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
But in one important respect we are in a new era. This new era is characterized by the willingness of our central bank to print whatever money is required, and offer up whatever bailouts are needed, to stave off recession and a correction in excesses of debt, regardless of the moral hazard incurred. Even in the 1920s, the Federal Reserve did initially lean heavily against the developing stock-market bubble (which was privately financed) in the spring of 1929, rather than feeding it, as today's Fed has. And once the 1920s bubble popped, that Fed was (perhaps, too) cautious in easing in the face of what seemed like the beginning of an ordinary recession.
But today, the Fed has the chutzpah to think that it can take appropriate action to avert the negative economic fallout from a popped bubble, and the nerve to scold the Japanese for mismanaging the aftermath of their bubble when it popped in 1990. What is "new" about this so-called new era is that the perpetuation of the bubble economy and the ridiculous elevation of stock prices is tied directly to the Fed's attempts to keep (and success in keeping) things propped up. When the Fed finally fails, the sh*t will hit the fan.
I've commented several times that the "free market" has died, probably as far back as the 1987 Crash, when the Fed provided all required liquidity to banks and specialists (and aggressive futures buying) to stave off a debt contraction and recession. Let me be more explicit: Our formerly-free stock markets have been replaced by a fascist enterprise. (Fascist=privately owned, but controlled or directed by the state.)
Strong words, Nick, you say. Well, if you doubt that today's stock market has become a fascist creation, then let me pose this hypothesis: Suppose Alan Greenspan, in what would be uncharacteristically clear English for him, made the following statement: "It is the job of the Federal Reserve to provide sufficient money for the smooth functioning of the economy and to protect depositors' funds in the event of bank failures, without creating inflation. It is not our job to prevent recessions, or to keep stock prices from going down, or to fix mistakes made in foreign lands, or to bail out businesses here, and we're not going to do any of that." And then suppose that people believed him. What do you think the reaction in the stock market would be? Ker-aaash, maybe? As I said, a fascist enterprise.
In my library I have many books written in the 1950s through 1970s which lay out the "old rules" for the days when the government did not feel it was its job to intervene in the pricing of stocks (other than very indirectly, through fixed commissions, margin requirements, the setting of interest rates, and regulations against unfair practices). How about: Stocks are a buy when dividend yields touch 6%, and should be sold when they go under 3%? Into the ashcan with this one - the major indexes haven't yielded 3% for half a decade now. Or how about.... P/Es in the single digits mean stocks are a good buy, but when they get above 20, you won't see much further appreciation, a bear market is not far away, and you can hide in cash or bonds for the next buying opportunity. How quaint.... P/Es have been historically high since 1993!
Then there's the GDP-ratio valuation.... historically, stocks trade at a mean-value-to-GDP of 48%, and are buys below 30% and sells above 60%. Let's see, that would have kept you out of stocks for nearly a decade, so there's another candidate for the circular file. Is 180% of GDP now to become the norm? Maybe, if the Fed has its way for awhile longer.
In the 1980s issues of The Contrarian's View I had another rule of-thumb.... that (thanks to "portfolio insurance", the precursor to today's derivatives games) stocks would trade to yield about two-thirds the six-month T-bill yield, in a band between one-half and three-fourths that yield. It was when they broke through the upper edge of that band that I (correctly) anticipated the 1987 Crash. Well, this rule-of-thumb bit the dust in 1992.
You get the idea. These historical oddities from the pre-fascist days of the 1950s, 1960s, 1970s and early 1980s no longer apply now that the Fed has taken a direct interest in the price level of stocks. Now there is still plenty of individual choice within the overall fascist enterprise, as is clear from last year's NASDAQ behavior.... a decline from the highs by half before the Fed really got nervous. But in general, the old rules (for the time being) mean nothing; as long as the fascist control prevails, they have been replaced by a new rule: When you buy stocks, you dance with the Fed.
What amazes me is the extent to which supposedly liberty-loving Americans have embraced this fascist support of the markets.... and most certainly, without seeing it for what it really is (for after all, the auction market does appear to operate smoothly most of the time without government interference). But then, I recall those grainy black-and-white newsreels of smiling Germans saluting Hitler in the mass rallies of the late 1930s, and understand that fascism is a powerful and highly attractive force when things are on the upswing. Today's equivalent is Americans expecting the Federal Reserve to keep them from suffering losses in their stocks, and the adulation Alan Greenspan receives from nearly all quarters, of the kind that was accorded maximum leaders of antiquity.
Look, if this economic/monetary fascism really worked over the long term, even I might be tempted to accept it without question. Why would anybody want to argue with a stock market which is "guaranteed" to go up 15% per year, forever? Sure beats T-bills or savings bonds; sign me up! But this nagging suspicion that the eventual outcome of our acceptance of a fascist stock market will be the financial equivalent of the destruction of the Third Reich in the fires of World War II, holds me back.
