Thursday, June 11, 2015

Stock Market Valuation Follies

The people who got the last bust right are predicting another one, when is not sure, and even how big cannot be estimated, for a simple reason: no one knows how distorted things are.  There is no way to estimate....

I was speaking to an international banker with HSBC about deflation, which he acknowledged is in play but waived it off as a problem for banks.  "My real problem is trust, wee cannot rust our clients any more..."  In essence, everyone is lying.

Here is a forensic review of how people lie about their businesses:
There is some truth to the argument that “this time is different.” The accounting mechanizations that have been implemented over the last five years, particularly due to the repeal of FASB Rule 157 which eliminated “mark-to-market” accounting, have allowed an ever increasing number of firms to “game” earnings season for their own benefit. Such gimmickry has suppressed valuation measures far below levels they would be otherwise.
Never look at another business with envy.  You have no idea what you are looking at, and what is behind it.  Only be pleased with your business, what you have created.

Feel free to forward this by email to three of your friends.