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
I don't invent pessimistic scenarios by myself. My apprehension was largely a result of testimony from experts in the field and from agencies in government which can extract, by force of law, information not available to us peons. Presumably these people felt they had reason to be fearful.... otherwise there would have been no need to advise preparation for a "three-day storm", which was unneeded except in a few small areas of the country, or to bring home bureaucrats from foreign lands which were supposedly going to be done in by the bug. Or, for that matter, to put the National Guard, the FBI and FEMA people on alert nationwide, and to prepare for the possibility of martial law.
Certainly, the risk from Y2K chip failures was greatly overrated, as foreign countries which had done little remediation sailed through the Y2K boundary almost as smoothly as the U.S., where preparations were extensive. I would surmise that a date failure in an imbedded system does not necessarily mean a failure in the function the system performs, something a few experts in the field said.... but they were overshadowed by the "experts" who claimed the problems were more serious.
As for Y2K problems cropping up in mainframe systems, the supposed experts seem to have gotten closer to the mark. These are occurring, but with no damage to the infrastructure the repairs can proceed apace, with workarounds implemented in the meantime. To some extent, "fix-on-failure" is indeed working, because the failures are for the most part of the "glitchy" kind, not the kind that will bring down a system (and an organization) for days on end.
I also think that much of the credit for a smooth transition can go to contingency plans that worked. An example: You may recall me writing about my bank ATM card, which expired on "12/99" and was replaced by a card which expires on "12/49". Well, just to see what would happen, I kept the older card. On January 3.... and for the entire month of January.... I have used the old, supposedly-expired card with absolutely no problems. Guess the "windowing" logic wasn't ready, so the bank must have decided, Hey, people chop up their old cards anyway, who really cares when they expire as long as the account is active? Turn off the date check until the code is fixed. If it can work for the Russians.... who ran their electrical grid on manual through the rollover.... it can work for us.
According to the consultants, by the end of January we should have seen about half of the Y2K glitches that will crop up (with most of the rest occurring before July). If you haven't noticed any real impact on your life so far from Y2K (except for your preparations), then you're not likely to notice any impact in the future. Especially since Y2K was being closely watched leading up to New Year's, and the press was geared up for a do-or-die scenario on January 1, and now nobody's paying attention at all. You can be sure that if a Y2K glitch that affects you does surface, it won't be admitted as such (unless it is more advantageous, legally, to do so).
My original estimate of Y2K "damage" was a 4 or 5 on a scale of 1 to 10. Because there was no infrastructure damage, which allows the enterprise-systems failures to be fixed in due course, I'm lowering that estimate to a "3". That is, Y2K, by itself, is serious enough to trigger a perfectly ordinary recession, such as occurred in 1990, 1980 or 1958. (The popping of the asset bubble still puts us at great risk for a more severe economic downturn.) This "ordinary" recession will largely be due to "Y2K rot" in the enterprise systems, and the loss of efficiency to the economy as the systems malfunction and resources must be allocated to repair or replace them. By the same token, I expect a boost to the economy in 2001 and 2002 because obsolete computer systems will have been replaced with newer, more efficient ones on an accelerated schedule due to Y2K.
Now, to the point in the caption: I wrote (in December): The three major threats to our way of life from Y2K bug are, I think: economic degradation and inefficiency caused by failing enterprise systems, particularly billing, accounting and inventory-tracking systems; interrupted manufacture and delivery of goods caused by failures in just-in-time systems; and reduced energy availability caused by chip failures, especially in the petroleum industry. The threats appear to be greatest in oil, chemical manufacturing and transportation, and more so overseas than in North America. I am not particularly worried about financial systems (in the U.S.); they should be able to flawlessly track asset-value shifts as the troublesome areas trigger economic decline.
The outcome? No noticeable degradation, yet, from enterprise systems; just-in-time delivery of goods seems to be functioning fine, for the most part; and the oil continues to flow. It seems to me that petroleum refinery slowdowns and shutdowns have been more numerous and more extensive post-1999; although the price of gas hasn't gone up much in our area, the cost of heating oil has doubled since November. Supposedly this is due to a sudden cold snap and bad inventory planning; nobody will admit to Y2K being a factor.
