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Minyan Mailbag: Silly Sandwich



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 column with that very intent.


I was just watching Bubblevision and two guys were smugly saying how much they love housing and the stock market (bullish) and how it can't be a bubble if everyone thinks it is a bubble. I am beside myself right now; I do not see how the laws of nature can just let this country keep growing without producing anything, without saving anything. I know the answer, but is it possible that the country can just reflate their way out of debt? Wouldn't that just be too easy? How is it possible that our country is full of conservatives, but nobody is fiscally conservative?

I try not to be a pessimist, and try not to be bitter, (especially after watching my IWM puts get whacked) but I can't help to feel that we are not on the correct path. Does the little guy who watches housing prices double and triple here in Santa Monica--but doesn't act--get the wet end? The guy who doesn't buy Google (GOOG)? The guy who listens to the likes of Russell, Sir John, Buffett, Volcker, Succ and Fleck? It's like the expression: What is the definition of insanity... doing the same thing over and over expecting a different result. I know perception is reality, until reality changes. We need a Chauncey Gardner. We need a fiscal winter for a rebirth in the spring.

Kind regards,
Minyan Brendon


Your frustration is understandable as we edge through an "interesting" time for the financial markets. I've often said that the only difference between being early and being wrong is whether you're positioned when the trade arrives. That speaks to the importance of timing and the ability to construct a risk profile that mimics your time horizon.

I have little doubt that real estate is the reincarnation of speculative excess as the fever and fervor are palpable. The question, for purposes of positioning, is where we are on that investing curve. If you pull up a chart of JDS Uniphase (JDSU) from 1999 through today, at what point was it deemed a bubble? The stock ran from peanuts to $20 to $50 to $100 to $150 and has since round tripped back to a protein fest. You're a happy camper if you sold any of those prices but the vicious assent put alotta traders out of business first.

With regard to our economy, the migration from manufacturing to services is likely here for keeps. We can't compete with the cheap foreign labor and our government is now trying to play hardball. I don't view isolationism as a solution nor do I think it's consistent with our best interests. If we're truly to have a global economy--which is what we "pointed to" throughout the front end of the bubble--we must understand that there is another side to that trade. Sadly, at this rate (of spending and saving), our children will likely have to pay the tab for our immediate gratification mindset.

The only advice I can offer is to remain lucid and "see" the world through your eyes. I've missed some opportunities as a function of my view but I act in a manner consistent with my beliefs. There's a fine line between this approach and "never letting an opinion get in the way of making money" but that's a balance that we must each define for ourselves.

Therein lies the true definition of fiscal literacy and it's one of the reasons why I scribe my vibe on the 'Ville each day.

Best of luck to you.



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