Thanksgiving, Anno 1999 / The Daily Reckoning

verfasst von - ELLI -, 28.11.2002, 22:49

-->Thanksgiving, Anno 1999

The Daily Reckoning

Paris, France

Thursday, 28 November 2002, Thanksgiving

--------------------

*** Stocks soar...7th week in a row...

*** EOTWAWHKI - POSTPONED!

*** Techs hopping...banks be-bopping...as bears disappear
from Wall Street. But is the rally topping? Bankruptcy...
Nymphéas (don't get your hopes up too much)...and more!

--- Advertisment ---

What's a"One Day Wonder"? How About 4.5 TIMES YOUR MONEY
IN 48 HOURS? And a chance to get back the money you've
lost in the market - safely, with confidence.

Using this sophisticated, scientific stock selection
system to uncover little-known stocks (all under $7 a
share) could help you recover the money you've lost in
the market this year. How? Many are on the verge of
predictable, explosive price moves upwards of between
100% and 550%...

And many post their gains within 24 to 72 hours.
Interested? Click here for more...
http://www.agora-inc.com/reports/PNY/RackUpProfits

----------------------

Stocks went up like a house afire yesterday.

And why not? The economy is growing at a 4% rate. Consumers
are still spending. Houses are still selling. People are
losing fewer jobs. Prices are still rising and the dollar is
still worth more than it has any right to be.

Well...what can we say? The end-of-the-world-as-we-have-
known-it...or EOTWAWHKI, for short...has been postponed.

Stock market investors are buying stocks 'for the long haul'
again. Bob Prechter wonders why,"when 20 years ago they were
clutching T-bills." Why didn't they favor stocks for the long
haul when the long haul was about to really pay off?

Prechter found his answer in a 1917 book, One Way Pockets, in
which the author, a stockbroker, noticed that his clients
were always traders at a market bottom. At tops, they were
investors, buying for the 'long haul.'

How then will we know when stocks reach a real bottom? People
will no longer be investing in them; they'll be trading them,
careful not to hold too long for fear they will suffer a
terrible loss.

We are a long way from a bottom now - and seem to be headed
in the wrong direction. Stocks, already too expensive for a
sober man to buy, are becoming more expensive. And those that
are becoming most expensive, most quickly are those that are
most likely to give investors the terrible loss they seem to
be looking for - the old New Era wrecks. Techs, telecoms,
semiconductors, biotechs and even banks rose smartly
yesterday. The incredible hulks seemed to have come to life
all of a sudden...and for no apparent reason.

Why would anyone want to buy the banks, for example?
Yesterday brought news that the banks were writing off 35.6%
more bad credit card debt than they did the year before.
Given the huge rise in consumer debt over the last 2 decades,
banking would seem to be an industry to sell, not buy. As a
percent of personal income, U.S. household debt has risen
from less than 60% in 1982 to nearly 90% last year, according
to Fed figures. Total U.S. non-financial debt as a percentage
of GDP has jumped from 140% to almost 200% in the same
period.

But what do we know? When the EOTWAWHKI finally arrives, the
banks will be one of the last stocks you'll want to own. But
who knows when that will happen?

In the meantime, it's a national holiday and life as we have
known it for the last 20 years continues. We're not going to
spoil it by making you worry about something that might not
resume until Monday, or a couple of weeks, or even months
from now. And, even though we are hard at work here in the
Paris office of the Daily Reckoning, our hearts are with
Americans everywhere who gather together to celebrate and
give thanks.

Right, Eric?

-----------

Mr. Fry in Manhattan...

- The traditional pre-Thanksgiving short squeeze occurred
right on cue yesterday. It's as much a tradition as roast
turkey and cranberry sauce. The pre-Thanksgiving ritual on
Wall Street goes like this: most traders take off from work
Tuesday afternoon, not to return until the following Monday.
Therefore, trading volumes are much lighter than normal,
which permits the few folks that do remain to make a big
impact on prices with just a little bit of buying. It's all
just good clean sport and nobody gets hurt, except for short-
sellers...and who cares about them anyway?