Regardless, while the fascism prevails, the old rules no longer apply. We operate under new rules, all of which are corollaries of: When you buy stocks, you dance with the Fed. Thus, when the Fed makes a move, the question to be answered is: This time, will they succeed (and to what extent), or will they fail?
When the Fed cut the federal funds rate by a half-percent on January 3 (and the discount rate by the same amount over two days, January 3-4), with the markets open, in what was clearly a panic move, I was puzzled. Sure, the economy appeared to be headed into the crapper more quickly than anticipated, but it wasn't a situation that couldn't have waited until the next regular meeting. The easing was more characteristic of averting an incipient systemic failure, as in the fall of 1998.
By the end of the week, when the rumors surfaced that there were problems with the Bank of America's loan exposure, then it made sense. And like 1998, (in my opinion) the systemic repair will provide more liquidity than stocks and the economy really need.... in other words, the Fed has reignited the bubble. Yes, this is a judgement call on my part, but the rules of the dance require that, to the best of my ability, I keep in step. (Here's hoping I'm a good dancer, at least a lot better than I am in the ballroom.)
That left me with some hard choices in my portfolios. Do I think that someday, stocks will reach my "fair value" projections of the Dow in the mid-3000s, or even lower, with equivalent bashings in the other averages? Yes, of course, but "someday" is not an investment strategy. It looks like the Fed is going to keep the pedal to the metal until there is finally a systemic failure that it can't bail out (in which case we'll all have much bigger problems to worry about than the shrunken sizes of our portfolios). In the meantime, I expect that each mini-crisis that comes along will receive the money-gusher bailout treatment, though increasingly with less effect.
So I asked myself, how long do I wait for my (non-TIAA-CREF) portfolios to reach my target price? Do I really want to ride through another Fed-induced bullish surge holding onto bear funds, maybe through several more of these roller-coaster rides, until someday something cracks, and they finally become winners? No, not really. I can't even guarantee that "someday" will be in my lifetime (even though common sense tells us that the Fed is unlikely to be able to avert a recession, or prevent stock prices from regressing to historical values, for a period of decades.)
Then, looking at particularly my Roth IRA, it's clear that, with retirement approaching, this is never going to provide a significant part of my retirement income. You will recall that when the bubble got underway in the spring of 1995, I was reluctant to jump on the bandwagon with my retirement funds even though "Timer's Trend" was bullish, simply because (though it performed flawlessly in the 1987 Crash) I had no experience with "Timer's Trend" in a mania. My fear was that some systemic failure would strike out of the blue and take down the financial markets (while they were mostly closed), with no chance of escape, before "Timer's Trend" had given a sell signal.
Well, now we've seen the upside of the bubble, and part of the downside, with many sudden surprises (1987, 1989, 1997, 1998) along the way, and "Timer's Trend", if paid attention to, has correctly kept one from getting bagged by each market failure. In other words "Timer's Trend" works, even in manias.
Now, is it possible that someday the event I fear, that we will wake up one morning to find a derivatives accident somewhere has collapsed the world's financial structure, that the Fed's constant rescuing of enterprises "too big to fail" has turned into the "failure too big to rescue"? Yes, that's possible, but as I said before, if it happens that way then we will all have much bigger problems to worry about than the state of our portfolios.
More likely, as in the past, fissures will first appear in the system that will trigger a "Timer's Trend" sell, and this will have us safely in near-cash before The Big One strikes. In the meantime, I think we should recognize that we've not been dealt a pretty hand, but a fascist stock market, with the Fed as its master, is the hand we have to play.
This time around, we already see the increase in mortgage refinancings kicking in, and the reheating of the IPO market, and it looks like the Fed will have some success getting consumers to go further into hock to keep the economy humming along. Now one can argue whether, ultimately, the Fed has reignited the bubble enough to drive the markets to new highs, or whether it will just be a good-size rally in a deflationary bear market.... it's still too early to tell.... but of one thing you can be sure: The Fed will be printing boatloads of money, and putting intense downward pressure on short-term interest rates, to try to restart the economy. That means the safer (and maybe even the more profitable) way to play the rebound (particularly with retirement funds) is with bonds rather than stocks.... with really big profits in bonds ahead if we trace the steps of the Japanese in the prior decade.
In the portfolios which don't matter as much, like "Phoenix" and the Roth IRA, and with "Timer's Trend" having proved itself, I'm now much less inclined to worry about the timing of the arrival of The Big One, and much more inclined to use "Timer's Trend" signals to play the swings in stocks. So, I sold the bear funds, and have redeployed the money to attempt to ride the upswing. (Memo to David Tice: I shall return.) In my TIAA-CREF retirement plans, I'm dancing with the Fed mostly in bonds.
