Gold in a bubble and/or going to $3,000

[nero3]

Re: Gold in a bubble and/or going to $3,000

I think Mish Shedlock have some things going:

He is one of the most bearish commentators I know of, I usually disagree with him, but of all people it seems he have picked up this thing I have been saying about the US. He is of course not going as far as predicting a bull-market (of course), but he still seems at least to be a bit bullish:
9. Decoupling in Reverse

http://globaleconomicanalysis.blogsp...hemes-for.html

[Chomsky]

Re: Gold in a bubble and/or going to $3,000

I think Mish Shedlock have some things going:

He is one of the most bearish commentators I know of, I usually disagree with him, but of all people it seems he have picked up this thing I have been saying about the US. He is of course not going as far as predicting a bull-market (of course), but he still seems at least to be a bit bullish:
9. Decoupling in Reverse

http://globaleconomicanalysis.blogsp...hemes-for.html

He soft-pedals the pending China crash, makes no mention of oil prices, and (cue up metalman!) makes no mention of his endlessly wrong calls for deflation. The rest of what he offers is obvious.

Mish is useless.

[nero3]

Re: Gold in a bubble and/or going to $3,000

He soft-pedals the pending China crash, makes no mention of oil prices, and (cue up metalman!) makes no mention of his endlessly wrong calls for deflation. The rest of what he offers is obvious.

Mish is useless.

It's not really easy to predict the future, and it's likely to be unprofitable to invest money based on those predictions. Going with the numbers seems like a much safer method. Mish seems to have a fundamentally pessimistic personality from what I have seem. That's certainly something to take into account when reading what he is writing. Most forecasters seems to fall into a bearish scenario for the US, it just differs if they go for the deflation or inflation outlook. However there is a third camp. The bullish outlook, like with Laszlo Birinyi.

[nero3]

Re: Gold in a bubble and/or going to $3,000

Pardon me,

Do you think the western economies are near their laffer tax curve limit? Marginal rates were cut in 2000, but inflation
and a bigger take in local and state taxes have more than made up for this. What if rates spike to 7%, 8% or higher can the gvt. raise taxes and increase revenue to quell the panic? When will the central bank charade of buying debt with
new currency end?

When or if you get a self sustaining recovery, or even sooner if the currency markets, or bond markets go crazy.

I think you could get a benefit if they reduced different sorts of welfare and at the same used that money to reduce corporate taxes. I think that's really where the political wind is going all over the west. I think that's where the most potential is as the corporate sector is much less leveraged than the household sector. There should also be some new subsidies or something to get housing going, so it won't be a drag.

[c1ue]

Re: Gold in a bubble and/or going to $3,000

There isn't going to be a self sustaining recovery.

Neither jobs, nor income, nor any other factor is improving at such a rate that a recovery will occur.

The only thing growing right now is the Fed balance sheet.

iTulip is crystal clear on this subject.

The only question is how much the rest of the world follows suit.

IMO the US is the end of the whip in a game of crack the whip - and is praying that the whip breaks at an earlier juncture otherwise it is going to be ugly.

And Nero3 continues to look backwards. It is easy to look now and see which companies survived near death experiences 10, 20, or 30 years ago to greatly increase market capitalization.

Unfortunately he has yet to demonstrate an iota of forward looking capability.

Intel - as I've noted many times - is stuck in a very bad situation.

The newest generation processors are just as expensive as they always have been, but the benefit for the vast majority of people little to none.

Besides encouraging its anti-monopoly play toy AMD, this situation opens the door for the vast numbers of other CPU makers to make a play: the mobile manufacturers, the game console makers, the LCD TVs, etc etc.

Intel won't go away, but that isn't the problem. The problem is losing its 'tech company' valuation.

So far this has been disguised by growth in overseas demand, but this is not going to last forever or even more than a couple years.

No matter how Intel grows - and its recent growth is more a factor of less capital spending than anything else - a loss of 2/3rds of its valuation for no longer being a tech company is going to sting. And the capital spending cutback bonanza isn't going to last much longer either.

Equally so the rest of the tech giants driving the so called tech recovery:

Dell/HP are surviving by cannibalizing the retail network. They can preserve margins and grow by simply selling more themselves rather than through retail outlets.

Again, this is a fairly limited growth potential.

Apple is in a gigantic bubble. Web 2.0 is similarly undergoing late stage bubbledom.