There has been some speculation that the public may panic at the last minute, in the final week of December. Ain't gonna happen, in my opinion. The public is going to hit the Y2K wall fully asleep, thanks to truly abominable reporting by the mainstream media. It appears the Fed and banks have more than enough cash on hand for the one likely occurrence, heavy cash withdrawals at the end of December "just in case" or for serious partying.
Got that right.
In our area (central Massachusetts) I think the power will stay on, but I expect it to be "dirty".... full of spikes, surges, brownouts, the stuff that burns up motors and computers' power supplies. I don't expect to see this on January 1 or 2, the weekend, but problems may appear when people return to work on January 3.
Mass. Electric did give us occasional "spikes" through the weekend and the beginning of the week, but I must honestly say they didn't give us more than what they usually do.
We should know pretty quickly how serious the chip-failure situation is.
Right again.
I am most worried about petroleum refineries; I think it's likely at least 10% of them will shut down, maybe up to a quarter of them.
Shutdown rate does not appear to be highly abnormal. Thank God the oil continues to flow, otherwise we would, without a doubt, be in a major recession.
By January 4 or 5, 2000 (with the extent of chip-defects mostly known, and assuming it's not extensive), there will be an enormous collective sigh of relief as the impact of Y2K will appear to be much less to people than some pessimists had predicted. People will go about their usual business; confidence will remain high.
Bingo! (Add a grateful me to those heaving a sigh of relief. Life is good the way it is.... who wants to spend hours in line waiting for toilet paper rations?)
By mid-January, the failure of "fix-on-failure" will be evident. Systems which couldn't be fixed in two or three years' time certainly won't be fixed in two weeks. Corrupted data will be spreading throughout enterprises because there was insufficient or no integrated testing before the code was slammed into production. Inventories will be messed up; delivery of goods will be erratic.
Wrong here. With no major infrastructure failures as an impediment, "fix-on-failure", where needed, seems to be working fine. I haven't noticed any slowdowns or shortages in goods, except possibly for oil and the mail.
Government "services" will be the most messed up.
I don't have good feedback yet to the extent of government systems failures, but this seems to be the case. (FAA air traffic control glitches, spy-satellite tracking systems kaput, state drivers' licenses, jury duty for "1900", etc.) Or, maybe, government is just more open about its failures than are businesses.
People and companies who stockpiled for Y2K will find their supplies depleted.
Yes, as they consume what they stockpiled instead of going to the grocery store. You can use the money saved this year to whittle down your debt.
I wouldn't be surprised to see air traffic moving at three-fourths normal capacity; air controllers are already stressed out from overwork, and the new FAA systems are buggy as hell.
We did see some of this in the first week of January, and the new systems are buggy; but the controllers seem to have kept things glued together well enough that winter storms have been more of a problem for the rest of the month than defective gear. Overall, there has been minimal disruption to air traffic.
Medicare will have serious problems paying doctors.
I haven't gotten any feedback on this yet.
Mail deliveries will slow down.
This does seem to have happened in our area. (And we have about the best mail service in the nation.) I'd appreciate info from other areas of the country.
Welfare and unemployment benefits will be screwed up.
Minimal problems so far, as far as I can tell.... it is probably still too early to accurately assess this.
Many people will go unpaid when payroll systems die (particularly in big-city governments).
This has happened in a few places, but it appears not to be a problem to the extent I thought it would be.
Oil refining capacity will shrink, and gas prices at the pump could go up by half.
Oil refining capacity has shrunk, and though the price of gasoline hasn't gone up much, heating oil is outta sight. But I can't establish any connection to Y2K failures, I only have suspicions.... this could be due to OPEC and bad planning. Y2K or not, this energy-cost bite is the most likely reason the economy will tip into recession. (You can, if you prefer, swallow hook, line and sinker the government's official stance that there is no inflation in the pipeline as long as you don't eat or drive.)
The IRS won't be able to process any but the most straightforward tax returns, but you won't know it because they won't tell; they'll just send you whatever you asked for as a tax refund.
Probably true, but we'll never know.
Countries overseas will be in much worse shape, and world trade will shrink.
Didn't happen for chips; it's probably too early to tell for mainframe systems. Other countries are not as heavily automated and were able to successfully revert to manual operation where needed, apparently. Any shrinkage in world trade is likely to be due to normal onset of recession; the link to Y2K is indirect and tenuous.
