Shares what you ask? Well, I was involved in an interesting conversation with a really smart friend of mine via email the other day. And following facebook’s lead with the whole voyeuristic nature of people, I thought you may want to see real communications that are uncensored, raw and unfiltered.

Now the names are changed to protect the innocent… I, Jason Archer, will be “Me” because I am not so innocent. And my long time friend and client will be known as “Johnny”. So this is us chatting via email back and forth:

Me:
Just FYI… I took care of the docs

Also, as an interesting aside, It struck me when you mentioned your stocks were up 45% this year… because, the average price of commodities taken together are up 46% in the same period. So how is it possible that earnings are up enough to justify gains like that when the cost of inputs has risen so drastically?

Best,
Jason

Johnny:
Great question. 🙂 Of course, the markets are not so efficient in the short run, timing counts, and buying low P/E’s make an easier climb when the market decides to “reward” a growth story. Having said that, of course, some of my picks are probably artificially high right now. UA is a one bagger for me since 2008. I wouldn’t buy at these prices, but I don’t know if it’s worth selling, either. No one ever lost money taking a profit, but at the same time, I think the prospects for the next 5 years outweigh downside risk.

There was an awesome article on fool.com this weekend about how MSFT was incredibly, incredibly profitable from 2000 – 2010, but shareholders who purchased in 2000 and held for 10 years lost money because the P/E was so high at their entry point. I love those ind of articles but it gets you back to fundamentals, similar to your point.

Me:
Ya… MSFT is a cash generating monster… And the cool thing is, they have effectively transferred leadership away from bill gates. So, it isn’t predicated on him being around.

I always enjoy these prognostications… In my view the next 5 years can not be positive for US companies for many reasons. The bond market has been under great pressure lately as the fed continues to pump fake wealth into the system and yields don’t even cover 50% of the real inflation rate. That is the next bubble to burst in my opinion.. which means that retirements for many Americans, pension funds, et al will disappear as the rush to exit the market intensifies. The only thing that could make it worse would be if the largest generation in recorded history was going into retirement on a fixed income… Oh wait. That is happening too.

In order to sell bonds, rates have to rise… which will drive home prices lower, further increasing upside down mortgages… currently 7 of 10 Arizona homes is underwater. Great time to pick up cash flow property… some of this can be masked with inflation, but as input costs respond to the printing press (and the dollar is eliminated from transaction settlements and central bank reserves), real wealth disappears if held in paper dollars or companies tied to high input costs because earnings will not support higher multiples. Or more employment…

The shift from the dollar has already begun. China has made agreements with the middle east and russia and Brazil and other major players to settle commodity purchases in Renminbi… in other words, the dollar will be unnecessary in the transaction and unwanted in reserves for the first time in 40 years! Meanwhile, legislation is in the works to eliminate or highly tax those of us holding foreign currency and stocks to make getting out of the dollar tougher.

With all that, I would be extremely surprised if the US is better off in 5 years. I will be rich though… so that’s good i guess.

Jason

This type of conversation can have alot to do with whether you choose to buy Arizona investment property. It all depends on your outlook. As you can see we have a somewhat different outlook… So I’m curious what do you think? Let me know with an intelligent comment below.