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://www.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
So it seems to be with the current passel of apparent shenanigans of the Clinton administration generally grouped under the heading of "Whitewater". This octopus of complex, convoluted dealings is being unravelled so slowly that the average person cannot really comprehend what it means, and.... like the slow drip of a faucet that never gets fixed.... it has become so much a part of our daily lives that we easily forget that most presidents' administrations are not afflicted with daily, widespread accusations of illegalities.
Even the most complex messes will have certain features that "stand out" for different observers. For me, what sticks out are the circumstances surrounding the death of Vince Foster.
If we are to accept the official, government version of Foster's "suicide", then we must believe that Foster drove his own car to Fort Marcy Park without keys, got out and walked 700 feet to a secluded spot without getting any dust on his shoes, sat down and blew his brains out using a powerful revolver without leaving a bullet, or any body-tissue residue on the surrounding vegetation, or recoil damage in his mouth, or fingerprints on the gun. Then, after instantly dying - because he didn't bleed much - he threw his glasses 19 feet away and laid himself out neatly, ready for the coffin. I have problems with this scenario. So, apparently (according to polls) do two-thirds of the American people.
Whether Foster committed suicide or was murdered, I cannot determine; but it does seem to me that a lot of effort has been expended to draw people away from the common-sense conclusion that he died in a politically-inconvenient place, and his body was then moved to Fort Marcy Park and staged to look like he committed suicide there. The two green sheets attached to this month's issue of The Contrarian's View, comments by Rep. Dan Burton of Indiana as they appear in the Congressional Record, pretty well reflect my misgivings.
People want to believe in their government.... for the alternative is to realize that they don't exercise very good judgement when they vote.... and the pursuit of the inconsistencies in Foster's death could easily be attributed only to the mad ravings of a bunch of conspiracy nuts if it were not for the "suicide" note. Last October, three experienced graphologists determined that the torn-up note which had suddenly appeared in Foster's previously-empty briefcase is a forgery. However, it doesn't take a handwriting expert to detect the forgery; it, along with several genuine examples of Foster's handwriting, have been posted to the Internet for all to view, and even I can see that the "suicide" note is not in Foster's handwriting.
This is important; for if our government has lied to us about the authenticity of this note, then why should we believe any of the other official statements about Foster's death, or accept as the truth the denials of wrongdoing from the same people on other Whitewater matters?
If the note is not a suicide note, then what was its purpose? Most probably, to reinforce the suicide theory in the face of weak evidence.... and to deflect attention away from the Clintons and their entourage and toward Foster's own problems. This means that whoever wrote the note was providing "disinformation".
We can see this in one statement the note makes: "No one in the White House, to my knowledge, violated any law or standard of conduct, including any action in the travel office. There was no intent to benefit any individual or specific group". Recent evidence (from notes of others) clearly shows that Hillary Rodham Clinton was actively pressing for dismissal of the travel office staff, and that even before the Clintons occupied the White House they intended the travel office operations to be transferred to World Wide Travel, the business of a friend.
(Mrs. Clinton's hair-splitting, disingenuous denial of any involvment in the firing of the travel office employees is one of the reasons columnist William Safire branded her as a "congenital liar". I'm not sure about the "congenital" part, but the rest of Safire's characterization seems about right to me.)
Another statement, "The WSJ editors lie without consequence" probably means the editors of The Wall Street Journal are telling the truth; or, at the very least, editor Robert Bartley is asking some very penetrating questions.
"The public will never believe the innocence of the Clintons and their loyal staff" is probably true; but the inference is that they should. (I have no quarrel with the characterization of the staff as "loyal", however.)
The foot-dragging, stonewalling, obfuscation and hair-splitting of the White House staff has inspired some independent investigations of Whitewater and related events, and fertilized the growth of some pretty bizarre conspiracy theories. The best investigative reporting (in my opinion) has been done by Christopher Ruddy of the Pittsburgh (PA) Tribune-Review, and Ambrose Evans-Pritchard of the (London, England) Daily Telegraph. Also active in pursuing the matter has been James Dale Davidson of the Strategic Investment newsletter (and who, with Lord William Rees-Mogg, authored Blood in the Streets and The Great Reckoning).
The British have no particular political axe to grind, so Daily Telegraph readers have generally gotten a balanced and informative view of the events surrounding Whitewater while the U.S. press has been asleep. The publisher of the Pittsburgh Tribune-Review, and a backer of Strategic Investment, is Richard Mellon Scaife (an heir to the Mellon banking fortune), who appears to be politically conservative. This tends to trivialize the Whitewater reportage along partisan lines.... for example, Strategic Investment contracted for and paid the fees of the graphologists who analyzed the "suicide" note... and could compromise its integrity.