By late January, Y2K will have introduced so much uncertainty into the system that interest rates (particularly on corporate paper) will soar; fears that almost anybody can unpredictably go out of business will be realized as a few Fortune 500 companies go bankrupt or suffer "quickie" mergers.
Interest rates have risen sharply, but this has more to do with anticipated inflation, and the Fed's goosing the money supply for Y2K, than with fallout from Y2K itself. I haven't seen any major failures yet, but there are plenty of big mergers, thanks to the stock-market bubble.
Banks will become nervous about the quality of their loan portfolios.
Only in an economic slowdown, which hasn't arrived yet.
Corporate cash flows will be squeezed.
Only when the recession arrives. It's too early, yet.
February and March will bring more of the same.... by then, it will be obvious to all but the most incurable optimists that a Y2K-induced recession is unavoidable.
Indeed these months will.... but the public won't notice. So far, it's obvious only to me that a Y2K-induced recession is inevitable. That recession will arrive, but it will be blamed on the popping of the asset bubble (as in 1929). Maybe, after people start looking at glasses as half-empty instead of half-full, they'll notice the economic effect that Y2K glitches are having; but I wouldn't count on it.
[Odds that the] stock market doesn't crash: 0%. (Stocks will crash, even if Y2K should be a non-event.)
Still to be proved. We're getting closer.
I'll gladly trade having Alan Greenspan keeping the stock-market bubble inflated for another year or two (and be wrong for even longer about the impending crash of stocks) for a no-impact outcome to Y2K. If Y2K should, against all my expectations, turn out to be a non-event, you'll see me leading the cheering squad.
I meant it, Alan. Do your thing. Keep the bubble going. I'll gladly hunker down in cash
for another year or two, awaiting your ultimate failure, just because I'm so grateful that
the fallout from Y2K has (so far) proved to be entirely manageable.
A sticky dilemma proposes he,
At what point shall we be free?
Toast, Jam, or pop-tarts,
Shoot, I've no beans and no f**ts.
Oh well, the future remains to be.....
- Robert A Cook
The Pollies screaming 'You are shit'
Change facts just not one bit
The IEEE and Kossie too,
Believe we are deep in stew.
Although the 1st was not the end
(And techies all we must commend),
The lady fat is yet to sing,
We still don't know what March will bring.
The danger is we've dumped our load
As Pollies loud both rant and goad,
But in the end the truth we'll see,
The middle road the facts will be.
The problem here, a simple fact,
Is that greed alone was the act
That fixed the problems we didn't see,
And left the others alone to be.
So we're not quite toast here now in Jan,
But the bug is not quite in the can,
With all the cash that's slopping round,
I fear the bug has gone to ground.
If December comes with news real good,
Employment high and pleasant mood,
Economy good with failures slow,
I'll get my fork and eat some crow.
Until that time I'm keeping watch,
For all the fixes and the botch,
In case it proves the doomers' case,
And everything goes to slower pace.
So doomer, polly, Get It too,
Hide your venom out of view,
We both might need each other yet,
The road and rubber have not quite met. -
"Merville"
The lights are still on,
the water still runs;
they're selling the wood
and returning the guns
pollymorphers are screaming
they're having their fun
while Y2K prophets are still on the run
it's over, it's over
they shout all and one
when in true reality
it's only begun
give it a week -
no make that a month -
they're betting the ranch
on only a hunch
that there'll be no fiasco
no time-delayed crunch
just premature pinnings
and unquestioned trust
that post Y2K
was only a bust.
