PETER BRIMELOW: Dollar Bull Has Advice For Countrywide CEO

lei123 (2007-09-13 06:16:09) 评论 (0)

John Dessauer's Investor's World
http://www.dessauerinvestorsworld.com/





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PETER BRIMELOW: Dollar Bull Has Advice For Countrywide CEO
1:01 AM ET - Dow Jones News

By Peter Brimelow
NEW YORK (Dow Jones) -- Dollar deterioration, but Dessauer is undaunted.

John Dessauer's Investor's World is one of the few investment letters that regularly comments on the dollar. I occasionally complain that he does so in a rather simplistic way, and also that he has a distinct tendency to Wall Street triumphalism. But over the past five years, he's achieved a healthy 17.55% annualized as measured by the Hulbert Financial Digest vs. 13.26% annualized for the dividend-reinvested Dow Jones Wilshire 5000.

Dessauer is now slightly but respectably below the market over the past 12 months: 14.7% vs. 15.42% for the total-return DJ Wilshire 5000. And when I last looked, it seemed to me he was dodging the dollar issue, something he does from time to time.

Still, n his current monthly letter, which just arrived, Dessauer is defiant about the dollar as part of an overall boldly bullish stand: "There is good news from the currency markets, too. Contrary to all predictions, the dollar gained ground versus the euro and British pound during the subprime crisis. On Friday, Aug. 17, when the Fed cut rates, the dollar held firm. I'm sure that confused the dollar bashers. The dollar is supposed to go down when the Fed cuts rates. But my 35 years of experience with currency markets tell me that currencies seldom do what they are expected to do. My guess is that the positive trade numbers caused the dollar to firm. The dollar isn't going to collapse as long as the trade deficit is declining."

Obviously, this appears to have been whipsawed by more recent action. But Dessauer's unquestionably right that currencies are cranky, especially in the short run.

The summer's events have moved Dessauer to proffer perspective: "Looking back at the 1970s, we see clearly that the longstanding failure to tame inflation with tight monetary policy led us to the brink of an economic disaster. As it turned out, the Fed's mistakes of 1978 caused a pair of nasty recessions in 1979-82. The 1970s would definitely have turned out far better if the Fed, the Congress and Presidents Nixon, Ford and Carter knew then what we know now, that inflation is the main enemy. Stay ahead of inflation, consistently, and the economy will deliver new wealth creation. Central banks around the world understand the need to stay ahead of inflation. As I write, the Fed has pumped in billions of dollars and cut the discount rate. I believe the Fed will cut the fed funds rate at its meeting on the 18th of this month. Because we learned the lesson of the 1970s and fought inflation, the Fed is in a position to help the economy in its hour of need. You can be sure the Fed will do whatever is necessary to keep the economy growing and markets orderly."

Among other happy conclusions, Dessauer writes: "Dare to imagine how investors and markets will react when it turns out that their fear has been based on gross exaggerations. Be bold and plan for the inevitable recovery. Demand for mortgage-backed securities will soar. And the stock prices of the mortgage-banking survivors will soar, too."

He continues to rate IndyMac Bancorp Inc. (IMB) and even troubled Countrywide Financial Corp. (CFC) as buys.

But Dessauer does add darkly: "I would love to see Angelo (Mozilo, Countrywide's CEO) buying several millions of dollars' worth of stock with his own money. (CEO) Michael Perry bought $1 million worth of his company, IndyMac. Why can't Angelo follow suit with an appropriate amount? ... Hey, Angelo, buy some shares ASAP. OK?"

> Dow Jones Newswires
09-13-07 0059ET
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