Why This is Not the Bottom
Insane bullishness. There is a panic to buy equities. Bearishness and the depression were forgotten in a week! Look at the equity put/call ratio. It is at a level recently associated with short term tops.
Astonishing - scenes from the recession:
- I have seen residential lots like this sell for $1000. They cost 10x that to create. Loss severity.
- See this picture? It is really expensive to get rid of those weeds. Loss severity.
- The future of car dealerships: auctions being held in these car storage spaces at ports.
- Is this bullish for Best Buy? Bigger piece of much smaller pie.
Have you heard any plans to fix the auto industry? Not prop it up, but figure out how many cars a non-bubble economy needs annually, and then figure out an economical way to produce that quantity?
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3 comments:
Doesn't every bull market start from a position of over capacity?
Are you joking?
Do companies have any pricing power when there is overcapacity? What will that do to earnings?
Of course they don't have any pricing power, but that's when assets sell for low prices. They sell for high prices when things are tight and pricing power is strong.
P.S. I agree that we're not at a bottom. But that doesn't mean you wait for over capacity to go away and then buy stocks. By the time that happens, we'll be up 50% or more.
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