Squawk Box just had a remarkably shallow segment with Bill Wilby from Oppenheimer Funds. Mr. Wilby said that the team at Oppenheimer has an annual brainstorming session to find market inefficiencies and try to isolate them for investment.
Based on the questions asked in the segment growth stocks are cheap compared to value. Stocks are cheaper than real estate. Tech looks very favorable as do all megacaps but healthcare investors should be more selective.
All the brainpower from a big company like Oppenheimer and all the crew could extract was the above three sentences. Nice work.
Did you see Senator Dorgan trying defend the windfall profit tax concept? Is he the best spokesman this movement has? I took great solace from the fact that his windfall profit tax will be different from the other one (read sarcastic tone). I did not know that he used to teach economics. I was shocked by that.
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4 comments:
I remember the windfall profits tax from the Carter days. I also remember that Carter was fired.
Thanks for easing my pain, my brain hurts when these jokers talk about windfall profits taxes. I can understand when a percentage of uneducated consumers whine. When a Senator calls for such a tax, he makes me believe that socialism is a greater threat than we realize. How can an American citizen not understand that the market sets the price of oil?
I liked the fact that the joker would not address the Mark Haines question about a windfall tax on the sale of a home. And yet there are millions who have sold real estate at great profits in the last year. Why should they not pay an extra tax on their windfall? If this senator gets his windfall tax it would not be long before he would want the government to dictate the aproved colors of underwear.
In regard to Bill Wilby, take a look at "The Mind of Wall Street" by Leon Levy. Mr. Levy is straight foward about the fact that, in his many years at Oppenheimer, many of the best deals were not shared with the public.
The core report by Wilby was correct, i.e. the earnings yield on stocks is currently very high relative to the rental yield on real estate and the earnings yield on bonds is currently low relative to the earnings yield on stocks.
The big question (as always) is where is the inflation rate headed and thus where are interest rates headed. Should long rates go to 8% over the next couple of years, the E in the PE could drop and the earnings yield comparison could switch from favoring stocks to favoring bonds even at much lower stock prices. The price of real estate could drop enough to make the rental yields much more attractive.
I am a BULL. I see the resolution of the divergence being a strong rally in stocks starting at least by mid January. I see a decline in the CRB and lower long rates.
The bottom line is that I wish CNBC could offer in depth analysis. I'm with you, but I don't expect much more from the "big boys" such as Oppenheimer.
Jack,
Great stuff. for readers, I would note that I take the other side of Jack's "bullish" position.
However, if I am wrong a lot of the why will be because of what Jack is saying.
Thanks again!
Once a year? Did I read this right? Oh boy! Once a year.....did anybody else think this was .....not often enough?
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