SUMMARY - "PIG":
The Contrarian's View is published 11 times per year on a mostly-irregular schedule, and the views expressed are those of the author and editor, Nick Chase. Because nobody can predict the future, results of past suggestions or recommendations are no guarantee of future results. Material in this publication may be freely quoted provided proper attribution is given to its source. Subscription rate: Free on the Internet through the World-Wide Web service at Assumption College. Using your favorite Web-browsing program, Open URL http://nick.assumption.edu. Mailed paper subscriptions, one year for $39 to The Contrarian's View, 132 Moreland Street, Worcester, Massachusetts 01609. There is a limit of 50 paid subscribers at one time; please check for availability before sending any money. Sorry, Visa and Mastercard are not available. Overseas subscription rate, U.S. $54. Unsolicited material sent to us by UPS or by courier other than the postal service is refused and returned to sender! Phone: (508) 757-2881
Well, take yourself back to 1928 and early 1929 (if you're that old) and recall how, in those heady times, it was inconceivable that the stock market would so spectacularly crash in 1929; and how, even after the crash, it was still inconceivable that a Great Depression lay ahead, to be followed by a world war that took total commitment by the nation to win. The message: The future is unpredictable.
However, that does not mean that history offers no lessons. History does tell us that bust follows boom (and which is then followed by another boom).... that wars will recur.... that the public mood consistently, if not predictably, will swing from euphoria to pessimism and back. Analysts have tried to predict these public mood swings, with perhaps the Kondratyev and Elliott Wave long-term cycles the best known, in my opinion with limited success. But just because the state of the public psyche cannot be extrapolated with precise mathematical certainty does not mean that such cycles do not exist. Furthermore, history would seem to indicate that historic extremes in public optimism are followed by historic extremes in pessimism, as in 1720-21 (South Seas and Mississippi), 1830s (Midwest land), 1870s (west-ward and railroad expansion), 1929 (crash and Great Depression) and 1960s (oil cartel, inflation and Watergate). Call it collective manic-depression, I think.... it's part of human nature to go along with a trend until it reaches a ridiculous extreme, unless you are one of the select few old enough and wise enough to know better.
When the public is euphoric, as is the case today, every bit of news, whether in reality good or bad, is perceived as another reason to be bullish. When the mood turns, and pessimism is on the increase, such news will be perceived as yet another reason to be bearish, regardless of the reality. Certainly there is enough reason today to make a bearish case (based on reality): Real incomes of workers have been declining for more than 20 years; real interest rates (that is, adjusted for inflation) are high; economic growth is below norms associated with prior euphoric periods; debt levels are oppressive; Japan, and now much of the rest of Asia, are in recession and threaten to slip into depression; deflation rattles around parts of the rest of the globe, while inflation still threatens here; a ruthless crook presides over the executive branch of government. But no matter, each thing that "could go wrong" hasn't yet, and the potential for any particular thing to turn sour is merely seized upon as fodder for the bullish case.
When the euphoria does finally peak and turn, whether by overt action of the Federal Reserve, as happened in 1929 or similar to the Bank of Japan's efforts to temper that country's boom in 1989 and 1990, or whether it "just happens", as in the Asian "Tiger" countries in 1997, then the public will emphasize the negative consequences of the news. The downward spiral always happens much more quickly than the upward climb, as it is typically punctuated by "seminal events" that increase the panic level; it would seem that humans panic more readily than they gain confidence.
One of these seminal events, clearly, will be the coming stock-market meltdown. Another will be surmounting (or perhaps, not surmounting) the Y2K problems as we enter the year 2000. I couldn't tell you for sure if the meltdown will arrive first, or if both will occur more or less together, but whether separately or together both will be major blows to the current public euphoria. Lose your dreams of retirement riches in the market meltdown, then possibly lose your bank (if it fails in Y2K) and have to wait 'til the Feds give you your FDIC-insured money back, possibly lose your job (if you work for one of the 5% to 15% of companies that will fail), maybe even lose your electricity for awhile and have to contend with 19th-century living conditions. Yuck. Not very appealing futuristic thoughts when we're now living in this best-of-all possible worlds.
So am I a visionary, or just a crackpot, for seeing perilous times shortly ahead? Time will tell, but it is already
clear (to me, if not to anybody else) that we will have a stock-market meltdown.... we're well past the point of
no return, it's unavoidable.... and there will be serious Y2K failures in the year 2000.
