Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

Minyan Mailbag: Appetite For Risk


...always question conventional wisdom and ask why it is so.



As a Minyan and Buzz reader (enthusiast), I have noticed that you always seem quick to point out the "Bear" view of the market and the indicators that support this view. I was just wondering (as I try to learn), what would make you positive on the market?


Minyan Jeff


It is not that I am "negative" or "positive." I know full well that markets are driven (especially in the extremes) primarily by sentiment: the appetite for risk by investors. Saying I am positive or negative based on how investors "feel" is not the correct connotation.

First of all I am contrarian by nature. This makes me always question conventional wisdom and ask why it is so. Much of my commentary is merely meant to show the "other side" of conventional wisdom, to make people "think" about what is happening. I have never said short stocks; I always talk about risk instead. By the way, most of conventional wisdom is carefully packaged by Wall Street; it is in Wall Street's best interest to get stock prices up. Currently (and for the future) that objective is congruent with the government's objective for the real economy is inextricably tied now to stock prices.

Combine this with the masses' lack of understanding as to what the macro situation (although they are finding out through lower income and higher debt) is implying and this is a very powerful combination.

Secondly, I am one of those who question the wisdom of the effect of money on the system. I understand the idea of lower currencies (loose money policy) causing higher stock prices in the short run (a few years), but I also understand why it occurs and that it is caused by credit expansion. In the long run this is a de-stabilizing effect, while all along looking like a stabilizing effect. High liquidity means higher stock prices in the short run, but in the long run it means higher debt levels and higher risk.

For example, as imbalances accrue in the world economy we believe that multi-national non-discretionary consumer companies with moderate debt (i.e. Proctor & Gamble (PG)) will do fine, but financial companies are very risky.

So while I cannot be short term negative, or advise when stock prices are likely to fall, I can advise on the levels of risk and the burden we are placing on future generations in this country.


< Previous
  • 1
Next >
Position in PG

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.

Featured Videos