Inflation figures indicate some more trouble

The inflation figures came in today a bit higher than anticipated. I have mentioned already my general view, that liquidity situation is now worsening, and - more important - can actually not be "discounted", i.e. you should not think of it as of corporate news which are now priced in.

Though the fundamental valuation and prospective for the world stock exchanges and economy remains sound. We do not have the 2000 environment.

Of course, one could be concerned about earnings development - with business cycle moves, sales move and earning fluctuate. It's very natural. But I've always stated, that not the underlying economic conditions is what should make you scary at the bourse - it's the people, the mass, with their emotional and from time to time irrational behavior.

I can't recognize any exuberance in the recent past, any striking cause of disappointment. And - if you don't trust (like me) the earnings estimations, think for a moment this way: the companies have made large restructuring, have focused on core business, there were - my opinion - no business or financial "adventures" in recent years. So we will stay firm. Even if there is a cooling off economically, the earnings should not behave as after the stocks mania of late 90s. And any further decline in stock prices brings the valuation to even more favorable levels. Do not forget the fundamentals...

Anyway, the liquidity problem should make some troubles in the coming weeks. So I would expect trouble and prepare for buying. Slowly... don't rush... (if you have good portfolio positions; if not I suppose you should run to make some...but first look at the disclaimer...)


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