Monday, March 04, 2002

March 3, 2002 ECONOMIC VIEW Rising Savings Could Mean a Weaker Recovery " ... the savings rate for January was 1.8 percent, up from 1 percent in December. ... More saving would further weaken the rebound — after all, the more you save, the less you consume. 'This is going to be an anemic recovery, and the increase in the saving rate is one key element as to why'" " ... through the early 1990's, the monthly savings rate had dipped below 5.5 percent only once ... the rate has not been above 5.5 percent since 1995." "'When the stock market bubble popped, the only asset left to provide saving to the consumer was the home.' ... If savers start to worry more about Social Security, they will share a motivation with their counterparts in Japan, where savings rates have been high for years. ... 'eople save in case the government cannot deliver its promises.'" "The strong supply of credit to consumers could continue to make spending more attractive ... " ... [more] 2:55:24 PM    comment  []

"An economist is an expert who will know tomorrow why the things he predicted yesterday didn't happen today." --Laurence J. Peter 12:40:15 PM    comment  []

March 4, 2002 Bargains Everywhere but on Wall Street By JAMES GRANT "Reaching into their wallets, consumers demand value. Investing other people's money, professional money managers are less discriminating. The great and growing anomaly of American capitalism is the detachment of individual investors from their own investment dollars." " The stock market peaked two years ago. Yet the investment merchandise remains prohibitively expensive. Is the price of a share reasonable in relation to ... earnings ... its dividend ... net assets ... interest rates? By none of these measures are the prices quoted for America's biggest companies anything but stupendously high. ... even now, during what many on Wall Street contend is a savage bear market, the Standard & Poor's 500 index changes hands at about 25 times earnings. It would have to fall by 41 percent to reach the median valuation prevailing since 1957." " ... the primary objective of most money managers is not to make money for the client. It is to keep the client. ... In the boom, investing was made to seem effortless. ... There is one way to succeed on Wall Street. It is, in fact, the way Warren Buffett got rich. Pay low prices for the shares of good businesses. Buy them when the rest of the world wants to sell them. Keep your wits about you. Have the courage of your convictions. Sound easy?" ... [more] 8:33:33 AM    comment  []