Telecom stocks at 52-week lows
In the last several days, several telecommunications companies entered their 52-week lows: MOT (Motorola), NOK (Nokia), Q (Qwest), TLAB (Tellabs), VOD (Vodafone). These are small news compared with the major meltdowns among financial companies (e.g. Lehman Brothers) and extremely high oil prices which cause all kind of fears.
Is the economy really in serious trouble? Or will the financial industrial problems propagate into other industries? Will the high oil prices force contagious all-world inflation?
I hope the world smart economists, businessmen, and all kinds of governors will find solutions to the financial problems and oil price problems. Finding solutions to these problems are their jobs.
One possible situation is that the financial problems and the high oil price problems are inter-connected problems. Capital needed for financing economic expansions such as mortgages is flocked in to bet on higher future commodity prices.
In general, investing money in stocks and bonds is for business expansions while betting money in commodity futures is to smooth out economic gyrations. Now too much money is betting on non-productive commodity futures. Not-enough money is left for expanding the productive bases of economy. So the current economic problems are caused by infeasible allocations of money.
The up-coming President of the United States might have the need and will to eventually fix these problems of run-away speculations on the commodity futures like the oil futures. So these problems can at most last a few more months.
So the oil price will not go much higher. If this is the case, then the telecommunication industry problem as shown now will not be a problem at all.
Is the economy really in serious trouble? Or will the financial industrial problems propagate into other industries? Will the high oil prices force contagious all-world inflation?
I hope the world smart economists, businessmen, and all kinds of governors will find solutions to the financial problems and oil price problems. Finding solutions to these problems are their jobs.
One possible situation is that the financial problems and the high oil price problems are inter-connected problems. Capital needed for financing economic expansions such as mortgages is flocked in to bet on higher future commodity prices.
In general, investing money in stocks and bonds is for business expansions while betting money in commodity futures is to smooth out economic gyrations. Now too much money is betting on non-productive commodity futures. Not-enough money is left for expanding the productive bases of economy. So the current economic problems are caused by infeasible allocations of money.
The up-coming President of the United States might have the need and will to eventually fix these problems of run-away speculations on the commodity futures like the oil futures. So these problems can at most last a few more months.
So the oil price will not go much higher. If this is the case, then the telecommunication industry problem as shown now will not be a problem at all.
posted by Unknown at 6:15 AM
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