George Rebane
I received the following email from a friend and member of our little investment group. He is the most astute and insightful investor I personally know and his remarks are forwarded, with permission, for the consideration of those readers interested in what's going on in the today's security markets.
Today is a fine example of inefficient markets. Short term investors are concerned with the bounce in consumerism and the increase in inflation concerns (less likelyhood of further rate decreases) Hence, commodity prices are down.
Long term (which really counts)
1. Who really believes that the worst of the credit crunches are over? The only way the govt can TRY to avert a housing disaster and a severe stock market decline is to continue (mid-term) with interest rate reductions. This reads as increases in the money pumped out by Washington.
2. The bail-outs for failing mortgages and falling real estate prices will ultimately resemble the corrupt effort the last time this happened. A government market of last resort supporting and auctioning real estate. This will add funds to the fire.
3. The countries across the seas will not stand by and accept a weakening dollar and damages to their export positions. They will also pump out more and more currency.
4. Investors in all countries will ultimately lose faith in currencies and turn more and more to assets that can retain purchasing power. This will ultimately support gold, silver, timber, energy and (yes) the stock markets.
5. Lots of volatility ahead and many opportunities to fall for the short term head fakes.
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