You know that my preference, and expectation, was for the bear market to grind on until we reached a low-risk, low-cost buying opportunity, as was seen in 1974 or 1982, or 1990, or even after the 1987 Crash. Instead, thanks to the fascists, what we have is a high-cost, high-risk buying opportunity. But it is a buying opportunity (in both stocks and bonds), nonetheless. And even the word "risk", in the New Era, has transmogrified: The many "risks" that formerly existed in a free market have now been overshadowed by but one major risk: Loss of control by the Fed.
Do you know what the Fed's real message, the one that everybody missed, was? That even in the first year of a new political administration, when recessions are normally tolerated to get them out of the way, this time around systemic risk is so great that no recession can be allowed. To permit a recession likely means triggering a financial failure that's too big to rescue.
Good luck, Alan. You can't keep it up forever. In the meantime,
let's dance.
I consider Greenspan a menace to society. Rather than talking about people managing their risks, he seemed to embrace the new era. My complaint with him is not yesterday's [January 3] ease, it's the implication that he is bailing out the stock market and once again "writing a put for the stock market". - William Fleckenstein
It is astonishing that they cut rates. The Dow is within a few percentage points of its all-time high. The S&P is only down about 12%. Even the NASDAQ is just back to where it was two years ago. It's certainly not at 10 year lows or at 16 year lows as is Japan. The man [Greenspan] is throwing fuel into a raging fire, which is going to consume him. - Jim Rogers
Alan Greenspan cannot live with the stock market bubble and he can't live without it. The Federal Reserve chairman proved t hat.... when he panicked and pushed interest rates down by half a percentage point - for no apparent reason other than the pullback in the stock market and some normal weakening in the economy. Greenspan's only job as Fed chairman is to make sure there is an adequate money supply for banks and companies. He's only supposed to be the protector of the banking system - above politics and immune to the everyday whims of corporate chieftains. But Greenspan has gotten himself trapped by allowing America - individual investors, companies, politicians and banks alike - to become too dependent on the quick riches afforded by a stock market that was enormously overvalued. - John Crudele
There were well-publicized rumors this morning [January 5] of derivative problems at Bank of America. These were, of course, denied. Since LTCM, there is no talk of derivative problems. Hear no evil, speak no evilŠ We assume that the major players have all agreed to keep all such discussions "behind closed doors." After all, if one of the major derivative players gets in trouble, all are in trouble. If confidence wanes in one institution, the entire system is in jeopardy. It's a small community and problems will be handled within this group and between the Fed, like LTCM, but importantly, outside of the public's eye. - Doug Noland
Shortly after the market opened [on January 5], rumors began to spread that Bank of America (BAC) was in trouble and we had a violent sell-off that took the S&P down about 3 percent and the Nasdaq 100 down about 3 or 4 percent. Naturally, Bank of America denied those rumors -- what else would you expect Hugh McColl (the company's CEO) to do? After all, Long-Term Capital vigorously denied the rumors about its problems. It's pretty standard practice, and my suspicion is that where there's smoke, there's fire, especially when I look at the balance sheet and the activities of Bank of America. In any case, the denial initially produced a spirited rally, which quickly fell apart after Bank of America opened and started trading lower. In addition to the problems at Bank of America, there were stories about various money market funds with exposure to California utility paper potentially having problems because of that paper being downgraded. The main thing is that now we know why Easy Al panicked and eased this week. Besides possibly targeting the stock market, there are very large problems lurking beneath the surface. - William Fleckenstein
The second reason the Fed panicked became obvious by week's end - and that was the reported bank exposure to the California utilities whose debt was being downgraded to "junk" status. The Fed has demonstrated numerous times (including Penn Square Bank and Continental Bank) that they will pull out all stops to stabilize a possible banking crisis. - Jim Stack
As we have said all along.... central banks are not in business to preserve the value of their people's money, whatever they pretend: They are there to underwrite their constituent banks' franchise and to protect them from their own malpractice. This [January 3 rate cut] was NOT a reaction to NAPM, the real economy would not have suffered in a wait until the meeting in three weeks' time. This was a response to systemic worries. - Sean Corrigan
One possibility is the Fed is terrified of watching the stock market implode and stain its legacy. Greenspan and his playmates know that they flooded too much credit into the sandbox during the LTCM debacle, Russian debt crisis, and Y2k. Each time they bailed the goofy gamblers with bad debts out, they greatly increased the moral hazard in the entire US financial system. They know they have created a monster and are trying to pull off the biggest financial coup in history by attempting to abort the consequences of a bubble. This hypothesis, if true, is frightening. First, it shows that the Fed simply is catering to the stock market speculators and not worrying about the US dollar (which is plummeting as the interest rate cut made it less competitive with other currencies). Second, if the good folks at the Fed are so deluded that they think they can control the most complex economy in history by pulling levers and pressing buttons from behind their bullet-proof curtains like a command-and-control Soviet factory manager, we are all in a world of hurt. Talk about delusions of grandeur! God help the markets if this hypothesis is correct. - Adam Hamilton