- Patrick Lastella
Booms warp the character of a society. For most investors, the fear of not making money outweighs the risk of loss. They seek rewards without a corresponding understanding of the assumed risks. They dismiss caution. Banish the prophets. - Anthony Deden
Specious Keynesian economic 'remedies' have irreparably harmed our economy. They have forestalled appropriate corrections which were good and healthy and postponed the day of reckoning. What Greedspin and his predecessors have done is no more than shore up the slag heaps burgeoning over the little coal-mining town with collar-stays. Instead of having carted away the mess it has grown to unmanageable proportions which will inevitably landslide and destroy everything in sight. - Paul Milne
Keep in mind that about 3 out of 4 Americans believe, nay, truly know that the end of the Great Bull Market still lies many years and many thousands of Dow points into the future. The majority of market gurus regularly tell them so, which means it is true. - Daan Joubert
On CNBC, there was a discussion of the impact of the vastly higher oil prices. The anchor indicated that some analysts believe that crude oil no longer has a large impact on the new Internet based economy. Isn't that funny? Just log in to AOL, and download some fuel for your car. - Marc Sexton
Today investment bankers, brokerage firms and the money markets are kings of credit creation and the banks just follow along. Security issuance and financial-sector borrowing governs the credit creation process. The business of lending has opened up to virtually any company that wants to try to earn a buck making a loan or providing financing. All one need do is lend the money and get a securities firm to bundle it, securitize it, and sell it. If you are big enough, or have a government guarantee, you can borrow cheap money in the money markets and balloon your balance sheet with loans and leases. - David W. Tice
In my view a stock market crash is not guaranteed to doom the economy, but it certainly will expose the vulnerabilities of the system that have accumulated during a long period of excess. Traditionally, the longer the period of expansion, the greater its legacy of bad debt when a downturn comes. When banks and investors start to bet the farm that each successive year will be better than the last, they are certain to lose that bet some fine day, and consequently lose the farm.... When personal and institutional losses grow large enough, the pain is not confined to the losers, but quickly spreads to the whole community. That was the motivation behind the LTCM bailout and a whole series of bailouts before that.... the constant demonstrations by the Federal Reserve that every failure will be cushioned and every risk mitigated after the fact, only encourages the institutions we rely on to become ever more risk-addicted and vulnerable. The policy of privatizing profits and socializing losses has been running full-tilt flat-out for two decades now. In the process, we have glorified speculation and marginalized caution. Some day soon we may find out that caution was a lot more valuable than we gave it credit for and we'll be sorry we kept such a scanty supply of it for the inevitable rainy day. - Brian McLaughlin
According to Salomon Smith Barney (as of early December), in the Russell 1000 (the largest 1000 stocks), those with no earnings have moved up 50.9%. Those with earnings were down 2%. I think we ought to give those analysts a round of applause. They clearly know what they are doing. - Alan D. Newman
Wall Street has over the years become increasingly fixated on companies and industries with negative earnings and cash flows. Of course, in the age of online trading and evaporating commissions, investment banking is king, and businesses with endless capital requirements have become the true darlings of Wall Street. This has been a most unfortunate development for our financial system and economy. - David W. Tice
Microsoft has become the world's most heavily-traded entity and is now almost the same size as the entire U.S. Treasury bond market. Microsoft's market capitalization recently topped $617 billion. The total amount of Treasury Bonds outstanding (all bonds issued with an original maturity of greater than 10 years) was just under $644 billion as of November 30th.... By the way, MSFT now routinely trades each day as much as 15% of daily GDP all by itself. - Alan M. Newman
My year 2000 recession forecast was based on Y2K disruptions bursting the speculative bubble in the stock market. Of course, the market is less vulnerable if there are no disruptions. So, the bubble could get even bigger. High valuations may be justified to a certain extent by the New Economy fundamentals of strong growth with low inflation. However, tech stock prices are soaring to levels that only make sense in the "Yahoo Economy." If Yahoo is worth $400 per share today, why not $1000? - Ed Yardeni
Back in '89 I suspected the real estate market was going to dump. My brother-in-law was at the point of selling a spec home and would have made some big bucks. He got his last offer on the home approximately three months before the crash, he turned it down. I was thinking I should talk to him about the situation but I was afraid of being wrong and as a result, no more offers, the bank repossessed the home and he went bankrupt and is now living in the mountains driving a long haul truck. Am I better for not having warned him? What if I had warned him and the market kept climbing? - Mark Hillyard
I have often spoken in support of "moderate" preparation--what I call, "smart living." I use
this catchphrase to describe living within one's means and avoiding the traps of instant
gratification, consumer credit and "keeping up with the Jones." (What Thorstein Veblen
called "pecuniary emulation" and "conspicuous consumption.") Even with the placid [Y2K]
rollover (thus far), "smart living" is still a reasonable idea. I do not think the economy will
