13000 & November: A Tail of Two Company's

By Eric Engle - August 5, 2012 | Tickers: ^DJI, GE, MET | 0 Comments

• Email
• Print

Writing about stocks and markets is often like writing about sports and leagues: one sees a lot of flurrious activity, yet no real content. It's as if investing authors are more interested in massaging the crowd than in reaching to substance.

One principle value investors know is to look at the fundamentals. That's a sell order in case you need a playbook.
Don't buy a business which loses money. Find something undervalued but which is a moneymaker. Or, as my grandma put it "buy low, sell high."

Currently, we are at 13,000. Is this the new market high? No, because we know that the market was pushing 19000 - before the borrowing bubble burst. But that was several years ago already. The question isn't whether 13000 is the new ceiling, it's whether it's the new floor.

Of course, we have all survived, more or less, a decade of waste and war, kleptocratic corruption
here and outright stupidity there. But what about the economy stupid?

Exogenous factors which could make this 13000 a ceiling are: Syria, Syria, and Syria. It is not so much that Syria, an oil producer is itself an important place - even though it borders Israel, that mouse sized lion. Rather, it's Syrias relations to Iran, Russia, and in turn to China and the machinations of Beijing that can make our life hell on earth.

Syria and Iran and Russia are all producers of petrol - the lifeblood of the U.S. economy. Oil products are used for lubricant, fertilizer, explosives, plastic, heating, transport and even food (don't ask, I will not tell). The U.S. is dependent on oil, so much so it is willing to risk its very water supply and to run its navy on vegetable oil, while desperately trying to figure out how to make alternative energy viable. While the U.S. might think it can unilaterally do what it wills in Syria this is not at all the case because of oil dependency. 

Exogenous factors such as wars, tsunamis, earthquakes, are economically unpredictable. The U.S. might cynically step back from the Al Qaeda influenced Syrian opposition, to replay the Warsaw Ghetto uprising and watch the radicals get crushed as happened to the Hmong in the 70s, the Hungarian anti-communists in 1956. That would probably be in the best interest of the U.S. pocket book. But it goes against the ideals and values of humanity and freedom. The U.S. went too far in pushing for rebellion in Syria, and the people who are paying are Syrians. The U.S. need not pay for its imprudent push in economic terms, but the deeper it gets entangled and committed into a Saudi led anti-Syrian uprising the likelier it is to see an Islamic fundamentalist regime come to power and to face expensive oil.

Only a masterpiece of Clintonian diplomacy can pull the U.S. position out of overcommitment and rout into chaos. And diplomacy implies partnership. Is 13000 the ceiling? Will Barry O get relected?

Can we choose a Company to represent the current economy? A real blue chip stock?

 First, General Electric (NYSE: GE) has long been a work-horse of the U.S. economy, and it's set to lead the solar sector. I like sure things. So should you.

Meanwhile, MetLife (NYSE: MET) has just been fined  -- again -- for some variety of fraud. That's an example of the failed kleptocratic policy's of the first decade of the 2000s. No hope on that horizon. The company you keep? Maybe you, not me. When I want to run with my dogs, you won't even see me coming.  The Independent Trucking Company. We move anything, anywhere.
And we're working on ...any Time.

Wonderful things,

Eric

• Email
• Print
• Feedback