I know that I am not interested in a "Democratic" truth, or a "Republican" truth, or a "conservative" truth, or a "liberal" truth. I would just like to know the truth. But because the major political parties do not police themselves well, we are forced to rely on the messiness of partisan politics.... the watchdog instincts of the opposition party to gain political advantage by exposing dirt... to force the truth out. This was certainly the case in the Watergate scandal twenty years ago.... the truth was made known not by the various agencies of the executive branch of the government, but only by the persistence of a hostile, Democrat-controlled Congress trying to discredit a Republican administration.
The Internet is a great place to scrounge around for conspiracy theories relating to Whitewater, and most of them seem to have a common thread best expressed in four articles written by James Norman for Media Bypass magazine. These articles apparently were posted to the Internet and placed in the public domain before they appeared in the magazine, so I am able to capture them and reprint them for you on the six pink sheets attached to this month's issue. (In the interest of saving trees, and in getting the articles to fit on six sheets of paper, I have slightly abbreviated the end of the fourth article.)
Jim Norman was a senior editor at Forbes magazine when he researched and wrote the "Fostergate" article. The article had been checked and was ready for publication in Forbes when (apparently) higher management killed it. (Not surprising, when you consider the amazing allegations it makes.) But Norman was told he could have the story published elsewhere.... which he did, in the August 1995 issue of Media Bypass.
As Norman pursued the story, he believed he had found links between the corruption he was investigating and management at Forbes; at that point, he was fired. He now writes for Media Bypass and continues to pursue his incredible tale.... the remaining three stories appeared in the October and December 1995, and February 1996 issues of Media Bypass.
Although I have lived long enough to know that almost anything is possible where the weaknesses of human nature are at the center, I would still take these articles with a very large grain of salt. Norman may have been snookered by unreliable sources, or have been the victim of disinformation.... and I have included his stories here mainly to show you what's circulating out there, and because they appear to have been thoroughly researched, and because they are well-written and entertaining. (I particularly like the idea of an Avenging Angel extorting into retirement members of Congress who have been around for too long. It's almost as good as term limits.)
Conspiracy stories like this (assuming they're untrue) would not flourish if the White House and other Clinton-administration officials did not, through their deeds, convey the distinct impression they're trying to hide something. Instead, what do we get? A $100K payoff to Hillary Rodham Clinton disguised as cattle futures trades. An unsatisfactory "suicide". Travel office staff whose lives were ruined by bogus charges, when they could simply have been dismissed without prejudice. Key papers suddenly appearing from nowhere. Large numbers of people connected to Bill and Hillary Clinton, in both Arkansas and Washington administrations, who have been indicted, or sent to jail, or resigned under a cloud.... numbers not seen since Nixon's second term.
Also, there is credible evidence that Bill Clinton had knowledge of a CIA-connected gun-smuggling and drug-running operation that ran for many years through the Mena, Arkansas airport. And if it is true, as Ambrose Evans-Pritchard has reported, that Vince Foster made quickie trips to Geneva unknown even to his wife, then it would seem that some sort of clandestine operation was (or is) being done out of the White House.
You should not underestimate the parallels between the currently-unfolding Whitewater events and Watergate of twenty-plus years ago. Richard Nixon did not order the break-in of the opposition's campaign headquarters; but it was his obstruction of justice in an attempt to cover up its connection to his re-election campaign that led, ultimately, to his resignation.
Like Whitewater, Watergate was a long time unfolding, as scores of administration officials and Republican partisans tried to dissuade people from the obvious, common-sense conclusion that Richard Nixon was not only fully aware of the cover-up that was going on; indeed, he was taking an active role in it. Watergate also got caught up in the 1972 elections. I ended up voting for George McGovern, whose political views I did not particularly care for, because I believed it was better to have an honest liberal in the White House than a conservative crook. (Fat lot of good it did me.... Nixon won re-election in a landslide). Only after the elections did the full story come out, resulting in Congress' bill of impeachment and Nixon's resignation.
As I did in 1972, I look to the current administration for honest, straightforward, timely answers. Instead, what I see are machinations that resemble a low-level mafia operation. As in 1972, I find myself driven to the conclusion that somebody is covering up something, and that the man at its center is a crook, at least in the sense that Richard Nixon was a crook, and maybe in a worse sense.
