcapitalism.com/2013/01/richard-koo-debunks-the-deleveraging-is-almost-done-american-consumer-getting-ready-for-good-times-meme.html http://www.thestreet.com/story/11971373/1/has-consumer-deleveraging-ended.html http://www.zerohedge.com/news/2013-05-22/deleveraging-releveraging-and-finding-new-saturation-point Hoisington's Q2 letter pointing out that consumers decreased savings to make up for increased taxes to consume (which can't continue) is not a very positive indicator in my opinion.

You know what Sanjeev, I really learned from you along the years quietly. You have an extraordinarily balanced mind!

I am 100 times less smart than Al but I do not see why it is so obvious we are in a new secular bull market! First there is nothing "as usual" in the current recovery. This is the weakest recovery in US history except the great depression and GDP numbers keep on getting revised to the downside quarter after quarter. Then you get continuously declining household income, still unprecedented public and household levels of debt, higher taxes and future lower stimulus when consumers already have decreased saving levels from an already low level, declining money velocity etc, etc, etc... I think there is a lot of hope baked into the cake right now but that's about it. And now we get China slowing at best... :-[ I have a lot of cash right now!

another article about China from a portfolio manager who got burned by it: http://asiaconf.com/

Krugman: China hitting the wall now: http://www.nytimes.com/2013/07/19/opinion/krugman-hitting-chinas-wall.html?hp&_r=0

It's A Stock Market Stampede: http://www.businessinsider.com/us-sees-largest-weekly-equity-inflow-since-june-2008-2013-7 Everyone loves the US markets now.

Happy Birthday Sanjeev! :D

Congratulations Sanjeev! You are quite an inspiring human being! ;)