For, while we once believed that a finely shaded reading of statistical ephemera was what drove Fed monetary policy, we now know for certain that Mr. Greenspan and his banking cohorts are as obsessed as the rest of us with the performance of the stock market. And while we revered him until very recently as a true Master of the Universe, exuding calm detachment and Delphic Authority wherever he went, the Fed chairman now looks more like a nervous wonk with his thumb on the panic button. - Rick Ackerman
Greenspan made a critical mistake on Jan. 3. He lowered rates - between FOMC meetings... and by 50 basis points. These two features signaled to the markets that the problem was large...and urgent. Large problems are not solved by a single rate cut. In every case, it has taken a series of rate cuts over many months to cure a declining economy. Thus, more rate cuts are almost guaranteed. - Bill Bonner
Obviously, Greenspan, with all of his access to economic research, sees everything that we see, and what we see is a crumbling economy with earnings falling apart. The market, with its excessive valuations and misguided bullish sentiment, is about to recognize the dire outlook ahead. We believe that the market rally will fail despite the Fed's easing, and that when this happens, panic will ensue. - Charlie Minter
I need a neck brace.... On Wednesday [January 3], the Fed cut the federal funds rate in a surprise move, sending stocks soarin g..... The year was half over in a day, with many groups scoring gains matching at least half of the returns I expect for all of 2001. By Friday, the market and many industry groups gave back much of Wednesday's performance. The year isn't over, but the recession may be over as far as investors are concerned because the Fed has started to ease. - Ed Yardeni
No matter what you read or what you hear about widespread bearish sentiment, the fact is that investors and strategists have remained stubbornly optimistic, and as long as this is the case and sharp bear market rallies continue to occur, no meaningful stock market low will be established. - Marc Faber
Since the last rate cut early this month, investors have been piling into the high-yield, high-risk securities markets, allowing some of the liquidity-starved financial houses to reduce their risk, and perhaps walk the stock markets up a little bit more. Survival of the fittest my ass; this type of socialist monetary system can only reward the biggest and dumbest fools. Accordingly, it is doomed. - Ed Bugos
A 'sound' banker, alas!, is not one who foresees danger and avoids it, but one who, when he is ruined, is ruined in a conventional way along with his fellows, so that no one can really blame him. - John Maynard Keynes [1931]
If the old sages of capitalism used to say that there are no gains without pains, such as saving, investing and laboring, the message of this new Wall Street model makes, of course, much more cheerful reading: Consume and borrow as much as you can, and just buy stocks to get rich. This is an insult to economics. - Kurt Richebacher
Confident of an era of permanent prosperity, protected by The Maestro himself, consumers cut savings rates from about 9% in 1991 down to nearly zero in the year 2,000. Household debt service rose to 13.7% - near an all-time record. Durable goods spending had been between 22% and 26% of GDP from '50 to '95. Last year, it hit 30%.... Looking at the 5-1/2 years from the beginning of '95 to the middle of last year, GDP rose $2.7 trillion. But corporate and consumer debt rose $4.7 trillion. And total credit and debt creation rose $8.9 trillion. The entire nation - anticipating the Greenspan Put - dared to spend and go into debt as never before in history. Is there anyone in America who still needs a new gas- guzzling SUV or pick-up? Is there anyone who failed to refinance his house when the real, net cost of borrowed funds was a gain of 15% per year? Now that the net, real cost of borrowed funds is closer to a loss of 30% - will people rush to refinance, merely because Mr. Greenspan has cut the Fed Funds rate by half a percentage point? People are saturated with confidence in the Fed chairman. They can only be disappointed. - Bill Bonner
For the year [2000], we estimate that Dollar Trading Volume for the U.S. market finished at 329% of GDP, two-and-a-half times higher than in 1929.... The S&P 500 represents 85% of the American stock market and ended December 2000 at 1328, the same price it ended July of 1999. In that span of time, equity mutual funds realized a net inflow of $409 billion!!! If that amount of money cannot buy price appreciation, what amount can?! More likely, no amount can now buy significant price appreciation and no amount can now prevent stocks from falling to their fair value. - Alan M. Newman
A common characteristic of financial crises is that most market participants fail to anticipate them. If they did, the crisis wouldn't materialize, for the majority of market participants would take countervailing actions that, collectively, would mute the developing turmoil. Only a few see the storm approaching. The vast majority - after contributing to the making of the crisis in the first place - are caught off guard when the tempest hits, and suffer the consequences accordingly. - Henry Kaufman
In 1998 the world was suffering a deflationary collapse. Prices collapsed for commodities, prompting credit defaults. We'd seen this happen many times before in history. But the difference this time was the Fed stepped up to the plate and eased the crisis. And yes...I know that in the long run this will have consequences... resources that should have been forced into bankruptcy will continue to produce marginal products, making it difficult for new, more efficient producers to survive. See Japan for the last 10 years. But the question remains, if the Fed is able to produce liquidity...how can the world spiral into a deflationary crisis? It would seem to me that the real risk will always be an inflationary crisis because this is something that the Fed cannot immediately solve. - Porter Stansberry [Nick's comment: I think we're about to find out. An "inflationary depression"? Possibly.]