I thought that my stories of interest had ended with my sentencing and being sent to the prison hospital facility here in Fort Worth. Until my friend Jim McDougal died last Saturday night. I believe that he was murdered! So does every other inmate in this prison. All 1,442 of them. So many bizarre things occurred last Saturday afternoon that the government's story doesn't hold much water. It started at 4 o'clock count when an olive drab "Blackhawk" helicopter with NO markings on it whatsoever, landed outside the fence of the prison. Count was completed and we went to dinner. Upon completion of our evening meal at 6:05 the helicopter took off and flew over the compound at maybe 150 ft. Hundreds of us saw this helicopter take off. At 6:10 the compound was locked down and at the same time Jim was taken to give a urine specimen for drug testing which is very odd in itself because he's not here for drugs.... he was injected with a drug in the clinic, supposedly 'Lasix' to make him urinate, then put into the hold by himself, where he died. It was not the right time for urinalysis; he was not taken to the right place where it's done; he shouldn't have even had a UA, and even though a doctor had previously noted on his file that he had urinary tract problems, and should not be forced to urinate on command, he was given an injection of what was said was 'Lasix,' a diuretic. He was taken to John Petersmith Hospital, which is odd in itself, because ALL inmates are taken to Ft. Worth Osteopathic Hospital where the.... [Bureau of Prisons] contract is. I am NOT a black helicopter conspiracy nut. I saw this with my own eyes close enough that I could have hit it with a rock. - Ft. Worth Federal Prison inmate, name withheld for his safety, in a March 11, 1998 letter
The tragic fact now evident to all in Washington is that the Presidency of the world's most powerful nation has been effectively hijacked by a gang of underworld thugs. - Steve Myers
We must not be tempted.... to divorce character from leadership. That would be tragic. - Billy Graham
I had my own early insight into Clinton's true character. He trailed me at Georgetown University by two years. Girls I knew there related to me with disgust how a priapic Clinton groped them with all the finesse of an Ozark hog farmer. More important, I heard a steady stream of stories about Clinton from his classmates that showed a man of ruthless ambition and relentless opportunism, - acceptable in a politician - but coupled to low integrity, frequent dishonesty, and a lack of loyalty to friends and supporters. - Eric Margolis
I was particularly distraught when you told me of your brutal rape by Bill Clinton and how it affected you.... how he started trying to kiss you and run his hands all over your body, how you resisted until he ripped your clothes off, and how he bit your lip until you gave into his forcing sex upon you.... I believe that you will continue to be irreparably psychologically damaged by your decision to hold this brutal rape inside. I doubt that you are the first victim that Clinton has been able to silence, nor will you be the last. - Phillip Yoakum in a 1992 letter to Juanita Broaddrick, recalling a 1978 incident.
He was the boss and that was my only source of income.... For a while, I was embarrassed about some of the things that happened to me during the campaign. Now I realize I'm not the only one whose breast he touched - and there's no reason I should be embarrassed.... If it had been anyone other than Clinton, I'd have hit him. - Christy Zercher
The next time I spoke with Billy was at our high school reunion in 1994.... He approached me sometime around midnight. He greeted me, saying "how are you?" I responded: "You are such an asshole, I can't believe you'd even bother to ask! - Dolly Kyle Browning
I just could not believe that that had happened in that office. I - I just could not believe the recklessness of that act ... there are Secret Service people around, there are stewards around.... I just thought it was extremely reckless. Later on, I think I - I was feeling angry. I was feeling that I had been taken advantage of. My circumstances had been taken advantage of.... I just think that it's time to tell this story. I think that there - too many lies are being told. Too many lives are being ruined. And I - I think it's time for the truth to come out. - Kathleen Willey
OK, I'll give you this bit of information. I just asked Podesta about it and he knows what it is and asked me to check to see if Isikoff was writing for it in tomorrow's magazine. He's not, but you knew that. You and I did not have this conversation. I just got a lot of people very riled up around here about this Willey thing. We'll talk later. Do not mention this conversation. Do not mention this conversation. - unidentified White House staffer in July 26, 1997 on-line chat with Matt Drudge
...[N]o journalist questioned how Tripp's confidential file ended up in The New Yorker. Instead, all the papers dutifully reported on her arrest and her lack of candor in disclosing it. But let's put the sins in comparative perspective. What is more reprehensible, more dangerous to our liberties? A junior Pentagon employee who omits mention of an arrest decades ago which resulted in no conviction and which was expunged, or the release of secret Pentagon files by unnamed operatives in an effort to discredit one of the president's adversaries? - Dick Morris
After years of being assaulted by lamps, phones, and paperweights, the President snaps. He grabs his favorite 9-iron and beats the FLOTUS' head into an oozy puddle on the Oval Office carpet. The Secret Service rushes in: "Mr. President, you've just murdered the First Lady!" The President: "Get away, dammit, get away! I'm the chief law enforcement officer of the United States! You can't arrest me, you can't indict me, you can't take me to jail! And you're all fired!!!!!" Trent Lott, reached during the congressional recess at home in Mississippi, said he couldn't comment until all the facts are in, but suggested that discussion of impeachment proceedings was premature but in any event were months away from taking place.... - E. Joseph Ryan, Jr.