remain robust forever. At greatest risk will be the long-term poor and the faux middle to
upper-middle class. I think the plight of the poor in an economic downturn is easily
understood. A more subtle risk is for those families who acquired massive debt, buoyed by
an overvalued market and easy credit. An economic downturn, including interest rate hikes
to curb inflation, will financially devastate many. - Ken Decker
I had mixed feelings about the risk to power. I did make arrangements to borrow a generator and own a 10-watt solar panel. Even at the end, I wasn't sure and procrastinated until I was scrambling with the herd just prior to the roll, grabbing for 6 D-cells.... When I found the tray of D-cells at the Target, I was almost knocked over by people grabbing for them. These were.... people who were panicked by.... Kosky and the press. What was the point of the fifty million dollar monitoring center? They were watching for power failures. Their message was clear. They were worried about power. It should have been simple to verify that power was or was not a problem. But at the end, Kosky and the press were pushing for flashlights, water, and a few hundred dollars.... Some here took building the bunker as a sign that the roll would be serious, there's a lot of sense to that.... Yeah, the power stayed up and I have 6 D-cells for my flashlights. Kosky suckered me too. Big deal, 7 bucks for batteries. I'll use them for my evening strolls. - Cory Hamasaki
I am a programmer for the United States Postal Service, and I work at the integrated business systems solution center in Pa. As you have read, the postal service had two Y2K bugs which made it to the news in the critical systems. We own one of them.. the one which reports on mail volumes.... this one has been handled. We manned our warrooms 24/7 and worked on this problem for years. Everyone here did a fine job and I am glad none of the bad things that could have happened, happened. In retrospect I think that a lot of things are happening around the country and the world that are Y2K anomalies, but the failure rate (because of the remediation) has not exceeded the available resources to fix the problem.... But some guys say this was never a problem, to this I disagree because I remember working one time 23 days straight without a break (getting paid double time!!) during the remediation (which was at least two years in progress). I for one was worried, conceiving the possibilities. - Bill Lamoreux
My "deja vu all over again" attitude toward Y2K projects would suggest that, in rough terms, 80% of the Y2K projects would be finished more- or-less on time, with more-or less an acceptable number of bugs; they might or might not be over budget, but that's a secondary issue unless you're a small company with cash-flow problems. I'm willing to believe that Y2K actually got companies scared enough to work harder than before, and try hard to avoid the political nonsense ... which could lead us to imagine a 90% success rate. But we're being asked to believe that the Y2K success rate is closer to 99%, or 99.9%, and that just doesn't make sense to me -- ....because we have this troubling statistic that just won't go away: 30-50% of the SME's (depending on whose survey you feel like believing) did NOTHING to remediate or test their systems. Nada. Zip. Zilch ....confidence is not high ... at least not amongst the majority of IT managers who have been emailing me since the rollover. The ones who ARE confident seem to be the ones that are working in the great companies that have done great work all along -- before, during and after Y2K. I fear they may have made the mistake of over-generalizing their own good work, and assuming that everyone else is just as competent, well-organized, and disciplined. Time will tell... - Ed Yourdon
The stock market's technical condition (particularly in the divergence between the advance/decline line and the popular averages) is strongly reminiscent of the spring and summer of 1929, and suggests that the crash lies only a few weeks away. But the crash may not look like 1929's.... rather, I expect violent swings of hundreds or thousands of Dow points per day (so far, we've seen hundreds; the thousands lie ahead).
Why? Well, one might well ask, why did the Federal Reserve allow the situation to get so out of hand in the first place? Especially when Alan Greenspan has been so critical of the way the Federal Reserve of the 1920s allowed that stock-market bubble to happen?
The answer, I think, is that the Federal Reserve fully believes it has the clout to stem any market decline that threatens to snowball, through direct intervention in the stock market by purchasing index futures. Whether that is the case remains to be seen; but, they'll certainly try.
So.... some day soon, stocks tumble over a thousand points by the close. Next day, the Fed intervenes, and the popular averages recover most all they lost. A few days or weeks later, another tumble; the Fed intervenes again, and again the averages snap back. Perhaps once again, the same sequence occurs.
Eventually the smart money figures out that the Fed is artificially propping up the averages.... and even more money is then thrown at the favored few, though ridiculously overpriced, stocks that carry great weight in the Dow and S&P.... Intel, Cisco, Microsoft, Yahoo!, whatever.
The averages stay afloat, while more and more stocks tumble into the bear market that has had the majority in decline since April 1998. Eventually the legerdemain becomes public knowledge, then a joke. Invest in stocks (certain stocks, that is), the experts will say; capital gains will be all yours, while the Fed guarantees you'll never take a loss. I could see the Dow soaring to 15,000 in one of these moves, while most stocks decline 40% to 60% from their bull-market highs. (Though I don't give this possibility very high odds.... we probably saw the final highs in January.)