- The Dow gained 255 points to reach 8,931, while the Nasdaq
jumped 3% to 1,488. The dollar gained a little and gold
slipped a little.

- On Tuesday, investors responded to the good news of
stronger-than-expected GDP and rising consumer confidence by
SELLING stocks. Yesterday, they did just the opposite. They
responded to a spate of encouraging economic news by BUYING
stocks. Durable orders rebounded 2.8% in October, and the
Chicago Purchasing Managers' Index jumped to 54.3 from 45.9.

- Will yesterday's rally be the coup de grace of this
particular bear-market rally? If so, the bulls should be very
proud of what they have accomplished. Since October 9th, the
Dow has jumped more than 22% and the Nasdaq has gained a
sparkling 33%.

-"Even though recent market history has taught, or SHOULD
HAVE TAUGHT, investors a painful but valuable lesson about
bear market rallies," Apogee Research observes,"a slew of
them have embraced the latest rally with unbridled
enthusiasm...We are in favor of better times, but various
contrarian indicators of bullish sentiment are flashing
'caution!'"

- Apogee notes that option volatility indexes like the VIX,
which measures implied volatility on the S&P 100 options, are
flashing signs of extreme complacency. That's the type of
signal that often precedes market sell-offs.

- Furthermore, my friend Kevin Duffy of Bearing Asset
Management tells me a recent Investors Intelligence poll
shows that the percentage of bearish advisors has reached
24.7%, the lowest reading since the 23.2% of March 2000 - the
infamous date that marked the very top of the 1990s epic bull
market."This poll shows way too much optimism for this
seven-week rally," says Duffy."While we can't rule out more
gains - which would take these indicators to even greater
extremes - this rally appears to be running on borrowed
time."

- Agreed.

- For the counter-argument, let's turn to portfolio manager
Ronald Baron."This is your opportunity to get rich," Baron
told the Wall Street Journal recently."You shouldn't be able
to sleep at night; there's so many things to do." Baron may
well be correct. But it begs the question: if NOW is the
opportunity to get rich, why was he so heavily invested in
stocks two years ago? You see, Baron's $3.15 billion Barron
Asset Fund fell 10.1% in 2001 and has dropped about 20% more
so far this year.

- Baron could be right that NOW is the opportunity to get
rich. But first, his investors will have to recover the money
they've lost from BEFORE, when he was loading up on stocks
during the time when it was a great opportunity to become
poor...

- Pity the poor bond market. Now that stocks are popular once
again, nobody seems to want bonds anymore. What fun is a 4%
ANNUAL yield when you can get two or three times that return
in a single day by buying any one of a number of tech stocks?
Yesterday, the 10-year Treasury tumbled more than a point,
causing its yield to rocket to 4.25% from Tuesday's 4.06%.

- But what may be misery for bond investors should be sheer
delight for the subscribers to the Resource Trader Alert. On
November 13th, the Resource Trader recommended buying put
options on the 10-year T-note. The options have jumped a
sparkling 105% since then.
(see: Resource Trader Alert
http://www.agora-inc.com/reports/RTA/MassiveProfits/)

- Of course, it's hard to blame the folks who are selling
bonds. The apparition of deflation that so many folks
believed to be real has suddenly vanished. In its place
stands the imposing - albeit faint - outline of a looming
inflation. What's more, Alan Greenspan's razor-thin interest
rates and double-digit money-supply growth provide little
reason to doubt that inflation's faint outline will
eventually become much more visible.

- Happy Thanksgiving!

-----------

Back in Paris...

***"Debt + no job = bankruptcy." Thus does the San Francisco
Gate do the equation for us. People owe so much that they
cannot afford to take a unplanned vacation. For many people,
the revenue that will pay next week's bills comes in on
Monday or Tuesday. For others, it doesn't arrive until the
week after. And for a few - but more and more - it doesn't
come at all. They've been laid off and are having a hard time
finding new work. In the meantime, the mortgage they just
refinanced needs to be paid - along with life's other
necessities.