Mainstream media pundits express wonderment at the strength of Clinton's popular support. The pundits have now turned on Clinton, so why doesn't the popular majority turn as well? The mainstream media pundits are underestimating the effect of six years of propaganda. For six years the mainstream media have been telling the American people that the charges against the President are scurrilous, baseless attacks coming from gold digging Clinton haters and an out-of-control Independent Prosecutor appointed by the extreme right. For six years, the mainstream media have characterized women accusing Clinton of sexual harassment as gold-digging sluts or bimbos aligned with the religious right. For six years the mainstream media have viciously savaged reporters like Ambrose Evans-Pritchard and Chris Ruddy who have asked nosy questions and stood up for the truth. One particularly nasty and disingenuous piece by Don Hewitt and Mike Wallace on Chris Ruddy comes to mind. And now they expect the American people to believe them instantly when they say, no, no, forget everything we said, this time we are really telling the truth? Forget it. - Marvin Lee
Let the peasants celebrate the marvelous, progressive reign of Mr. Clinton. After all, he has achieved so much. Perhaps you can name one of his remarkable, ground-breaking and lasting achievements. There again, perhaps not. (That was a trick question. The answer, of course, is zero.) - Steve Myers
In today's mania, everything is perceived as bullish; even having a lying scumbag for a President. - Marc Sexton
If indulgence toward speculative finance, bank bailouts and runaway stock valuations is part of a bigger bubble made up of permissiveness, sexaholic officeholders and rampant amorality, then we could see the political equivalent of a triple-witching hour: Clinton ratings, stock indexes and skirt lengths all falling together. - Kevin Phillips
I think that society's structures are to blame for generally sliding morals.I cannot morally blame all Americans for allowing, for instance, the birth of the Federal Reserve System (a private cartel with full control over the issuance of national debt) and the money destruction that has followed. They are simply ignorant about it and don't know what happened or what is happening. They think that prices "go up" rather than that dollars go down. Unsound money imposes an environment of immorality, which in turn makes people behave in different ways for reasons they know not. - Robert Prechter
It is dangerous to link banking and government. That linkage becomes established when a government strips its people of money [precious metals], and substitutes a scrip, or credit, created by a privileged class: the bankers. The bankers can do this only with the consent of the government, and at its pleasure, for otherwise modern banking would be clearly illegal. In return for this favor, the bankers finance government, coming, in time, to own it, as President Franklin Roosevelt pointed out. It's an unholy alliance, but very satisfying to banker and politician. The only loser is the rest of us, who, by our productive labor, keep the country going. - Paul Heim
I think there is a vault over in West Virginia somewhere where there are some pieces of paper that certify the U.S. government owes x-number of dollars to the Social Security trust fund. But when that money comes due in a big way after 2008, the only way the government can fund it is by raising taxes or selling the Washington Monument, or whatever. - unidentified Congressional Budget Office official
The current stock market bubble is tied to the boomers entering the market and the depression and WWII generation leaving it. I work with boomers (I guess I'm one) and Gen-X'ers and they are all convinced that stocks, and especially mutual funds, are a perfectly safe, guaranteed to double your money in 3-4 years investment. They say, Microsoft, Intel, can't lose, it's a sure thing, I'll be rich very soon.... ...well, nooooo. You clowns have never seen a market meltdown. All it takes is one little pin and the bubble pops, it'll happen so fast that you will lose everything before you realize what's happening. The fallout of the crash, and let's be intellectually honest here, there's no guarantee either way but it sure looks like we'll see a 5,000 point drop in the Dow before Y2K day... ...the fallout will be, another generation will absolutely NOT trust the stock market.... so the remaining butt-heads who recite the mantra, it's not a crash, it's a buying opportunity, those butt-heads will go to their graves still waiting for the market to recover. - Cory Hamasaki
The baby-boomer money flowing into mutual funds is less than 2/10's of 1% per month. It would be foolish
to think that this will support or override the other 99.8% of money, regardless of market or monetary
climate... I would find more credibility.... if similar arguments hadn't been made (and failed) in the past. For
example, in the late 1960s, it was reasoned that stocks could only go up due to the underfunding of corporate
pension plans. And in the late 1920s, it was argued that there simply were not enough stocks to go around....
My simple question.... where was this argument (and its advocates) seven years ago at DJIA 2500??? - James
Stack
To a crowd of drunk people, the one with a sober mind seems like a fool. - J. Wu
As many of you know, I lurk regularly and occasionally offer an opinion or two about the state of affairs concerning the Y2K issue that we're all so worried about. My posting tonight, typed and uploaded from the Hay-Adams hotel in Washington, across the street from the White House, is simple: it doesn't matter what any of us say, because it's all being lost in the noise of media overload.Our "Time Bomb 2000" book, which my daughter and I wrote last summer, was released by Prentice Hall in early January; we have been very pleased with its success, as indicated by having reached #38 on the Amazon web site list of "hot books" for January 1998. However, there are at least two computer books with higher ratings, including one Java book. And in addition to works of serious fiction, we've been outranked by such books as "How to Have Grrrrrreeeaat Sex" and other such non-computer books. Y2K is not sexy...