[touchring]

Re: Gold in a bubble and/or going to $3,000

Even if Intel and Apple succeeds, how is this going to create jobs in the US?

http://www.techeye.net/chips/intel-o...n-dalian-plant

Intel opens $2.5 billion Dalian plantWhile China set to pass US as largest PC market by 201226 Oct 2010 11:50 | by Matthew Finnegan in London | posted in Chips
Intel's shiny new $2.5billion semiconductor manufacturing plant opens today with the aim of increasing the chip producer’s capabilities in the global PC market.

Apple is in a gigantic bubble. Web 2.0 is similarly undergoing late stage bubbledom.

[nero3]

Re: Gold in a bubble and/or going to $3,000

There isn't going to be a self sustaining recovery.

Neither jobs, nor income, nor any other factor is improving at such a rate that a recovery will occur.

The only thing growing right now is the Fed balance sheet.

iTulip is crystal clear on this subject.

The only question is how much the rest of the world follows suit.

IMO the US is the end of the whip in a game of crack the whip - and is praying that the whip breaks at an earlier juncture otherwise it is going to be ugly.

And Nero3 continues to look backwards. It is easy to look now and see which companies survived near death experiences 10, 20, or 30 years ago to greatly increase market capitalization.

Unfortunately he has yet to demonstrate an iota of forward looking capability.

Intel - as I've noted many times - is stuck in a very bad situation.

The newest generation processors are just as expensive as they always have been, but the benefit for the vast majority of people little to none.

Besides encouraging its anti-monopoly play toy AMD, this situation opens the door for the vast numbers of other CPU makers to make a play: the mobile manufacturers, the game console makers, the LCD TVs, etc etc.

Intel won't go away, but that isn't the problem. The problem is losing its 'tech company' valuation.

So far this has been disguised by growth in overseas demand, but this is not going to last forever or even more than a couple years.

No matter how Intel grows - and its recent growth is more a factor of less capital spending than anything else - a loss of 2/3rds of its valuation for no longer being a tech company is going to sting. And the capital spending cutback bonanza isn't going to last much longer either.

Equally so the rest of the tech giants driving the so called tech recovery:

Dell/HP are surviving by cannibalizing the retail network. They can preserve margins and grow by simply selling more themselves rather than through retail outlets.

Again, this is a fairly limited growth potential.

Apple is in a gigantic bubble. Web 2.0 is similarly undergoing late stage bubbledom.

This brings me to an article I read from 1980 about the bursting of the tech bubble. I think these things are still very early. The boom of the 90's was in no way the last one, and there will be more tech booms in the future of course. The nifty 50 of the 1972 was in no way the last we saw of stocks like Coca Cola. I think you are wrong about Intels new CPU's. It's still a huge development in the mobile area with higher and higher resolution, and more battery life through processors that consume less and less. This is of course a trend that will just go on and on as they have before.They are having almost complete domination as AMD don't have the resources or the competence, and are struggling with their lack of pricing power.

On Apple. It seems they might be in a bubble now from a psychological view, but it's still cheap on many metrics like the PEG ratio of 0,88 and it's sure cheaper than almost all gold mining companies on any metrics I think. To many in the west that was around in the 90's apple is more software, and that odd operating system from the time everyone was using something else , but to the developing world, they are the best brand in electronics and computers that's around. There is nothing they rather want than to afford to own apple products. To some of the younger people they are also ranking very high. That's why they have such margins and pricing power. Their products in many tests are getting outstanding reviews, better than any of their competitors. Like their laptops. They are sure expensive, and it might be a bubble, but it's really possible for them to pull it off too.

[nero3]

Re: Gold in a bubble and/or going to $3,000

One post on chip makers in general. They started to get hit by the commodity bubble in 2004. It's dollar weakness that's really the cause of the flat trend in many blue-chip's and even companies like Intel. If the commodity bubble busted, and the dollar got strong, with a strong economy as well, it would be replaced with an upward trend as profit margins would likely expand very much, that would mean they would be priced more as a growth stock, giving multiple expansion. It's the commodity bubble and weak dollar that's the significant cause in the flat trend of the Intel stock.

Even stocks like Wal-Mart would start a very nice climb if the dollar got strong. The weak dollar is in a sense hurting them, while also helping them grow, but the real benefit to the share price will first arrive when the dollar rise and pull up their profit margins.

The thing is, after year 2000, many of these stocks would had went down with a strong dollar, but a weak dollar fixed the traditional flat bear-market move, however now that's really through, at this point a strong dollar would work in the opposite way, give a boost to these stocks, if it happened with strength in the US economy. I think some stocks like Wal-Mart are providing a one way bet from here on. If the dollar get strong, you make money. If it stay's weak, at least they will still grow as a company, keep their nominal price. and you get your dividend.

