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Thursday, August 18, 2011

Market Thought... ultimate question

At the end of the day, when all things are said and done, under the current conditions, I must ask myself, what is the result of a failed Euro experiment?

There are forces at work here, seemingly hell-bent on destroying the Euro. (Although we can definitely say the EU countries did it to themselves after years of BS accounting and running up of huge debts.)

Regardless of emotions, stocks represent a very real and tangible value.  They are a pieces of a company that actually produces and do something for society. And since a company's service or product is important to society, the level of importance is measured in value.

The world maybe at an inflection point, preparing for the shock of removing or drastically devaluing of the Euro. The EU can do many things to try to save this 'make-believe' unifying currency. Some action will be of heavy consequence to banks.

I am just tired of watching this tit-for-tat, day-after-day. The EU leaders must do SOMETHING!  But something legitimate.  Maybe force a devaluation of the Euro? Maybe remove the weaker economies and focus only on the strong ones (even though I think that is bullshit)? Maybe hasten the Eurobond, making it the highest priority, to implement in a matter of months, not two years? Maybe end the experiment altogether, and be done with this bullshit drama.  JUST DO SOMETHING STRONG that will bring back stability!

In the mean time, AAPL is trading with a trailing PE of 14, with an untapped revenue potential of $70B in China via China Mobile alone. Or Google with next years PE at 11 with a revenue growth rate of +25% yr-over-yr. Or AXP trading at a trailing PE of 11.5 with delinquencies at their lowest level in years (at 2.7%), while despite potentially entering a recession consumers are saving far more and paying off credit card debt first. (Not to mention the cash-to-plastic transition and the fact that they are knee deep in social.)

Whatever rational thought I have to say about this matter is irrelevant because fear will always trump sanity.  But don't lose sight of the importance to which society places on the products of these companies, because that is what ultimately places value on these companies and their stocks.  Fear be damned.

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