AT THE END OF THE 1970'S BEAR MARKET...STOCKS WERE LITERALLY SELLING FOR LESS THAN THE BREAKUP VALUE OF THE COMPANY...
REMEMBER THE GREENMAILERS IN THE EARLY 80'S...?"
THEY TREATENED TO BUY A COMPANY AND SELL OFF THE PARTS...THE BITS AND PIECES...
AND JUST FIRE THE BOARD AND KICK OUT THE CEO STRAIGHTAWAY!?
THAT IS REALLY WHAT IS NEEDED NOW...BUT WE AIN'T THERE YET...
FORGET ENTERPRISE VALUE...AND "GOOD WILL"...IT'S ALL NONSENSE NOW...
A DIVIDEND CAN SAVE A COMPANY.... JUST PAY A NICE SAFE 5% OR 6% DIVIDEND...PEOPLE WILL BUY THE STOCK THEN...
WHY PAY A YIELD ONLY TO BOND HOLDERS...? THAT WAS NOT THE WAY IT WAS DONE HISTORICALLY...
STOCKHOLDERS USED TO DEMAND A DIVIDEND TOO IN THE OLD DAYS...
WITHOUT A DIVIDEND ....WHAT GOOD IS A STOCK...? APPRECIATION...? YEAH RIGHT...? FORGET THAT BULLSHIT... THAT'S OVER...IT'S SOooo '90'S...!
THIS IS NOT ROCKET SCIENCE...
STOCKS TODAY ARE A LOTTERY TICKET ON THE NEXT FED BUBBLE...WHICH PROBABALY AINT GONNA HAPPEN!
SO STOCK PRICES WILL FALL UNTIL THEY ARE TRULY CHEAP...ULTRA CHEAP...AND THAT IS PROBABLY BELOW THE BREAKUP VALUE OF THE COMPANY...
WE HAVE DEFLATIONARY EXPECTATIONS TO WORK WITH NOW...SO WE WILL OVER SHOOT...
I SUSPECT THAT DOW 4000 OR 5000 WILL BE NEEDED EVEN TO START INVESTORS THINKING ABOUT STOCKS AGAIN...
SO, THE SOONER THE DOW SELLS DOWN BELOW BOOK VALUE...THE SOONER THIS DEPRESSION WILL BE OVER...
THE MICROMANAGEMENT OF MARKETS BY THE FED AND WASHINGTON...IS ONLY DELAYING THE INEVITABLE...
WHATS THE CURE...?
CHEAP ASSETS... CHEAP STOCKS... CHEAP HOUSING...
NOT CHEAPER... I MEAN REALLY CHEAP...BELOW REPLACEMENT COST...
SADLY THAT IS WHERE WE HAVE TO GO...
BELOW BOOK...REAL BOOK...NOT BULLSHIT BOOK...
BELOW REPLACEMENT COST...WAY BELOW...
TO THE LEVEL WERE ASSETS ACTUALLY HAVE "YIELD"...
HOW CAN YOU SAY A HOUSE IS "WORTH"MORE THAN IT'S RENTAL INCOME...REDUCED TO PRESENT VALUE...
YOU CAN'T... THAT'S REALLY IT IN A NUTSHELL...
THERE WILL BE A "WARREN BUFFETT MOMENT" COMING...BUT IT MAY BE YEARS AWAY...
PERHAPS AROUND DOW 3500 TO 4500...NOT BEFORE...
IT'S COMING...SAVE YOUR CASH FOR WHEN THINGS ARE REALLY CHEAP...NOT JUST CHEAPER...