*** Here's something interesting."Art is very much in
again," Barron's quotes a London-based private banker. But,
think you can beat stocks with art? Not necessarily. People
who buy art as an investment get about what other people who
invest get - usually, about what they deserve. When he was
still at liberty, former Tyco Dennis Kozlowski went on a
buying spree of big-name art. The Monets and Renoirs were
supposed to give the world the impression that the man had
culture as well as money. But as we keep saying, money is not
the key to culture, nor to quality. And a fool who goes out
and buys 'art' for investment purposes is as quickly
separated from his money as one who buys tech stocks.

When the paintings are sold to cover the unpaid NY sales tax,
"some experts think they'll fetch just 50 cents on the
dollar, based on what Kozlowki paid," Barron's reports.

And when the British Rail Pension Fund finally figured out
what it had made on the $60 million it invested in art
between '75 and '80, it discovered that the return was only
4% per year - far less than its other investments during the
same period.

Nor is art immune to the booms and busts that episodically
visit other markets. Monet's"Nymphéas", for example, was
sold by Christie's on Nov. 8, 1999 for $22.60 million. Three
years later, it brought only $16.83 million.

And 'modern' art does even worse than old masters - unless
you get really lucky.

"Concept Art," explained my friend Michel at lunch,"is one
of the biggest marketing success stories of all time. You put
a fork against a white background and you call it something
like 'Destruction of the Ego' and it could sell for millions
of dollars - or for nothing.

"And then, the professors of art history in the universities
can't tell the difference between this 'concept art' and real
art. So they watch the prices...and treat the two of them as
though they were the same. So, the concept art enters the
academies and the galleries...and gets picked up by the
museums. After a while, the whole world seems convinced that
this garbage is worth something. The artists are put on the
same level with Rembrandt, even though many of them wouldn't
know a paint brush from a toilet brush."

*** With that, your editor heads out the door. He is on his
way to the famous auction house, Drouot, where he will buy
art the way he buys stocks: cheaply. He will place low bids
on unknown paintings by second- and third-rate 19th-century
French landscape artists. With a little luck, his guests will
enjoy seeing them on his walls...and his heirs will at least
recover what he paid for them when the time comes to sell.

--- Advertisement ---

You Could Have 10 TIMES What Other Investors Made - While
Buying Exactly The Same Stocks!

Using this tough investing system, you could have made 10
times the profits of other investors... other readers made
another 260% in two days... 300% in just under two weeks...
131%in three days... 94% in three more... 124% over another
two weeks... and much, much more. Click on the following link:
you'll learn exactly what they did. And how you can do apply
this strategy to your portfolio, too.

It's all here in your"SECRET LOGIC LIBRARY" - a set of five
stunning investing reports - yours absolutely FREE.
http://www.agora-inc.com/reports/FST/SecretLogic

-----------------------

The Daily Reckoning PRESENTS: A DR Classique, first run
November 25, 1999

THANKSGIVING, ANNO 1999
by Bill Bonner

I turned to my trusty assistant...Beirne White...this
morning."Beirne," I said gravely,"tell me about
Thanksgiving in Mississippi." Beirne proceeded to tell me
about a Mississippi bluesman named"Son" House, who lived
to be 102 by doing what bluesmen tended to do...chasing
bad luck, bad liquor, and bad women.

"What does that have to do with Thanksgiving?"

"Nothing," he replied...whereupon he drew on the
resources generously provided by Britannica.com, formerly
of Chicago, lately of cyber space, to get me the research
I requested.

Beirne hails from Mississippi. And while Mississippians
will sit down with the rest of the nation...and tuck into
their turkeys with equal relish...perhaps only
substituting Bourbon Pecan pie for the sweet potato or
pumpkin pie enjoyed in Maryland...somewhere deep in the
most primitive part of his medulla oblongata, the part of
the brain where race memories are stored, Beirne resists
Thanksgiving. It is, after all, a Yankee holiday.