During the past month, I've had about 30-40 on-line interviews with radio stations all over the country, as well as approx 10-12 TV interviews; we expect to have a similar level of media activity in the next two months, and possbily beyond. Net result: it doesn't matter. If I get three minutes of air-time, Sonny Bono's ski accident will get 3,000 minutes. You really can't appreciate this until you wander into the CNN world headquarters in Atlanta, as I did earlier today for my on-screen interview about the book. I had a very sympathetic, knowledgeable, concerned interviewer and producer who filmed a grand total of 3.5 minutes of discussion with me, half of which was concerned with such world-shattering topics as, "So, what should the home PC user do about the possible Y2K problem on his home PC?". Meanwhile, there were a hundred TV screens on the wall showing the other events of the day. Massacres in country X, corruption in country Y, a massive flood in country Z, a thousand other crises and catastrophes. Clinton did this, Gore did that, Madonna decided to show a picture of her baby, the Knicks did this, Michael Jordan did that, blah blah blah. It's stunning, and utterly overwhelming. Y2K gets lost in the noise.
I don't see ANY chance of this changing for the rest of 1998, even though we might all be encouraged by the increased media coverage relative to 1997 and 1996. It's all relative: even if the amount of media coverage doubles or quadruples, it still pales in comparison to the stories about Bill Clinton's alleged escapades or the latest box-office revenues of "Titanic." We are, all of us, collectively, only a teeny, weeny story at this point .
Maybe this will change in 1999 ... but by then, it will be far, far too late... - Ed [Yourdon]
P.S. Yes, I live in New Mexico now. In my humble opinion New York City will resemble Beirut in Jan 2000. I don't want to be there when the lights go out, the subways stop, the airports shut down, and the less-affluent citizens of the city realize that it could be several weeks or months before they receive their food stamps, welfare checks, Medicare payments, and unemployment checks. Donald Trump may not care, but another 7 million New York citizens may discover that Y2K is not such an academic concept after all. Maybe that will be enough to get a few more minutes of coverage on CNN...
Sometimes, when on my Y2K soapbox speaking to the digitally-impaired trying to inform them of the prospects for 2000, I feel like they think I am eccentric, a nutcake alarmist, and they listen politely with a knowing smile. I believe the general population will not know what hit them until after the fact. Some of us see the future. Ed Yourdon vacates New York City for New Mexico. Others have farms or rural retreats available to them. Most of us will lay in supplies sufficient to last 6 months or a year. - Jay McInvale
Everybody I've spoken to about the possibility of a catastrophic collapse in the year 2000 thinks I'm nuts, to put it bluntly. Reactions include "Get a life" to "Stop worrying" to "You're showing signs of obsessive compulsive disorder". Does society really think that people who realize there might be big problems a short time from now are crazy? - Bryan Cowan
I'm one of the culprits who created this problem. I used to write those programs back in the '60s and '70s and was so proud of the fact that I was able to squeeze a few elements of space out of my program by not having to put 1-9 before the year. And back then it was very important. We used to spend a lot of time running through various mathematical exercises before we started to write our programs so that they could be very clearly delimited with respect to space and the use of capacity. It never entered our minds that those programs would have lasted more than a few years. And as a consequence, they are very poorly documented. If I were to go back and look at some of the programs I wrote 30 years ago, I mean, I would have one terribly difficult time working my way through step by step. And to try to infer how one reads a program when there are lots of alternate ways of doing things, and all you've got is the code in front of you, is not simple. It, therefore, is a very -- it's a very difficult problem to get your hands around.... The trouble is that there is a perversity of incentive in this type of problem in that you can be extremely scrupulous in going through every single line of code in all of your computer operations, make all the adjustments that are required, and get essentially a system, whether you're a bank or an industrial corporation, and say, "We've solved the 2000 problem" and then find that when the date arrives, all of the interconnects that are now built-in start to break down.... So part of what we're trying to do is figure out what we can do to assuage whatever problems might arise. And it's a difficult exercise because there's such a huge element of uncertainty in the nature of the problem itself. But we're trying to come to grips with it as best we can. - Alan Greenspan, February 25, 1998
We will have problems in the banking industry. - Alan Greenspan
[W]hen Alan Greenspan says Y2K could be a serious problem.... you'd better pay attention. From my perspective, this is not a theoretical, academic issue: this affects my retirement savings and it's not something I feel like risking. Bottom line: the banking system, as we currently know it, is in serious danger of coll apsing.... I can't claim that my crystal ball is perfect, but I will tell you that my own personal Y2K plans include a very simple assumption: the government of the U.S., as we currently know it, will fail on 1/1/2000. Period.... If Y2K does turn out to be as bad as I think it will be, nobody is going to care about the opinions of software professionals on 1/1/2000 (other than possibly lynching them for having created the problem in the first place!); instead, everyone is going to be concentrating on how to get food, shelter, clothing, and the basic necessities of life. Y2K threatens all of this, except in the backwards economies that have never depended on automation or socio-economic interactions with other automated societies. Rural China will probably be okay; but in my humble opinion, New York, Chicago, Atlanta and a dozen other cities are going to resemble Beirut in January 2000. That's why I've moved out of NYC to rural New Mexico a couple months ago. - Ed Yourdon
Top money center banker told me "We aren't even close." Top regional banker told me credit lines may be shut for Y2K laggards. Top exec man at major computer company told me he is very worried, but can't go public with his concerns. He says Asia and Latin America are Y2K disasters.... I'm still at 40% on global recession odds, but maybe not for long. - Ed Yardeni [Nick's note: Ed raised odds to 60% on March 16.]