In hindsight it is glaringly clear that the "hedonic" price indexing, by keeping the inflation rate significantly lower than otherwise, has played a key role in fueling the stock market boom. First of all, it delivered the necessary froth for the perception of economic miracles happening to the U.S. economy. Second, and most important, the resulting lower inflation rates gave Mr. Greenspan the green light that he wanted and needed to pursue his reckless policy of vastly excessive monetary looseness. An inflation rate 1-2 percentage points higher would have compelled him to prick the bubble with tighter money long ago which would have been best for America and the rest of the world. The true, key source of this fateful boom and the bubble is all too conspicuous in the monetary data. Since 1995, broad money has increased a stunning $2.6 trillion, or 60%. Total credit supply has surged $9.3 trillion, or 54%, to $26.5 trillion. But the most violent crescendo has taken place since late 1998, after the Fed's easing in the wake of the Asian-Russian crisis. Broad money in the short span of time since then has virtually exploded by $1.5 trillion (27%) and overall credit supply by $5.3 trillion (25%). Compare these astronomical money and credit figures with annual nominal GDP growth since end-1998 of around $775 billion. - Kurt Richebacher
So let's cut to the chase: what's the economy going to do? It's going to fail. Probably more slowly than abruptly, but it's going to fail. Not hyperinflation. That points directly to the money as defective. Depression. Unemployment. Someone else's fault; not the money managers/creators! ....We've pointed out often enough that a fiat economy, based upon the use of "debt" as money, is bound to fail, as the perpetual creation of money, burdened with interest, to repay prior debts, cannot do anything but fail, eventually, when the debt burden becomes to great to justify further lending, even for government projects which exist for virtually no other reason. Economically, fiat currencies MUST fail! Our rulers certainly know this. - Paul Hein
As far as we can judge, we have had a dramatic slowing down.... We are probably close to zero [growth in the economy] at this particular moment. Should economic weakness spread beyond what appears likely, having a tax cut in place may, in fact do noticeable good. - Alan Greenspan [January 25, 2001]
One thing is unequivocal -- the economy has deteriorated at warp speed. Even Easy Al has stated that the growth rate is likely to be 0.0 soon. Although most of the experts can't figure out why, the reason is the stock market IS the economy. I have euphemistically stated many times that after the bubble burst we'd have a recession 15 minutes later, and that's approximately what's under way. - Bill Fleckenstein
Could it be that I am wrong? Stock prices are holding up, speculation is increasing, there seems to be a new boom in debt...could Greenspan's effort to pump up the credit bubble succeed? The answer to both questions, dear reader, is, well, yes. I could be wrong. And there could be another credit bubble inflating now. - Bill Bonner
One might have expected folks to learn something from the damage that's already been done, but these really aren't markets - it's just a casino.... for those folks who are overextended, you are getting a once-in-a-lifetime opportunity, for however long this rally lasts, to get your financial house in order. Regardless of whatever prestidigitation happens in the short run, we are headed for an economic and financial market calamity of epic proportions. All we have succeeded in doing thus far is delaying the day of reckoning, thereby ensuring that it will be worse than it had been. - Bill Fleckenstein
I would go so far as to argue that the more aggressively the Fed cuts interest rates in the present environment, the more likely it is that the bond market will decline, as will the US dollar against the Euro - and possibly quite sharply. - Marc Faber
Most economists and observers continue to misapprehend the nature of a bursting bubble. No inflation? No problem...all the Fed has to do is to lower interest rates to get the economy hot and bothered again. The trouble is, low inflation is what you get when asset prices collapse. And in a major collapse, neither lower interest rates nor tax cuts nor government spending can offset the effects of deflation. Asset prices fall when investors run out of money, find themselves too deeply in debt, and realize that the expectations they have for their investments cannot be met. At the corporate level, overcapacity and bad investments squeeze profit margins. The only possible outcome - asset prices have to fall to more realistic levels. - Bill Bonner
Repeated easing by central bankers, which is designed to combat the threat of a recession or deflation, actually ...reinforce[s] the deflationary trend, because it allows the boom in the object of speculation to continue for far longer than would normally be the case. - Marc Faber
Human nature never changes, and that fact is reflected in the mirror of all economic activity, the stock market. All lasting change is incremented, based on unfolding traditions and developing institutions. Revolutionary upheavals may change how the world looks but seldom change the way the world works. Lasting historical change comes not through tidal waves but through the irresistible creeping tide. - Richard M. Nixon