[karim0028]

Re: Gold in a bubble and/or going to $3,000

One post on chip makers in general. They started to get hit by the commodity bubble in 2004. It's dollar weakness that's really the cause of the flat trend in many blue-chip's and even companies like Intel. If the commodity bubble busted, and the dollar got strong, with a strong economy as well, it would be replaced with an upward trend as profit margins would likely expand very much, that would mean they would be priced more as a growth stock, giving multiple expansion. It's the commodity bubble and weak dollar that's the significant cause in the flat trend of the Intel stock.

Even stocks like Wal-Mart would start a very nice climb if the dollar got strong. The weak dollar is in a sense hurting them, while also helping them grow, but the real benefit to the share price will first arrive when the dollar rise and pull up their profit margins.

I dont follow your logic... How is a rising dollar a good thing for INTC? if it would most likely cause less sales when 60% of INTC revenue comes from outside the US? Weak dollar makes US stuff cheaper for outside consumers...

[karim0028]

Re: Gold in a bubble and/or going to $3,000

Even if Intel and Apple succeeds, how is this going to create jobs in the US?

http://www.techeye.net/chips/intel-o...n-dalian-plant

It will create very few jobs in the US... Since the majority of growth is in asia....

[nero3]

Re: Gold in a bubble and/or going to $3,000

I dont follow your logic... How is a rising dollar a good thing for INTC? if it would most likely cause less sales when 60% of INTC revenue comes from outside the US? Weak dollar makes US stuff cheaper for outside consumers...

It won't matter, a strong dollar will benefit chip makers no matter where they are located, even those in Taiwan. Just as it will benefit a lot of factories in China, even their electricity producers (as profit margins improve from cheaper coal, even as revenue falls).

[c1ue]

Re: Gold in a bubble and/or going to $3,000

Even if Intel and Apple succeeds, how is this going to create jobs in the US?

http://www.techeye.net/chips/intel-o...n-dalian-plant

Dalian is a chipset plant, not a microprocessor plant.

I suggest you learn the difference.

Chipsets are to Intel what Explorer is to Windows.

The technology necessary to manufacture present day competitive microprocessors is 3 generations above what is exportable to China by predominantly US semi equipment manufacturers.

On Apple. It seems they might be in a bubble now from a psychological view, but it's still cheap on many metrics like the PEG ratio of 0,88 and it's sure cheaper than almost all gold mining companies on any metrics I think.

The more you talk, to more foolish you make yourself seem.

PEG is irrelevant when your market cap is already the 2nd largest in the US.

Are you seriously trying to tell me that Apple is more vital to everyday living than every single company in the US except Exxon-Mobil?

I think not.

Apple is simply a grandiose example of growth company valuation stuck onto a nice revenue stream.

[charliebrown]

Re: Gold in a bubble and/or going to $3,000

intel and microsoft are very different companies. Intel makes stuff, without intensive capital investments, there
stuff will not get any better. If one uses depreciation in the cashflow sheet as a proxy for how much money it takes
them to keep going, you will see that intel burns roughly 40% of cashflow on depreciation, which I loosely look at
as ageing equipment replacement.

Microsoft on the other hand, has a depreciation of roughly 12% of its cashflow. Most of its capital is intelectual which can
be gotten from Asia for cheap. I hold microsoft, not intel for this reason.

[nero3]

Re: Gold in a bubble and/or going to $3,000

Microsoft on the other hand, has a depreciation of roughly 12% of its cashflow. Most of its capital is intelectual which can
be gotten from Asia for cheap. I hold microsoft, not intel for this reason.

I think the intellectual capacity is one of the things the western economies got going for it in the long run, even Russia. I'm not sure if it's the same way all over Asia, or South America.

[nero3]

Re: Gold in a bubble and/or going to $3,000

Dalian is a chipset plant, not a microprocessor plant.

I suggest you learn the difference.

Chipsets are to Intel what Explorer is to Windows.

The technology necessary to manufacture present day competitive microprocessors is 3 generations above what is exportable to China by predominantly US semi equipment manufacturers.



The more you talk, to more foolish you make yourself seem.

I take that as a compliment coming from you. Apple is expensive no doubt about that. However. It's not a company without good pricing power, and good fundamentals. If it will remain expensive or get more so depends on what happens with the general market, it can't keep this relative out-performance going forever.