If I had to estimate what we're likely to spend between now and 2000 to be fully year 2000-compliant, I'd say we're likely to spend $250 million plus or minus but that has a very high variance.... It's a gigantic problem and I'm very concerned as I travel around the world that not everyone is taking it as seriously as they should, including financial institutions, governments and corporations. - David Coulter (Bank of America CEO)
I am convinced there is a 100% chance that a major portion of the domestic electrical infrastructure will be lost as a result of the Year 2000 computer and embedded systems problem. The industry is fiddling whilst the infrastructure burns. You heard it here first. - Rick Cowles
The question isn't whether Y2K has the potential to take down [electric] power for months or years. That's a fact. The question is whether the horn-hairs who control the purse strings will pay consulting engineers to work 7x24 to find and fix the problems.... Will the idiots who control the purse strings stop dozing long enough to start the work? ....It's a given that all systems will fail if not remediated. Similarly, it's a given that there isn't enough time left to replace the systems. They have to be examined and fixed in place by real pros. - Cory Hamasaki
I've spoken to [electric utility] industry leaders who are buying generators, for God's sake.Why? Do they know something that the rest of the world does not? - Rick Cowles
You ask yourself, what's really going on in these companies and government agencies where you have to assume that the leaders are not stupid people? Some of them maybe are stupid -- they're just saying, I don't want to hear about it. But somebody at the IRS has gotta know that they're hosed. You don't have to be a rocket scientist to just see, oh shit, we don't have enough people. You'd think that somebody would have gone to the president and said, "Ahem, Mr. President, can I get your attention for a minute? Uh, the federal government's not gonna be able to collect, whatever it is, $1.8 trillion, and you might want to come up with a backup plan." What's the IRS gonna do? Put in a flat tax? Put in a national sales tax? Insist that all transactions take place through the Internet? What's the backup for IRS? What's the backup for FAA? When air traffic goes down, what're they gonna do? Get people out on the runway waving semaphore flags? I don't think they've got a plan yet. - Ed Yourdon
As of January, 400 of 1,100 state civil service senior computer programming analyst positions were vacant.... The position pays from $36,000 to $45,000 a year. At the same time, two-year computer programming graduates from Hudson Valley Community College are commanding starting salaries of $57,000 at local financial institutions. - [New York State Comptroller] H. Carl McCall
Don't you find it at all funny that the federal Y2K czar is a lawyer who wouldn't know a sub-classed object if it bit the tip of his pecker? He's completely clueless about computers and is about to taken for the ride of his life.... and that in his addled, confused, wacked out mind, he is effective, a positive force and will, by God, accomplish something because he knows how to select and tie a tie, hold a meeting and speak firmly and clearly to subordinates. The fallout from this is that, no doubt about it, people will go hungry, lose their savings, and some will die. This is funny. sad, yes, avoidable, no, this is one of those rare events, we can watch it happening, laugh and cry at the same time. - Cory Hamasaki
I am very disheartened by the lack of remediation. At this point, we, the Information Technology business should be deciding which 20% of the systems are absolutely necessary. We should be dismantling the power generation 'grid' and making each city go it alone. It's not happening and the contingencies are not being prepared.... When I look at Y2K, I can clearly see the systems failing. I know the remediation is not being done, I know the poor quality of work, the small amount of work done to date; it doesn't look good.... The problem is that Y2K has never happened before and is one of those discontinuities that happens in .... a thousand years. Y2K will have an impact like the computerization of the last 35 years... except it will happen fast, almost overnight and it is not a positive change, it is an undoing of the efficiencies of automation. - Cory Hamasaki
Guesses: We're looking at a complete collapse of the government's systems and partial collapse (50%) of private industry's computer systems. Analogous to the dissociation of the former Soviet Union. 10-20% of the military will resign when they aren't paid for months. Rioting, looting, and burning in the usual places.... A nice fearsome recession, DJI down 5000 points in 6 months, hyperinflation for a couple years, the usual brushfire wars in unstable 3rd-world countries. Crop production off 20%... Lots of personal financial misery. - Cory Hamasaki
"I don't know about you," my friend said, laughing nervously, "but I'm putting everything into gold." My friend, a senior executive for one of the world's largest software companies, wasn't worried about the recent stock market crash and rebound cycle. To him, that was small potatoes. "By next May," he said, "people will really start seeing the effects, and the price of gold will go up." In fact, it wasn't so much the stock market as the world economy that had my friend worried. Instead, he was concerned that the end of the millennium would cause irreparable harm to the world economy - so great that only a position in gold would offset it.... Instead of the world ending in a flash of mangled bits, it will simply degrade. Ultimately, as my friend predicted, the public will lose confidence in computers, in the communications that support them, and in us. - Wayne Rash