In the middle of the war between the states, both sides
proclaimed days of"thanksgiving," following the progress
of the war as we now follow the progress of the stock
market. After each of the first and second battles of
Bull Run, which sent the Yankees fleeing back to
Washington, the Confederates proclaimed days of
thanksgiving.

But it was Lincoln's day that stuck. Declared after the
battle of Gettysburg - the last great Napoleonic charge
of military history - Thanksgiving was set for the third
Thursday in the month of November, commemorating the
Northern victory.

Beirne doesn't say so...but this fact must stick in his
craw. It doesn't help that the original celebration took
place in Massachusetts. And that it was hosted by a dour
bunch of Puritans, who probably wouldn't have been able
to enjoy a good dinner if their lives depended on it. But
they certainly had a lot to be thankful for. As the Wall
Street Journal reminds us annually, they nearly
exterminated themselves in typical Yankee fashion - by
wanting to boss each other around. They had arrived in
Massachusetts by accident and bad seamanship, intending
to settle in the more hospitable climate of Virginia,
which had been colonized more than 10 years before.

Once in Massachusetts, they proceeded to set up such a
miserable community that surely most of them, had they
lived, would have longed to return to England. The
Soviets could have learned from their example and spared
themselves 70 years of misery. Only after the"witch
burners and infant damners" abandoned their communal form
of organization, and allowed people to work for
themselves, did the colony have a prayer of survival. But
victors write the history books. And now this precarious
celebration by a feeble group of religious zealots has
turned into the most American holiday.

After Appomattox, the South was helpless. Its natural
leaders, the plantation aristocrats, were either dead,
bankrupted and/or discredited. Many of them went to
Northern cities, like New York or Baltimore, where,
Mencken tells us, they"arrived with no baggage save good
manners and empty bellies." They enriched the North. But
back home, they were sorely missed."First the
carpetbaggers," says Mencken,"ravaged the land...and
then it fell into the hands of the native white trash..."

Scars of war can take a long time to heal. But 130 years
later, the South is the most economically and culturally
robust part of the nation.

Thanksgiving was declared a national holiday in 1931.
Through the Depression, and then WWII, Thanksgiving grew
in importance. In a country where roots meant almost
nothing, where people were ready to pick up and move at
the drop of a hat, where there were huge differences in
what people thought and how they lived, Thanksgiving
served to provide a unified, national myth...most
popularly expressed in Norman Rockwell's Thanksgiving
cover for the Saturday Evening Post.

Roots mean more in Mississippi than they do in
California."No man is himself," said Oxford,
Mississippi's most celebrated alcoholic,"he is the sum
of his past." Unlike so many other American writers of
the 20th century, Faulkner stayed home. The forward to
the"Encyclopedia of Southern Culture" has a passage from
Faulkner, saying:"Tell about the South. What's it like
there. What do they do there. Why do they live there. Why
do they live at all."

Even in Faulkner's Mississippi...Thanksgiving is now part
of everyone. Where Beirne goes...it goes too. And so, all
over the world, Americans, gathering in small groups,
like pilgrims on distant shores, celebrate the holiday
(if not on the actual day...perhaps the weekend before or
following...as we do.)

Art Buchwald has translated the Thanksgiving story for
the French, deftly turning Captain Miles Standish into Le
Capitaine Kilometre Deboutish. But no one has refashioned
American Thanksgiving recipes for the metric measuring
cups and local ingredients here in France. Americans have
to use their yankee ingenuity to find substitutes.
Pumpkins are hard to announce - citrouilles - and hard to
find. Cranberry sauce is almost unknown. My wife,
Elizabeth, descendant of the Puritan fathers and former
resident of New York...does her best.

And we are thankful.

Bill Bonner

Thread gesperrt

 

gesamter Thread:

• Thanksgiving, Anno 1999 / The Daily Reckoning - - ELLI -, 28.11.2002, 22:49
  • Re: Thanksgiving, Anno 1999 / The Daily Reckoning / AUSZUG - -- ELLI --, 28.11.2002, 22:54