The Watergate scandal did not cause a bear market in stocks, but it certainly aggravated it. This was the time of the "Nifty Fifty" craze, prior to the 1972 elections, when the Watergate noise got progressively louder but did not impact on the stock-market silliness. After the elections, tracking the usual presidential cycle and preceding the 1974-75 reces-sion, stocks did enter a bear; but it was the complete loss of confidence in government by Americans, because of Watergate, that (in my opinion) made both the recession and the bear market much more severe than they would otherwise have been.... a "granddaddy" bear.
Will Whitewater unfold in a way similar to Watergate? I am inclined to think the news will get progressively worse, but to date (as far as I know) no "deep throat" has appeared to give clues to those intrepid investigative reporters and to keep them on the right track.... so the Clinton administration may be able to stonewall its way through the 1996 elections.
If Bill Clinton is defeated in 1996, the issue will probably die, because nobody will care any more. Similarly, if the Democrats again become the majority in Congress, the issue will probably be buried, because the Democrats certainly have no incentive to embarass themselves. But if Clinton is re-elected and Congress retains its Republican majority, we could see a rerun of the 1974 scenario.... the "loyal opposition", out for blood, brings down a corrupt administration.
The current stock market, which by many measures is the most overvalued in this century, is a balloon in search of a pin.... and with even the smallest pin, we would be fortunate to deflate it without its "popping". The market responds most often to economic events.... levels of interest rates, taxation, earnings and profits.... usually the political scene is a sideshow, as it was in 1973-74, when it aggravated the bear market, but did not cause it. But this has been a stock market that has "broken all the rules" as it soared to not-to-be-believed heights.... so who knows, perhaps this time economics will take a back seat to the unfolding political show. After all, stocks would not be this high if public confidence in them were not also high; and there are few events more destructive of confidence than the revelation of corruption in those whom we trusted. With stocks vulnerable to even the tiniest pinprick, just imagine the damage a big pin could do.
Even sectors of the market demonstrate the foolishness of mantras, such as last year's fad for technology stocks. In my opinion, this fad came about largely because Jeff Vinik, manager of the Fidelity Magellan fund, became enamored of them, and started buying high-techs in large quantities until they were more than 40% of his fund. Now Magellan is a very large fund, and when it buys anything agressively it will inevitably drive the price up. That's enough to cause a "bandwagon" effect, and other money managers, fearful of being left behind, will jump on the bandwagon and follow the leader in true herdlike fashion. So it was with the high-techs; soon we began hearing "wave of the future" mantras to justify the religious ferver with which tech stocks were being bought.
But Jeff Vinik is one smart cookie. After the high-techs had reached ridiculous levels, he sold big. Perhaps he could have ridden the wave to even higher levels, but it matters not, for when Jeff Vinik sells out, that is the top, because of the size of his fund. Investors in Fidelity Magellan should be delighted with the past thirteen months' performance; the rest of you, who bought high-tech funds that were not Fidelity Magellan, are the bagholders. What will Jeff Vinik fall in love with next? May I suggest gold stocks to him?.... they're really very scarce in relation to the size of Magellan, and (hint! hint!) I already have positions in them.
How can the tech stocks crash, without the rest of the market following their lead? Because money continues to pour into mutual funds at near-record levels.... and until the flow slows or reverses, prices will likely remain ridiculously high, with the fluctuations in individual issues resembling the rearrangement of the deck chairs on the Titanic. I am on record as expecting, with virtual certainty, a stock-market crash (or shutdown) worse than 1987, and I can hear you, my subscribers, calling out: When? When? When?
Beats me. But since it will be expected by almost nobody, and since extreme levels of overvaluation.... which we're at now.... are a prerequisite, it's best to hide in cash or, at the very minimum, make sure you mechanically follow the "Timer's Trend" signals. Better safe than sorry, at this stage.
A few days ago I was talking to a friend, a trained economist, who produces a massive weekly stock and economic report (around 200 pages) to a select clientele for $20K per subscriber per year. He makes a very good living at it. It is his opinion that not only is the stock market headed for a crash, but that the entire derivatives structure will also come unglued.... in other words, a true financial meltdown. Frankly, I don't see how this could happen without impairing all of the world's banks, including the central banks, and causing a sharp rise in short-term interest rates (such as happened in Mexico following the peso devaluation) and the virtual drying-up of credit. The 1987 Crash demonstrated that, thanks to the great technological advances of the computer age, it is possible to have an instant bear market. The discussion with my friend has left me wondering if, in this computer age, it is now possible to have an instant depression.