It's going to happen, and there will some major headaches in some big places, and it will take days, maybe months, to fix. There may even be a riot or two in California. But paper money isn't going to become worthless overnight, and I'll still be able to buy milk and eggs at the corner store, and we're not going to starve to death, and the teeming hordes in South America aren't going to strike while we have our (and our President's) pants down, and people aren't going to stop going to work, and the Earth (probably) won't get slammed by an asteroid. ... How many people died when the stock market crashed in 1929? The Great Depression killed far more, and it lasted a decade. And World War II killed 50M people. But we're here today, aren't we? - David R. Tribble
I don't think the computer infrastructure has a chance. The only thing that keeps my estimate [of impending disaster] as low as it is is uncertainty about the public reaction. Will people react the way they did here in the Midwest during the flood in 1993, with an outpouring of community spirit and charity? Or will they react more like the reaction to the Rodney King verdict? I expect that we'll see both - the former in the rural areas and small towns, where computers are less important anyway, and tending more toward the latter as one approaches the center of urban areas. - Aaron Baugher
Even if NO problems occur the economy will be severely affected because of companies putting all of their resources into fixing the problem and away from growth/production. But, I have enough experience in the industry and with human nature to realize that a low percentage of the problems will be fixed AND "new and improved" non-y2k defects will be introduced by the "fixes". - Rick Tuttle
Then there is the embedded chip problem, which probably dwarfs the software problem: possibly by four to one. But there is still no panic. There is still talk about "getting it fixed if we start now." It is all nonsense. It was nonsense in 1995, and it is nonsense now. When the public realizes this, the bank runs will begin. Then no one will have money to pay programmers, let alone embedded chips experts. Almost no projects will be completed because all plans assume that the banks will remain open. They won't. There is no way out for the world. My [web] site has said this for over a year. It is the only site that has said this or says it today. There is no way out. Get ready personally for what very few people see today and fewer still will begin to plan for in time. - Gary North
Looking for female geek with farm. Send picture of farm. - Steve Dover
How much higher can it go? Since we appear to be in the final-blowoff-of-the-blue-chips phase, you might be interested in comparisons with the 1929 and 1987 blowoffs. Each of these prior blowoffs lasted about four months and took the Dow up almost 30% in 1929, 26% in 1987. If we take late January 1998 and around Dow 7800 as the starting point for the current blowoff, if it repeats the prior patterns it will peak in mid- to late May, around Dow 9820 (if like 1987) or Dow 10130 (if like 1929). The subsequent crash, if the pattern repeats, will take stocks down about 35% from the peak, or about Dow 6380 (1987) or 6580 (1929). Personally, I think this is the minimum decline one should expect; I think they're more likely to crash closer to "fair value", still around Dow 3600.
Whether or not the 1929 and 1987 patterns are repeated this spring, we can certainly say that, one by one, the "props" under stock prices are being pulled away. Earnings growth? Forget it.... now near zero. Same story for increases in profits, less than 2%. Interest rates?.... now climbing back toward 6%. More ominously, the Japanese are now net sellers of Treasury bonds, apparently in an effort to reliquefy their stagnant (and slipping) economy.
About a year ago, I wrote that I felt the U.S. would be slipping into recession by mid-1998. With the bulk of the effect of the "collapse of the Asian Tigers" still to be felt, I have not seen any good reason to change that view. But when you're in a bubble mania, what's a little bad news when anything can be construed to be ever more bullish? We may see a repeat of 1929, where stocks ignored the behavior of the economy (which peaked in late 1928) for ten months before finally crashing.
Eventually, somebody will "wake up and smell the coffee". Then, everybody will wake up, at once. We will
have a stock-market meltdown. But I can't tell.... yet.... just when we'll get the meltdown.
Original cost: $ 8,090.45
Present value: $ 7,422.75
Increase: $- 667.70 [-8.25%]
The performance of this portfolio and its predecessors ("Hedger's Delight", "Present and Future Income", "Crapshooter's Folly") from January 1987 to the present is +4.04%, for a compound annual rate of return of +0.35%. COMMENT on "Phoenix": There is no change from the last issue.
B. "Professors' Investment Group (PIG)" - investment club portfolio.
SUMMARY - "PIG":
Original cost: $ 8,075.00
Present value: $ 8,234.29
Increase: $ 159.29 [+1.97%]
COMMENT on "PIG": The PIGs are still interested in buying Ciber Inc. (CBR), a Y2K company, which recently split its shares 2-for-1. The PIGs' Web page is at
http://www.assumption.edu/HTML/Faculty/Kantar/WPigs.html
C. Fidelity IRA - real portfolio, includes commissions:
SUMMARY - IRA:
Original (1983-86) cost: $ 8,326.19
Present value: $13,537.16
Increase: $ 5,210.97 [62.59%]
The performance of this portfolio (including its predecessors) from January 1, 1987 to the present is +23.43%, for a compound annual rate of return of 1.89%.
