The Global Economy

[Misty]

In my long term portfolio, I own the global economy. I own shares in listed companies around the world, as well as some real estate, and some businesses that aren’t listed. Some of my holdings I’ve held for awhile, some I’ve been picking up at ever cheaper prices.

The number of owners have been dwindling. The rush for the exit has been pretty dramatic. Some are left, though, and they seem to be the giants in the investment world.

I look across at a cave I’ll call T-bills/Gold, and I see a lot of former long term investors crammed inside. They don’t look very happy. Some of them are professional fund managers who, worried about their quarterly performance figures (and job security), took long term money out of the global economy and shoved it inside the cave. Many are small investors who aren’t sure what’s happening, but ran with the mob and are now in shock. Others are feeling either lucky or clever, at least for the time being.

At some point those inside may get hungry or thirsty. (Probably T-bills and gold don’t taste that good.) They may come shopping in my global economy. Maybe they’ll buy a good or service from one of the companies that I own a piece of. Maybe they’ll go to work—I may own their employer, or at least some of its customers or suppliers. Maybe they’ll buy some water that one of my companies transported, take some medication for their heart condition, use some electricity generated by one of my companies, read a newspaper, watch the TV, even some day some may get in an airplane again, etc, etc.

Of course, maybe the big fear story is correct. The organized world is ending, and we’re going back to caveman days. Even then, somehow I don’t think T-bills or Gold will be of much use in that case. So for those in the cave thinking that way, maybe they should come out and stockpile some weapons, food, water, candles, fuel, seeds, fertilizer, try to find some land with running water and livestock, and hunker down for the darkness to descend. Better hurry though—if the global economy is about the end, you’ll want to make sure that my stores are still open.

I don’t believe in the fear story. I think the global economy will survive, and is already an excellent long term investment. In my long term portfolio, I’m be buying some more of it. I can afford to wait until those inside calm down. If I'm right, someday they'll all be stampeding back into the global economy. And if I'm wrong, well I guess we'll all be stuffed and it won't matter much anyway...in the latter case, of course, I don't think any of us will be posting here on TV.

If you're are tempted to post that I just don't get, it, well, actually I do. Yes, I know this is an extreme simplification. But when investors are behaving irrationally, sometimes simple is better.

And if you still think I'm an idiot, then just chalk it up to oxygen deficiency as it was some musings while out on a morning run.

[OriginalPoster]

In my long term portfolio, I own the global economy. I own shares in listed companies around the world, as well as some real estate, and some businesses that aren't listed. Some of my holdings I've held for awhile, some I've been picking up at ever cheaper prices.

The number of owners have been dwindling. The rush for the exit has been pretty dramatic. Some are left, though, and they seem to be the giants in the investment world.

I look across at a cave I'll call T-bills/Gold, and I see a lot of former long term investors crammed inside. They don't look very happy. Some of them are professional fund managers who, worried about their quarterly performance figures (and job security), took long term money out of the global economy and shoved it inside the cave. Many are small investors who aren't sure what's happening, but ran with the mob and are now in shock. Others are feeling either lucky or clever, at least for the time being.

At some point those inside may get hungry or thirsty. (Probably T-bills and gold don't taste that good.) They may come shopping in my global economy. Maybe they'll buy a good or service from one of the companies that I own a piece of. Maybe they'll go to work—I may own their employer, or at least some of its customers or suppliers. Maybe they'll buy some water that one of my companies transported, take some medication for their heart condition, use some electricity generated by one of my companies, read a newspaper, watch the TV, even some day some may get in an airplane again, etc, etc.

Of course, maybe the big fear story is correct. The organized world is ending, and we're going back to caveman days. Even then, somehow I don't think T-bills or Gold will be of much use in that case. So for those in the cave thinking that way, maybe they should come out and stockpile some weapons, food, water, candles, fuel, seeds, fertilizer, try to find some land with running water and livestock, and hunker down for the darkness to descend. Better hurry though—if the global economy is about the end, you'll want to make sure that my stores are still open.

