Professor Elam

Son of famed economist Herb Stein, Ben writes on the markets and established himself as the droll school person in Ferris Bueller's Day Off. He has appeared in numerous tv ads and several movies.

He reflects on losing money in this article. He asserts that one should be more of a favorite stock if it gets to one fourth of where you bought it before. The problem with such analysis is that is ignores where we are in the big picture.  In 1987 we had  correction, but in an ongoing bulll market. In 1929 and 1966, we were at the end of big bull runs. It would take until the early 1950s b before RCA, the tech darling of the 1920s regained its price it traded in 1929.  The Dow high of 1,000 in 1966 would not be really broken until the early 1980s. so Ben may be waiting a long time.

Now we are arguably at the end of the boom that started in the 1920s, if you see the 1900s as one long bull market interrupted by 1929-1952 and 1966-1982. If that is the case it is truly a New World.

I suspect this may not all resolve for some number of years. Power is clearly shifting. it is true that the US cannot go on consuming 25% of world energy with only 5% of its population, the world is not going to lend us the money to do that. Our markers are being called in, how long will the world accept our IOUs?  I frankly doubt either McCain or Obama understand that given their naive pronouncements during the campaign, and I don't know that their advisers are a lot better.

The world is weary of the US, China, India, and Russia not to mention the always down trodden economies of South America want their day in the sun. We are going through that transition process now. Who will emerge the big winner?  The country that produces goods and services the world wants. It will have a strong currency backed by that productivity of desirable goods. It will not have debt it cannot handle. At the moment that would not be the US with too much debt and an economy based on selling ring tones on cell phones….