D. CREF Pension plan; I switch between indexed stock/bond/money funds:
Date Sold Bought
13Mar92 stock @ 56.65 MM @ 13.41
29Apr92 MM @ 13.48 bond @ 31.19
19Jun92 bond @ 32.14 MM @ 13.55
29Jun92 MM @ 13.57 stock @ 56.74
24Jul92 stock @ 56.76 MM @ 13.61
29Oct92 MM @ 13.72 stock @ 58.61
23Dec92 stock @ 61.48 MM @ 13.78
16Jan95 MM @ 14.83 equity-index @ 26.44
20Jan95 eq-index @ 26.19 MM @ 14.84
30Oct97 MM@ 17.24 bond@47.56 (27.17%)
30Oct97 MM@ 17.24 i-i bond@26.12 (27.17%)
11Feb98 bond@ 48.84 MM@17.52 (27.17%)
11Feb98 I-I bond@ 26.23 MM@17.52(27.17%)
Values, 3Apr98: stock, 158.74; MM, 17.65; bond, 49.41; inflation-indexed bond, 26.28
Gain, 1988: 18.91%; 1989: 14.48%; 1990: 8.28%; 1991: 27.93%; 1992: 10.20%; 1993: 3.08%; 1994: 4.07%; 1995: 4.80%; 1996: 5.28%
Gain, January 1 through December 31, 1997: 5.38%
Total gain since January 1, 1988 (10 years): 159.20%
Compound annual rate of return: 10.00% (My long-term target: in excess of 15%)
Gain shown excludes the impact of additional monthly cash contributions.
Buying CREF stock on January 1, 1988 and holding it gained 341.21%, for a compound annual rate of return of 16.01%.
E. Current unfilled portfolio good-til-cancelled orders: None.
COMMENT on "Timer's Trend": Comment on "Timer's Trend": We're still on a BUY signal generated January 28.
______________________________ TIMER'S TREND _________________________________
Thu 20 Nov 97 . | . # }| 7826.61 |~+~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~*
Fri 21 Nov 97 . | . # | 7881.07 |~.+~~~~~~~~~~~~~~~~~~~~~~~~~~~~~*
Mon 24 Nov 97 .# I . {| 7767.92 *~+~~~~~~~~~~~~~~~~~~~~~~~~~~
Tue 25 Nov 97 . I #. | 7808.95 | + *
Wed 26 Nov 97 . |# . }| 7794.78 | + *
Fri 28 Nov 97 . | .# | 7823.13 | + *
Mon 1 Dec 97 . | . # | 8013.11 |~+~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~*
Tue 2 Dec 97 . | # | 8018.83 | .+ *
Wed 3 Dec 97 . | .# | 8032.01 | .+ *
Thu 4 Dec 97 . | # | 8050.16 | .+ *
Fri 5 Dec 97 . | . # | 8149.13 |~.~+~~~~~~~~~~~~~~~~~~~~~~~~~~~~*
Mon 8 Dec 97 . | .# | 8110.84 | .+ *
Tue 9 Dec 97 . |# . | 8049.66 |~.*~~~~~~~~~~~~~~~~~~~~~~~~~~
Wed 10 Dec 97 . #| . | 7978.79 |~+~~~~~~~~~~~~~~~~~~~~~~~~~~
Thu 11 Dec 97 #. I . * {| 7848.99 |+.~~~~~~~~~~~~~~~~~~~~~~~~~~
Fri 12 Dec 97 . #I . | 7838.80 |-. *
Mon 15 Dec 97 . I #. | 7922.59 |-. *
Tue 16 Dec 97 . I # ]| 7976.31 |-.~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~*
Wed 17 Dec 97 . | # }| 7957.41 + . *
Thu 18 Dec 97 . #I . {| 7846.50 |+.~~~~~~~~~~~~~~~~~~~~~~~~~~
Fri 19 Dec 97 # I . | 7756.29* |+.~~~~~~~~~~~~~~~~~~~~
Mon 22 Dec 97 . I # | 7819.31 |+. *
Tue 23 Dec 97 . I# . | 7691.77 *|+.~~~~~~~~~~~~~~~~~~~~~
Wed 24 Dec 97 . I# . | 7660.13 +~*~~~~~~~~~~~~~~~~~~~~~~~~
Fri 26 Dec 97 . I# . | 7679.31 + . *
Mon 29 Dec 97 . | . # }| 7792.41 |~+~~~~~~~~~~~~~~~~~~~~~~~~~~~~~*
Tue 30 Dec 97 . | . # | 7915.97 |~.+~~~~~~~~~~~~~~~~~~~~~~~~~~~~~*
Wed 31 Dec 97 . | . # | 7908.25 | . + *
Fri 2 Jan 98 . | .# | 7965.04 |~.~+~~~~~~~~~~~~~~~~~~~~~~~~~~~*
Mon 5 Jan 98 . | .# | 7978.99 | . + *
Tue 6 Jan 98 . # . | 7906.25 | . + *
Wed 7 Jan 98 . |# . | 7902.27 | .+ *
Thu 8 Jan 98 . #I . |*7802.62 |+.~~~~~~~~~~~~~~~~~~~~~~~~~~