I don't believe in the fear story. I think the global economy will survive, and is already an excellent long term investment. In my long term portfolio, I'm be buying some more of it. I can afford to wait until those inside calm down. If I'm right, someday they'll all be stampeding back into the global economy. And if I'm wrong, well I guess we'll all be stuffed and it won't matter much anyway...in the latter case, of course, I don't think any of us will be posting here on TV.

If you're are tempted to post that I just don't get, it, well, actually I do. Yes, I know this is an extreme simplification. But when investors are behaving irrationally, sometimes simple is better.

And if you still think I'm an idiot, then just chalk it up to oxygen deficiency as it was some musings while out on a morning run.

"They used to tell me I was building a dream, and so I followed the mob, . . . They used to tell me I was building a dream, with peace and glory ahead, Why should I be standing in line, just waiting for bread? Once I built a railroad, I made it run, made it race against time. Once I built a railroad; now it's done. Brother, can you spare a dime?" -- Yip Harburg, 1931.

[lannarebirth]

I would never suggest you don't get it Misty. There was one thing that stuck with me from your comments however. "Maybe they'll buy some water that one of my companies transported, take some medication for their heart condition, use some electricity generated by one of my companies". I thik there mat be a growing sense that yours, or anybody elses company should not own water resources, and that people should not be held hostage by private companies for electricity production. Many will see these things as public property (I know they aren't any longer). Entire watershed rights in private hands, entire regions buying electricity from a private producer.. The people are waking up to the fact the were truly scammed by investment banks and the well lobbied legislatures. Don't be surprised if some of your holdings don't become nationalized one day. Good Luck.

"And if you still think I'm an idiot, then just chalk it up to oxygen deficiency". I hope you never have to pay some company for that oxygen.

Edited October 12, 2008 by lannarebirth

[Misty]

Don't be surprised if some of your holdings don't become nationalized one day.

Lannarebirth, Yes, agreed nationalization may very well happen outside of the financial sector (obviously it's already happening inside). That's a risk. But I highly doubt that gov'ts want to or would be able to nationalize all that I own. That would indeed be caveman days!

I have a dime to spare, Original Poster. Did you want to eat it, or buy something with it?

Incidentally the comparison to The Great Depression is obvious--just be careful not to confuse "the greatest financial crisis since 1929" with meaning the economic crisis we are now entering will be identical in to The Great Depression. The financial system, the economy, and the capital markets, though obviously linked, are not the same.

[soundman]

I am really cashed up at the moment, however, I'm going to wait unitil Misty is forced into selling some of her global assets at way below realistic value to meet on-going repayments to her creditors.

[cmsally]

I am really cashed up at the moment, however, I'm going to wait unitil Misty is forced into selling some of her global assets at way below realistic value to meet on-going repayments to her creditors.

Me too, but I am wondering whether my mattress might be a safer place to store my cash.

[soundman]

I am really cashed up at the moment, however, I'm going to wait unitil Misty is forced into selling some of her global assets at way below realistic value to meet on-going repayments to her creditors.

Me too, but I am wondering whether my mattress might be a safer place to store my cash.

touche!

[flying]

In my long term portfolio, I own the global economy.

I look across at a cave I'll call T-bills/Gold, and I see a lot of former long term investors crammed inside. They don't look very happy.

At some point those inside may get hungry or thirsty. (Probably T-bills and gold don't taste that good.) They may come shopping in my global economy.

Hopefully they are not armed to the teeth once they get hungry

[Misty]

I am really cashed up at the moment, however, I'm going to wait unitil Misty is forced into selling some of her global assets at way below realistic value to meet on-going repayments to her creditors.

Me too, but I am wondering whether my mattress might be a safer place to store my cash.

You'll be waiting a long time. I don't have creditors, and I have enough dimes, dollars, pounds, euros, baht to spare for many years to come. As I mentioned, this is a long term portfolio--I've been investing in it since 1987, and will likely keep investing in it for the next 20 or more years before I plan to spend it.

If it's some other Misty you're talking about, best wishes on trying to time the market. Ever look at how that dime invested in 1931 would have done, even on a 5 year view?