When Wall Street first crashed in October-November 1929, it took more than a full year until the disappointing development of the economy and the stock market began to alarm people. Many had hailed the crash as a healthy shakeout of speculative froth. In Japan's case, the Bank of Japan raised its interest rate between May 1989 and August 1990 in big steps from 2.5% to 6%. While the Nikkei 225 peaked at end-1989, it took considerable time for these hikes to have visible effects on the economy. Despite plummeting stock and land prices, well into 1992 it looked like a soft landing for the economy. Real GDP growth was 5.1% in 1990 and still 3.8% in 1991. - Kurt Richebacher
Close your eyes and try to picture a financial calamity on a scale with the Great Depression. A quarter of all men without jobs...soup kitchens...10,000 banks close their doors. All that comes to my mind are black and white Depression-era photos. Well, it won't be like that. People do not dress as well today. And they drive better cars. And banks can't go bankrupt, or can they? But what difference would it make? No one has any money in banks anymore. My own grandfather was wiped out when his bank in downtown Baltimore failed in 1931. I can't imagine that happening to me. I put my money in mutual funds, stocks, real estate, and federally-insured CD's! I'm so much smarter than my grandfather. And the Fed is so much smarter than the Fed six decades ago. And the new Bush administration is so much smarter than the old Hoover gang. And investors are so much smarter, too. Rather than panic and sell out - they hold their stocks for the long ter m...and even buy the dips. Gosh...I can't even imagine how dumb people were back then - as dumb as the Japanese since 1989. But I can't imagine that either. In fact, with today's investors, today's Fed, today's enlightened economists, I can't even imagine a financial catastrophe of any sort. - Bill Bonner
I have always thought that if, in the lamentable era of the 'New Economics', culminating in 1929, even in the very presence of dizzily spiralling prices, we had all continuously repeated, 'two and two still make four', much of the evil might have been averted. - Bernard Baruch
The discussion on the strength of the Euro in all the financial press world-wide misses the root cause in the strength of the Euro. The strength of the Euro comes from the change in withholding and reporting requirements burdens placed on non-US holders of US Cash, US Negotiables and US financial instruments and US securities. Money is flowing into the Euro, and nobody will either hold dollars or dollar instruments given the enormous risk of seizure by the US government, with almost no recourse, if a whole new family of documents cannot be filled out correctly.... If nobody will hold US dollars because of the risks of US Government seizure of funds that might never even enter the US, the US is going to have a very difficult time remaining a power in world financial matters. As seen from London, the glee is unrestrained as the City gears up to take money that has fled or that is fleeing the US. - Rodney T. Cox
In the 12 years leading up to January 1980, gold had risen at an average annual rate of 30% per year. But the inflation rate was only an average of 7.5% during that period. The 12-year return on gold exceeded the return on stocks in any 12-year period in history. And at that end of it, there was more money invested in gold than in the entire U.S. stock market. By 1980, many investors were convinced that gold was the only true money and that it would go up forever. "Gold is indestructible," they would say. "Gold is forever," they chorused. "Remember the golden rule," they chided: "He who has the gold, rules!" And so, they bought gold...and have regretted it for the last 20 years. - Bill Bonner
Central Banks have done a remarkable job of breaking the psychological "link" between gold and inflation by methodically selling reserves. We doubt they can break or control that same link with currencies. Currency gyrations, when they hit, are often fast and furious. A perfect example would be the sharp spike in gold prices during the Asian Crisis of 1998. And with our own trade deficit surprising most economists by hitting a record $34 billion last month, we hardly think such currency crises are over. - Jim Stack
The main thing we miss today is universal money, a standard of value, the link between the past and the future and the cement linking remote parts of the human race to one another.... The absence of gold as an intrinsic part of our monetary system today makes our century, the one that has just passed, unique in several thousand years. - Robert Mundell [economist]
Power blackouts in California? Emblematic of the failure of the New Paradigm, California will begin rationing power rather than allow prices to rise and clear the market. All the billions of IT spending...and all the genius of Silicon Valley...were not enough to overcome the titanic imbecility of California lawmakers. - Bill Bonner
At least 210 Internet companies folded in 2000; nearly 60% of the shutdowns occurred in the fourth quarter of the year; at least a quarter of shuttered properties are seeking buyers for their assets; December's shutdowns involved at least $1.5 billion in sunk investments; between 12,000 and 15,000 employees lost their jobs as a result of the company closures; 55% of shutdowns involved e-commerce companies; 30% involved content companies. - Webmergers.com
My son, a college student, alerted me to the AllAdvantage business plan when he told me that his friends were all getting checks for surfing the web. He then explained that they had rigged up their computers to surf while they were sleeping. Hmmm...my quick wit thought it detected a problem. What kind of commercial advantage could you get by paying people to surf the net in their sleep? Well, none. In the first quarter of last year, for example, AllAdvantage sent out $32.7 million in checks to its drowsy members. It collected $9.1 million in revenue. Hmmmm, again. And now, the company seems to have hit a landmine. - Bill Bonner