Then something.... I don't know what.... causes the Fed's efforts to fail. Or perhaps they will wisely give up. No matter, at that point the game is over. Then we will have to worry about escaping an incipient depression as the public's mood sours.
The most favorable post-crash outcome I see is similar to what Japan endured in the 1990s.... a more-or-less constant state of recession bordering on depression; debt defaults and government bailouts of failing sectors of the economy; and a stock market at less than half its boom-days peaks a decade later.
But since the U.S. is the engine driving the world economy, when we finally sputter, it could be worse - for everybody.
The next good investing opportunity - and it may not be too far away, probably less than a year - will, I think, be in bonds. The current situation has a whiff of deflation to it; bonds - at least, government bonds - typically do well in times of asset deflation. (Witness: U.S. in the 1930s, Japan in the 1990s.) I have no "Timer's Trend" for the bond market; I just watch the situation, and I will tell you when I think there's an opportune time to jump in.
The next stock-market-buying opportunity may well be Japanese securities. I wouldn't buy Japanese stocks now, because we are Japan's largest trading partner and when our stock market collapses, theirs will surely decline in sympathy. But the Japanese have already endured a decade of near-depression; psychologically, they are ready to climb out of their hole (we've already seen some evidence of that recently). They are also prodigious savers (while we are profligate spenders) and will have the capital to lead the world in the next upturn, once their pessimism has run its course. (During this time, we will still be on the downslope as we try to work off a mountain of debt.). The opportunities in Japanese stocks will probably arrive within four years of our crash, maybe much sooner..... possibly, even in sync with the bond-market rally.
Something to look forward to. See, I'm not always gloom-and-doom. The leverage is much
better on the upside, so I'd much rather be long than short, as long as I'm not momentum
investing in a bubble.
Original cost (adjusted): $ 4,998.21
Present value: $ 3,918.84
Increase: $-1,079.37 [-21.60%]
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 -11.09%, for a compound annual rate of return of -0.88%. COMMENT on "Phoenix": There is no change from the December issue.
B. "Professors' Investment Group (PIG)" - investment club portfolio.
SUMMARY - "PIG":
Original cost: $ 9,024.00
Present value: $12,030.75
Increase: $ 3,006.75 [+33.32%]
COMMENT on "PIG": The PIGs directed me to sell half (50 shares) of Alexion, which has
had quite a runup, should it dip to 45 or below. It did so on Monday the 31st, so those
shares will be sold soon. [Sold on February 3 at $53.]
The PIGs' Web page is at http://www.assumption.edu/HTML/Faculty/Kantar/WPigs.html
C. Roth rollover IRA - real portfolio, includes commissions:
SUMMARY - IRA:
Original (1983-86) cost: $ 8,326.19
Present value: $11,058.62
Increase: $ 2,732.43 [+32.82]
The performance of this portfolio (including its predecessors)
from January 1, 1987 to the present is +0.83%, for a compound
annual rate of return of +0.03%.
D. CREF Pension plan; I switch between indexed stock/bond/money funds:
Date Sold Bought
13Mar1992 stock @ 56.65 MM @ 13.41
29Apr1992 MM @ 13.48 bond @ 31.19
19Jun1992 bond @ 32.14 MM @ 13.55
29Jun1992 MM @ 13.57 stock @ 56.74
24Jul1992 stock @ 56.76 MM @ 13.61
29Oct1992 MM @ 13.72 stock @ 58.61
23Dec1992 stock @ 61.48 MM @ 13.78
16Jan1995 MM @ 14.83 equity-index @ 26.44
20Jan1995 eq-index @ 26.19 MM @ 14.84
30Oct1997 MM@ 17.24 bond@47.56 (27.17%)
30Oct1997 MM@ 17.24 i-i bond@26.12 (27.17%)
11Feb1998 bond@ 48.84 MM@17.52 (27.17%)
11Feb1998 I-I bond@ 26.23 MM@17.52(27.17%)
16Jun1998 MM@ 17.84 TIAA Traditional (45.87%)
23Sep1999 MM@18.99 I-I bond@27.56 (53.32%)
Values, 31Jan2000: stock, 197.17; MM, 19.36; bond, 51.54; inflation-indexed bond, 27.74;
TIAA current yield in SRA, 7.00%
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%; 1997: 5.38%; 1998: 5.72%
Gain, January 1 through September 30, 1999: 4.129% (5.52%
annual rate of return)
Total gain since January 1, 1988 (11.75 years): 185.35%
Compound annual rate of return: 9.33% (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
472.60%, for a compound annual rate of return of 16.02%.
