Friday, October 10, 2008

Interesting side developments

Ok, so the market is continuing to drop a load at our feet.  That’s cool…  I still think it’s on sale and I’m not selling a damn thing.

 

After all, if we didn’t think the market would eventually come back (and historically it ALWAYS comes back), we’d be packing up and getting the fuck out of Dodge.  But the truth is it’s bad EVERYWHERE (even in places like Europe where there are no republicans).  So, we’re not going anywhere and, eventually, probably sooner rather than later, the market will snap back.  And if you quit today, you’re going to miss out tomorrow.  It is what it is.

 

And looking at it from a logical standpoint…

 

Why do companies exist?  To return value to shareholders.  That’s it.  Nothing more, nothing less.  Sure, as a byproduct of “returning value” they also create jobs and improve conditions for their chosen homes, but their A#1 job is to return value to the shareholders.

Now, let’s just imagine for a second that you’re one of those shareholders…  go ahead…  imagine for a second…

 

Doesn’t that feel good?  No, of course not.  You’ve just lost several thousands of dollars on your investments.  What are you going to do about it?  Sell low?  That’s not how you became a big mover and shaker in the investment game.  Is Warren Buffet selling?  No.  No he isn’t.  Calm down…  take a deep breath.  What are you going to do?

 

You’re going to look at your company that you own a chunk of and figure out how that company is going to start returning value back to you and your fellow share holders.  And what happens when value is returned to shareholders?  That’s right, the price of ownership in those companies goes up.  The price of ownership is represented by the stock price—which is a share of ownership—and THAT price represents expected future earnings, which is why you always want to buy companies that are ABOUT to hit it big (or are continuing to hit it big), not companies that just hit it big.  So, all the idiots that bought Google at $600, they screwed up.  The geniuses that bought it anywhere from $100 to $500, brilliant.  Of course, you only know when you’re a genius after the fact, not before the fact…  which is why the smartest people in the world buy distressed assets that are fundamentally sound (like the US Economy) and poised for a big comeback (like the US Economy).  People who tell you that our system is fundamentally broken are fools and you should offer to separate them from their money before someone without scruples does it for them.

 

News flash, people.  The US market isn’t going anywhere.  It’s down, but certainly not out.  We may very well break the 8,000 mark today, but that’s no big deal…  it just means the sale is getting better by the day.  Of course, none of this applies to folks who are unemployed or recently evicted…  although statistically speaking that is still the vast VAST minority of folks out there.

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