About 1.3% of the population is addicted to cocaine - the same percentage as in 1979, a few years before the Drug War, and the same percentage as in 1914, when cocaine was sold legally in grocery stores. - John L. Kane [Federal judge]
Fortunately, however, there is a law highly correlated with a
sharp drop in multiple killings: a shall-issue or right-to-carry
concealed hand gun law. This kind of law mandates that if a
citizen meets certain objective criteria like age and no criminal
history, then he or she shall be issued a permit to carry a
concealed handgun if he or she applies for one. The number of
mass public shootings plummets by 85 percent, mass murders drop
89 percent, and injuries plunge 82 percent in the 14 states that
have adopted shall-issue carry laws between 1977 and 1995, according to a thorough study by William Landes of the University
of Chicago and John Lott of Yale University.... Most of the
decline comes in the first year of the law, leaving little doubt
about the cause, although the effect increases the longer the law
is in effect. - Morgan Reynolds
The eight years of Clintonism were a demonstration case of the abuse of power. The president took money, in the precincts of our own (not his own) White House, from shady individuals and still doesn't feel that he owes anybody an explanation. He treated members of his staff, some of them apparently compliant but some not, as comfort women. He circumvented his own military and intelligence chiefs to carry out a scandalously contrived bombardment of Khartoum, Sudan, in such a way as to influence his own court calendar. He lied in a blatant and vulgar way to his cabinet, to Congress, to the courts and to a grand jury. He grossly politicized the Department of Justice at which he had once installed his crony Webster Hubbell. He and his lovely wife employed paranoid and McCarthyite rhetoric when confronted with any of the above facts, and have still not offered a word of contrition to those they insulted by doing so.... The Clinton years were a degradation of the idea of a democratic republic. They showed us how far a president can go, in the Peronist direction, if he is lucky with the media and Wall Street and the treasury all at the same time. - Christopher Hitchens
Reagan did the B-movies first and then the presidency. Clinton will do the presidency and then the B-movies. He has to be in the limelight, and he'll do whatever it takes to get there. - Dolly Kyle Browning
In truth, both liberals and conservatives these days too often exchange rational argument and political debate for highly manipulative hyperbole and name-calling. The goal of conservatives is to pin the gay-cozy socialist tail on the donkey and the goal of liberals is to find a racist with an elephant's hide instead of white sheets. One reason for this, we suspect, is that we are increasingly unable to address one another in language other than that of advertising and propaganda. - Sam Smith
Linda Chavez has only herself to blame for the fact that she won't be the next secretary of labor. Frankly, she should have known better. She should have known better than to open her heart to a stranger in need. Let alone a stranger who had just spent 10 days in a shelter for battered women. Let alone a battered woman who couldn't speak English, had very little money, and was fleeing a country racked by civil war and political murder. What was Chavez thinking? Was she out of her right-wing mind? How could she and her husband have allowed Marta Mercado to share their home while trying to get her life in order and obtain a green card? How could she have driven Mercado to English classes? Or showed her how to get around on the subway? Or occasionally given her -- of all things! -- spending money? She must have been deranged to think she could extend such compassion to another person and get away with it.... Real Washington players know that only a fanatic behaves like that. - Jeff Jacoby
But one thing I do not regret is taking Marta into my home at the request of one of my friends who knew of her plight. I would do it again today. And if there is any consolation in having lost out on the chance to become secretary of labor, it is knowing how well Marta is now doing. The battered woman who came to live with me a decade ago - an illegal alien, separated from her children, penniless and speaking little English is now a confident, middle-class, suburban housewife married to an American citizen. - Linda Chavez
According to.... an expert on Asian affairs.... [President Bush's
choice to head the Labor Department, Elaine] "Chao and her father
[James S.C. Chao] have extensive personal ties to communist
China's President Jiang Zemin -- contact described as 'regular'
and 'deep.'" The source also said "the relationship with Jiang
stems from Ms. Chao's father, James S.C. Chao, who attended
college with the Chinese president before fleeing for Taiwan in
1949, in advance of the communist government takeover of the
mainland." ....Should this revelation doom Ms. Chao's Cabinet
nomination? That's not for me to say at this juncture, but chief
among President-elect Bush's considerations ought to be the exact
nature of this relationship coupled with Beijing's known objectives.... If, despite this information, Bush's Labor pick sails
through Senate confirmation without so much as a whimper from
Republicans, they will have made a decision to misplace partisan
loyalties above the best interests of 280 million constituents.