COMMENT on "Timer's Trend":
Plenty of advance crash warning here.... we're still on the
July 20 SELL signal, with the majority of stocks accelerating their decline to the downside,
even while the averages bounce around.
______________________________ TIMER'S TREND _________________________________ Mon 22 Nov 99 #. I . |11089.52 | - * Tue 23 Nov 99 # . I . |10995.63 | .- * Wed 24 Nov 99 # I . |11008.17 | . - * Fri 26 Nov 99 .# I . |10998.91 | . - * Mon 29 Nov 99 # . I . |10947.92 | . - * Tue 30 Nov 99 #. I . |10877.81 | . - * Wed 1 Dec 99 # I . |10998.39 | . - * Thu 2 Dec 99 # I . |11039.06 | . - * Fri 3 Dec 99 . & . |11286.18 | .- * Mon 6 Dec 99 # I . |11225.01 | .- * Tue 7 Dec 99 # . I . |11106.65 | .- * Wed 8 Dec 99 #. I . |11068.12 | .- * Thu 9 Dec 99 #. I . |11134.79 | . - * Fri 10 Dec 99 .# I . |11224.70 | . - * Mon 13 Dec 99 #. I . |11192.59 | . - * Tue 14 Dec 99 # . I . |11160.17 | . - * Wed 15 Dec 99 #. I . |11225.32 | . - * Thu 16 Dec 99 #. I . |11244.89 | . - * Fri 17 Dec 99 # I . |11257.43 | . - * Mon 20 Dec 99 #. I . |11144.27 | . - * Tue 21 Dec 99 .# I . |11200.54 | . - * Wed 22 Dec 99 # I . |11203.60 | . - * Thu 23 Dec 99 . I# . |11405.76 | .- * Mon 27 Dec 99 # I . |11391.08 | .- * Tue 28 Dec 99 # I . |11476.71 |~-~~~~~~~~~~~~~~~~~~~~~~~~~~~~~* Wed 29 Dec 99 . & . |11484.66 | - * Thu 30 Dec 99 . & . |11452.86 |-. * Fri 31 Dec 99 . | #. |11497.12 |-. * Mon 3 Jan 00 .# I . |11357.51 |-. * Tue 4 Jan 00 # . I . |10997.93 |~-*~~~~~~~~~~~~~~~~~~~~~~~~~ Wed 5 Jan 00 # I . |11122.65 | - * Thu 6 Jan 00 . & . |11253.26 | - * Fri 7 Jan 00 . | # |11522.56 | - * Mon 10 Jan 00 . | #. |11572.20 |-. * Tue 11 Jan 00 .# | . |11511.08 + . * Wed 12 Jan 00 .# I . |11551.10 + . * Thu 13 Jan 00 . | # |11582.43 +~.~~~~~~~~~~~~~~~~~~~~~~~~~~~~~* Fri 14 Jan 00 . | # |11722.98 + . * Tue 18 Jan 00 . # . |11560.72 + . * Wed 19 Jan 00 . & . |11489.36 + . * Thu 20 Jan 00 .# I . |11351.30 + . * Fri 21 Jan 00 . #I . |11251.71 + . * Mon 24 Jan 00 # I . |11008.17 |*-~~~~~~~~~~~~~~~~~~~~~~~~~~ Tue 25 Jan 00 #. I . |11029.89 | - * Wed 26 Jan 00 .# I . |11032.99 | .- * Thu 27 Jan 00 .# I . |11028.02 | .- * Fri 28 Jan 00 # . I . |10738.87 | . - * Mon 31 Jan 00 # I . |10940.53 | . - * ========================================================================"Timer's Trend" is based on 4% and 10% exponential moving averages of the New York Stock Exchange advance/decline line (that is, the ratio of advancing to declining stocks). There are many symbols shown above, but the ones that count are the braces: {, } = "Timer's Trend" (4% exponential confirmed by 10% exponential) SELL ({) or BUY(}) signal.
NEXT ISSUE - will appear about February 29. /Nick Chase