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Minyan Mailbag - Too Many Voices

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Note: Our goal in Minyanville is to remove intimidation from the financial markets and encourage an interactive dialogue among the Minyanship. We share this next discussion with that very intent.

Editor's Note: The following exchange began in response to Prof. Miller's comments in his mailbag, "Repatriations" from yesterday.

David,

It gets to the point, frankly, that there are SO MANY divergent opinions on the Fed, Elmer, interest rates, dollar weakness, repatriation, inflation, stagflation, slowdown, offshoring, outsourcing, etc. etc. etc...It sort of becomes white noise or throw up the deck of cards...It's hard to know who to listen to.

Thanks,
Minyan PGV

PGV,

When I was in college, I was on our school's debate team. Two teams of two people each banged away at each other in a structured format for about 75 minutes. Each side had its own opinions about who was right and the path we'd chosen to get to that answer. The conviction of that opinion varied as the debate was ongoing. There was a judge (or three) that was the final arbiter.

I find the market similar. Two sides are banging away at each other, each confident (in varying degrees at varying times) that its path is the right one. Each side develops new strategies and new arguments based upon old strategies. In the end, the little red and green numbers tell you who was right.

I could torture this analogy to death with more detail, but my point is this: It didn't matter what I felt about whether my side was the winner. All that matters is the judge. The debate along the way can provide some interesting clues, but ultimately the correct answer is provided by the market. Listen to what the MARKET tells you, not what the players (debaters) are saying, and you'll likely have a clearer picture.


Regards,
David

David,

Excellent analogy, and I thank you. I don't short term trade anymore.
Only medium term and long term investments, and VERY VERY diversified. I enjoy reading all the arguments and the process is very enlightening....I am a neophyte though and not an economist or analyst or even a Fibonacci maven.....

But your point in the article was well taken that it is a HUGE mistake of the bears to assume the Fed and others are "stupid". They aren't by a long shot. In fact, they are likely smarter than a LOT of traders who think they are smarter.

Doesn't mean the gubmint, Fed, Elmer, whoever won't walk over the cliff with us....

What I have been saying for some time is this: We need a catalyst for economic growth in the USA. We are hemorraging industries, jobs, money etc. etc. We can't make it on service jobs and refinancing and silly widgets and Gameboys.

I don't have an answer. But I worry about the future for my kids.

Thanks, David.
Minyan PGV

PGV,

I share your worries, actually. I'm teaching a class of entrepreneurs right now. It's week 3 (of 10) and we just got their first drafts. I've spoken with a few of them about management responsibility and taking the long-term view - how if they expect to be successful they need to pay their employees enough and give them enough security so they can afford to buy the products they make. Not a new idea (see Henry Ford), of course, but one I think we forget.

I often say America's only competitive advantage is our brainpower. I'm often told that's ethnocentric or whatever word is used these days to chasten people who talk about competitive advantages on a societal scale, but I truly believe it. Outsourcing any job is a real problem, but when we outsource our expertise to other countries we're digging a hole we simply will not be able to dig out of. I fear for our children, too (I mean that generically since I don't have any myself).

On your other point, it takes a ton of ego to succeed in this business. But it has to be carefully applied. The disrespect shown Mr. Greenspan and others bothers me, especially when those who are the worst offenders wouldn't have the first idea how to solve the problems he faces. Let's be serious, we were barely peeking out of an economic downturn 9/2001 when the entire peace dividend that drove the stock market since the mid-80's was yanked out from under us.

The fact that the entire financial and economic system didn't flat-out collapse is astonishing. Our economy essentially stopped -- clearly for a few days and I'd argue for several weeks. What we've endured as a recession would have been hailed as incredible economic performance in the 1970s.

I don't agree with all the decisions (the dividend tax cut was a colossal economic blunder, in my opinion) but I try to voice my disagreement with as much respect as I can muster.

Thanks for your correspondence. I've enjoyed replying!

David

No positions in stocks mentioned.

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