Fri 9 Jan*98 # . I . {| 7580.42 |-.~~~~~~~~~~~~~~~~~~~~~~~~~~
Mon 12 Jan 98 .# I . | 7647.18 | - *
Tue 13 Jan 98 . I . # | 7732.13 |-.~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~*
Wed 14 Jan 98 . I . # ]| 7784.69 +~.~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~*
Thu 15 Jan 98 . I# . [| 7691.77 +~.~*~~~~~~~~~~~~~~~~~~~~~~~~~
Fri 16 Jan 98 . | . # }| 7753.55 | .+ *
Tue 20 Jan 98 . | . # | 7873.12 |~.~+~~~~~~~~~~~~~~~~~~~~~~~~~~~~*
Wed 21 Jan 98 . |# . | 7794.40 | .+ *
Thu 22 Jun 98 . # . | 7730.88 |~+~~~~~~~~~~~~~~~~~~~~~~~~~~~
Fri 23 Jan 98 . & . {| 7700.74 |~*~~~~~~~~~~~~~~~~~~~~~~~~~~~
Mon 26 Jan 98 . I# . | 7712.94 |+. *
Tue 27 Jan 98 . I # ]| 7815.08 |+. *
Wed 28 Jan 98 . | .# }| 7915.47 |+.~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~*
Thu 29 Jan 98 . | . # | 7973.02 |~+~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~*
Fri 30 Jan 98 . | # | 7906.50 | .+ *
Mon 2 Feb 98 . | . # | 8107.78 |~.~+~~~~~~~~~~~~~~~~~~~~~~~~~~~~*
Tue 3 Feb 98 . | . # | 8160.35 |~.~~+~~~~~~~~~~~~~~~~~~~~~~~~~~~*
Wed 4 Feb 98 . | . # | 8129.71 | . + *
Thu 5 Feb 98 . | . # | 8117.25 | . + *
Fri 6 Feb 98 . | . # | 8189.49 | . + *
Mon 9 Feb 98 . | . # | 8180.52 | . + *
Tue 10 Feb 98 . | . # | 8295.61 |~.~~+~~~~~~~~~~~~~~~~~~~~~~~~~~~*
Wed 11 Feb 98 . | . # |*8134.55 |~.~~+~~~~~~~~~~~~~~~~~~~~~~~~
Thu 12 Feb 98 . | . # | 8369.60 |~.~~+~~~~~~~~~~~~~~~~~~~~~~~~~~~*
Fri 13 Feb 98 . | .# | 8370.10 | . + *
Tue 17 Feb 98 . | . # | 8398.50 | . + *
Wed 18 Feb 98 . | . # | 8451.06 |~.~~+~~~~~~~~~~~~~~~~~~~~~~~~~~~*
Thu 19 Feb 98 . | .# | 8375.58 | . + *
Fri 20 Feb 98 . | . # | 8413.94 | . + *
Mon 23 Feb 98 . | . # | 8410.20 | . + *
Tue 24 Feb 98 . | #. | 8370.10 | . + *
Wed 25 Feb 98 . | . # | 8457.78 | . + *
Thu 26 Feb 98 . | . # | 8490.67 | . + *
Fri 27 Feb 98 . | . # | 8545.72 |~.~~+~~~~~~~~~~~~~~~~~~~~~~~~~~~*
Mon 2 Mar 98 . | . # | 8550.45 | . + *
Tue 3 Mar 98 . | . # | 8584.83 | . + *
Wed 4 Mar 98 . | .# | 8539.24 | . + *
Thu 5 Mar 98 . |# . | 8444.33 |~*~+~~~~~~~~~~~~~~~~~~~~~~~~~
Fri 6 Mar 98 . | . # | 8569.39 |~.~+~~~~~~~~~~~~~~~~~~~~~~~~~~~~*
Mon 9 Mar 98 . | .# | 8567.14 | . + *
Tue 10 Mar 98 . | . # | 8643.12 |~.~+~~~~~~~~~~~~~~~~~~~~~~~~~~~~*
Wed 11 Mar 98 . | . # | 8675.75 | . + *
Thu 12 Mar 98 . | . # | 8659.56 @| . + *
Fri 13 Mar 98 . | . # | 8602.52 | . + *
Mon 16 Mar 98 . | . # | 8718.85 |~.~~+~~~~~~~~~~~~~~~~~~~~~~~~~~~*
Tue 17 Mar 98 . | .# | 8749.99 | . + *
Wed 18 Mar 98 . | . # | 8775.40 |~.~~+~~~~~~~~~~~~~~~~~~~~~~~~~~~*
Thu 19 Mar 98 . | . # | 8803.05 | . + *
Fri 20 Mar 98 . | . # | 8906.43 |~.~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~*
Mon 23 Mar 98 . | . # | 8816.25 |~.~*+~~~~~~~~~~~~~~~~~~~~~~~~
Tue 24 Mar 98 . | . # | 8904.44 | . + *
Wed 25 Mar 98 . | .# | 8872.80 | . + *
Thu 26 Mar 98 . | . # | 8846.89 | . + *
Fri 27 Mar 98 . | # | 8796.08 |~.~*~~~~~~~~~~~~~~~~~~~~~~~~~
Mon 31 Mar 98 . | . # | 8799.81 | . + **
========================================================================
{, } = "Timer's Trend" (4% and 10% exponential) SELL ({) or BUY (}) signal
NEXT ISSUE - will appear about April 28.
/Nick Chase