And another horror is that the stock market went up, which is Pretty Freaking Strange (PFS) since Barron’s reports that the earnings of the Dow Jones Industrials went down, dropping to $225.53 from $234.49. This has produced the unbelievable price-to-earnings ratio of 57! Earnings are going down, but the stocks are going up! To a P/E of 57! Un-freaking-believable!

Not that hard to understand, and I'm surprised the Great Mogambo Guru (GMG) doesn't get it. The world is awash in liquidity. Monetary growth is running double digits in every major economy. So where's the money going to go?

New mortgage loans? Right. Corporate paper? As if. Treasuries? That's a sucker's game. Real returns are negative with an ever present risk of a dollar collapse.

OK, so what's left? Commodities and productive assets. Commodities for the obvious reason of declining reserves and growing demand, both real and investment driven, and productive assets, ie. companies with a long history that are unlikely to fail come what may.

That was my thinking when I bought GE. Sure they have some bad paper they have to flush, but they're not going anywhere, and when this is all over, which it will be some day, there they'll be. What their price will be is anyone's guess, but they'll still be standing, and that's the point.

Commodities get consumed, gold we don't really know what will happen, real estate (except farmland) is dead for years, so that leaves ownership of companies as your last refuge.

Seems obvious to me at least.

ebear