Harry S. Dent Jr.'s Blog, page 152
May 19, 2015
Wall Street’s Not the Only Crook
We all know there’s manipulation on Wall Street. There are companies that are much stronger than their fundamentals would suggest, and it laughs in the face of free market capitalism as it was originally intended.
But it’s not just Wall Street that’s to blame…
The concept of free markets suggests that they work best when they’re run from the bottom up, not top down. “The invisible hand” was first brilliantly explained by Adam Smith in
May 18, 2015
May 16, 2015
Diagnosed by a Machine: Artificial Intelligence Takes Over from Doctors
On May 12, Politico published some frightening statistics about when “not to get sick,” largely based on hospital statistics and interviews with nurses.
Every July in U.S.-based teaching hospitals, medical students become interns, interns become residents, and each level of resident moves up a level.
May 15, 2015
Excessive Lending & Spending: The Fed’s “Magic Tricks” Have Backfired
In today’s global monetary system, money is created out of thin air — like magic — but it can disappear even faster.
May 14, 2015
Rural Wages vs. Urban Pay: Time for Dorothy to Head Back to Kansas?
When I was in college there was a popular t-shirt that read: “Dear Aunt Em, Hate you, hate Kansas, taking the dog. Love, Dorothy.”
The obvious reference to Wizard of Oz aside, it captured the sense of adventure people feel as they leave boring, ho-hum lives in rural or suburban areas to seek their fame and fortune.
It makes sense that college kids were drawn to the sentiment, but I imagine it would resonate much more with the sort of young adults who, like Dorothy, grew up on a farm.
Especially in emerging nations.
This is the breeding ground of the manufacturing class of the world — the same kids who probably made said t-shirt.
The allure of the city leads the peasant farmers of today to become the factory workers of tomorrow.
That, in turn, drives a manufacturing boom, and as more of them search for jobs, labor costs remain low and products remain cheap. It’s why those college kids in the U.S. can buy electronic gadgets, clothes, and other consumer goods at such low prices.
But it doesn’t last forever. Eventually everyone figures out that the yellow brick road doesn’t lead to a pot of gold.
As rural wages move up to compete with urban pay, and the cost of city living shoots higher, the draw of factory work fades, the migration wave subsides, and productivity gains slow to a crawl.
It hurts the companies, too. As factory workers demand more pay, they drive up costs and cut into profits. At this point, the economic gains of getting those people to migrate to cities are mostly null.
Stock Market Bullishness: Back To Where We Started
May 13, 2015
The Most Undervalued Sector
Warren Buffett is well known for saying: “Price is what you pay. Value is what you get.”
May 8, 2015
Hey, Fed – Where’s Our Silver Lining?
As I read the news and watch the markets, I’m struck by the yawning difference between what’s going on with the economy and what is happening with equities.
I know the worn out arguments.
People are buying stocks because they don’t have many choices. That’s fair, to some extent. The return on stocks (dividends, expected earnings growth) is higher than the interest paid on bonds.
Then there’s this one: Foreign investors moving to U.S. dollar-denominated holdings are driving up prices.
And my favorite: Stocks will keep going up because… they’ve been going up. I’m not sure how that makes sense, but I guess it follows some thread of logic.
There is some truth in each of these, but we need to keep one overriding factor in mind.