A. "Phoenix" -real portfolio, begun on October 1, 1995.
Original cost: $ 8,090.45
Present value: $ 8,877.44
Increase: $ 786.99 [9.73%]
Yield: $ 311.53 [3.87%]
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 +24.42%, for a compound annual rate of return of 2.43%.
B. "Professors' Investment Group (PIG)" - investment club portfolio.
SUMMARY - "PIG" :
Portfolio cost: $ 4,225.00
Present value: $ 5,109.86
Increase (decrease): $ 884.86 [20.94%]
COMMENT on "PIG": There is no change from last month, other than cash added.
C. Fidelity IRA - real portfolio, includes commissions:
SUMMARY - IRA:
Original (1983-86) cost: $ 8,326.19
Present value: $19,784.34
Increase: $11,458.15 [137.62%]
Current yield: $ 886.19 [4.49%]
The performance of this portfolio (including its predecessors) from January 1, 1987 to the present is +80.40%, for a compound annual rate of return of 6.73%.
F. 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
Values, 26Jan96: stock, 91.46; MM, 15.66
Gain, 1988: 18.91%; 1989: 14.48%; 1990: 8.28%; 1991: 27.93%; 1992: 10.20%; 1993: 3.08%; 1994: 4.07%
Gain, January 1 through September 30, 1995: 3.34%
Total gain since January 1, 1988 (7.75 years): 127.93%
Compound annual rate of return: 11.21% (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 179.14%, for a compound annual rate of return of 14.17%.
COMMENT on "Timer's Trend" : The Dow is at new highs, and "Timer's Trend" is bullish, but not as solidly bullish as the new highs would indicate. Ride it with a watchful eye toward the exit.
{, } = "Timer's Trend" (4% and 10% exponential) SELL ({) or BUY (}) signal
=============================TIMER'S TREND===========================
Mon 25 Sep 95 . I # | 4769.93 | .+ *
Tue 26 Sep 95 . I .# | 4765.60 | .+ *
Wed 27 Sep 95 . I# . | 4762.35 | + *
Thu 28 Sep 95 . I . # | 4787.64 | .+ *
Fri 29 Sep 95 . | .# | 4789.08 | .+ *
Mon 2 Oct 95 . I #. | 4761.26 | .+ *
Tue 3 Oct 95 . I# . | 4749.70 | + *
Wed 4 Oct 95 . I# . | 4740.67 | + *
Thu 5 Oct 95 . I # | 4762.71 | + *
Fri 6 Oct 95 . I #. | 4769.21 |+. *
Mon 9 Oct 95 .# I . {| 4726.22 |+. *
Tue 10 Oct 95 . #I . | 4720.80 + . *
Wed 11 Oct 95 . I . # | 4735.25 |+. *
Thu 12 Oct 95 . I . # ]| 4764.88 |+. *
Fri 13 Oct 95 . | . # }| 4793.78 | + *
Mon 16 Oct 95 . | #. | 4784.38 | .+ *
Tue 17 Oct 95 . | .# | 4795.94 | . + *
Wed 18 Oct 95 . | .# | 4777.52 | . + *
Thu 19 Oct 95 . | #. | 4802.45 | .+ *
Fri 20 Oct 95 . I# . | 4794.86 | + *
Mon 23 Oct 95 . #I . {| 4755.48 | + *
Tue 24 Oct 95 . I# . | 4783.66 |+. *
Wed 25 Oct 95 . #I . | 4753.68 + . *
Thu 26 Oct 95 #. I . | 4703.82 |-. *
Fri 27 Oct 95 .# I . | 4741.75 | - *
Mon 30 Oct 95 . I # | 4756.57 |-. *
Tue 31 Oct 95 . & . | 4755.48 |-. *
Wed 1 Nov 95 . I #. | 4766.68 |-. *
Thu 2 Nov 95 . I . # | 4808.59 |+. *
Fri 3 Nov 95 . | .# | 4825.57 |~.+~~~~~~~~~~~~~~~~~~~~~~~~~~~~~*
Mon 6 Nov 95 . | .# | 4814.01 | .+ *
Tue 7 Nov 95 . I# . | 4797.03 | .+ *
Wed 8 Nov 95 . | .# }| 4852.67 | .+ *
Thu 9 Nov 95 . | # | 4864.23 | .+ *
Fri 10 Nov 95 . | #. [| 4870.37 | + *
Mon 13 Nov 95 . I #. {| 4872.90 |~+~~~~~~~~~~~~~~~~~~~~~~~~~~~~~*
Tue 14 Nov 95 . I# . | 4871.81 | + *
Wed 15 Nov 95 . I .# | 4922.75 |~+~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~*
Thu 16 Nov 95 . | . # }| 4969.36 |~+~~~~~~~~~~~~~~~~~~~~~~~~~~~~~*
Fri 17 Nov 95 . | . # | 4989.95 | .+ *
Mon 20 Nov 95 . | #. | 4983.09 | .+ *
Tue 21 Nov 95 . | .# | 5023.55 |~.~+~~~~~~~~~~~~~~~~~~~~~~~~~~~~*
Wed 22 Nov 95 . | .# | 5041.61 | . + *
Fri 24 Nov 95 . | . # | 5048.84 | . + *
Mon 27 Nov 95 . | . # | 5070.88 |~.~+~~~~~~~~~~~~~~~~~~~~~~~~~~~*
Tue 28 Nov 95 . | . # | 5078.10 | . + *
Wed 29 Nov 95 . | . # | 5105.56 | . + *
Thu 30 Nov 95 . | . # | 5074.49 | . + *
Fri 1 Dec 95 . | .# | 5087.13 | . + *
Mon 4 Dec 95 . | . # | 5139.52 |~.~~+~~~~~~~~~~~~~~~~~~~~~~~~~~~*
Tue 5 Dec 95 . | . # | 5177.45 | . + *
Wed 6 Dec 95 . | . # | 5199.13 |~.~~+~~~~~~~~~~~~~~~~~~~~~~~~~~~*
Thu 7 Dec 95 . | #. | 5159.39 | . + *
Fri 8 Dec 95 . | .# | 5156.86 | . + *
Mon 11 Dec 95 . | #. | 5184.32 | .+ *
Tue 12 Dec 95 . | # | 5174.92 | .+ *
Wed 13 Dec 95 . | .# | 5216.47 | .+ *
Thu 14 Dec 95 . | #. | 5182.15 | .+ *
Fri 15 Dec 95 . | # | 5176.73 | + *
Mon 18 Dec 95 # I . | 5075.21* |+.~~~~~~~~~~~~~~~~~~~~~~~~~~
Tue 19 Dec 95 . I .# | 5109.89 | + *
Wed 20 Dec 95 . | .# | 5059.32 |~+~~*~~~~~~~~~~~~~~~~~~~~~~~~
Thu 21 Dec 95 . | . # | 5096.53 | + *
Fri 22 Dec 95 . | . # | 5097.97 | .+ *
Tue 26 Dec 95 . | . # | 5110.26 | . + *
Wed 27 Dec 95 . | .# | 5105.92 | . + *
Thu 28 Dec 95 . | .# | 5095.80 | . + *
Fri 29 Dec 95 . | . # | 5117.12 | . + *
Tue 2 Jan 96 . | . # | 5177.45 |~.~~+~~~~~~~~~~~~~~~~~~~~~~~~~~*
Wed 3 Jan 96 . | . # | 5194.07 | . + *
Thu 4 Jan 96 . | # | 5173.84 | . + *
Fri 5 Jan 96 . | # | 5181.43 | . + *
Mon 8 Jan 96 . | . # | 5197.68 | . + *
Tue 9 Jan 96 . | #. | 5130.13 | . + *
Wed 10 Jan 96 . #I . | 5032.94 |~+~~~~~~~~~~~~~~~~~~~~~~~~~~
Thu 11 Jan 96 . | .# | 5065.10 | + *
Fri 12 Jan 96 . I #. | 5061.12 | + *
Mon 15 Jan 96 . I #. | 5043.78 |+. *
Tue 16 Jan 96 . | . # | 5088.22 | + *
Wed 17 Jan 96 . | # | 5066.90 | .+ *
Thu 18 Jan 96 . | .# | 5124.35 | .+ *
Fri 19 Jan 96 . | . # | 5184.68 | .+ *
Fri 19 Jan 96 . | . # | 5184.68 |~.+~~~~~~~~~~~~~~~~~~~~~~~~~~~~~*
Mon 22 Jan 96 . | . # | 5219.36 | . + *
Tue 23 Jan 96 . | .# | 5192.27 | . + *
Wed 24 Jan 96 . | . # | 5242.84 |~.~+~~~~~~~~~~~~~~~~~~~~~~~~~~~~*
Thu 25 Jan 96 . | # | 5216.83 | . + *
Fri 26 Jan 96 . | . # | 5271.75 | . + *
=====================================================================
[, ] = 4% exponential change unconfirmed by 10% exponential (not a signal).
@ = market overbought or oversold. I or & (on baseline) = 10% exponential SELL.