And they will have done so despite a decade of known Chinese
infiltration and counterintelligence efforts at the highest
governmental levels. When Clinton did that, it was political
sacrilege. It ought to be now, too, in a Republican administration. - Jon E. Dougherty
Whether one calls this a "new bull market" or an extension of an old bull market is irrelevant semantics. (But it will keep the bull flying.) The point is, what we have here is a playable bounce.
Is it possible that the Fed has reflated the bubble to the point where it will really take off again, with new highs in all the averages and the Dow pushing 16,000 to 20,000? Yes, that's possible, especially if the Fed has succeeded in reversing the descent into recession, and the recession is a mild one, followed by a slow climb back, similar to the recovery from the 1990 recession. In this case, all that newly-minted money really will have no place to go but into financial instruments. But for the moment, I'll opt for a Japanese outcome.... a big bounce before we slide into a decade-long period of malaise.
One should not expect stock-market miracles after the Fed's first rate cut. Historically, stocks will trade a few percent lower to a few percent higher three months after the first cut. It takes several lowerings of interest rates before the markets will catch fire, but they invariably are higher six months later (except during the Great Depression, when the Fed lost control). That means the stock markets will take off sometime this spring; the bond market will most likely just slowly climb upward after the first (early January) cut. What we see at the moment is a shrinking of new daily lows into single digits on both the NYSE and NASDAQ, and an improvement in advance/decline lines (on which "Timer's Trend" is based), indicating that at some unpredictable point, the markets will explode upward (and, unlike January 3, stay there for awhile).
The bear is unlikely to return before autumn, and this bullish jag could last as long as two years. Because systemic risk in the financial arena is considerably higher than normal, I feel the safest way to play the rising markets is primarily with bonds, but certainly one's "play money" can be used to dip into and out of stocks. Another safe way to play is with those FDIC-insured broker's CDs that promise to track the stock market's gains while keeping your principal intact. (The taxpayer is on the hook to make those things whole if they should turn sour.)
The Fed has given all of us another chance to get our houses in
order. When it does finally fail.... someday.... you want to be
completely out of debt (absolute top priority!), not just safely
snuggled into your safe bonds or near-cash holdings.
Original cost (adjusted): $ 4,998.21
Present value: $ 4,324.53
Increase: $ -673.68 [-13.48%]
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 -1.89%, for a compound annual rate of return of -0.12%. COMMENT on "Phoenix": As I switch from bearish to bullish, and as soon as I regained electronic access to this portfolio, I sold the Prudent Bear shares, and the portfolio is now mostly in cash. I haven't yet decided where to put the money to work (mainly, I've been too busy), but I'm leaning to SPDRs (Standard & Poor's Depositary Receipts, a.k.a "spiders"), which track the S&P averages, or to a no-load mutual fund which tracks the averages or the bond market with leverage.
B. "Professors' Investment Group (PIG)" - investment club portfolio.
SUMMARY - "PIG":
Original cost: $ 9,024.00
Present value: $15,436.36
Increase: $ 6,412.36 [+71.06%]
COMMENT on "PIG": I'm trying to convince the PIGs to sell the
Prudent Bear shares, so far without luck. 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: $12,518.85
Increase: $ 4,192.66 [+50.36%]
The performance of this portfolio (including its predecessors)
from January 1, 1987 to the present is 14.15%, for a compound
annual rate of return of 0.94%.
Anybody who owned the Warburg Pincus Japan Growth Fund during 1999 and 2000 went on a real roller-coaster ride, as the shares advanced from under $7 to $35 (as the Nikkei climbed from 14000 to 21000) and sagged back again under $7 (as the Nikkei returned to 14000). Meanwhile, back in Japan, despite the pessimism over the stock market, and an overhang of debt that still hasn't been succesfully dealt with, the underlying economy is strengthening, and this reinforces my opinion that Japan will progress to being the world's economic leader in the 21st century. They'll be the first to recover from the worldwide slump which lies ahead.... because the Japanese people are prodigious savers, while we are profligate spenders, and they'll have the capital to buy up the rest of the world at bargain prices. Even though that doesn't happen right away, I do expect a shorter-term recovery, because the Fed's money-printing will keep U.S. consumers spending for awhile, and we buy a lot of their stuff. The currency play will, I hope, provide an added kick. These shares took a big bounce upward right after I bought them, which was, of course, dumb luck.
American Century Ultra tends to track the S&P 500, and Ariston Convertible owns primarily convertible bonds and preferreds of NASDAQ-type, tech-type, "junk bond" quality.... exactly the kinds of securities I expect to benefit handsomely from the Fed's reflating. Both of these funds I expect to hold only while the Fed is on the side of the bulls, and/or while "Timer's Trend" gives the green light.
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%)
17-18May2000 rate adjustment to 7.25% in SRA
12-13Jul2000 rate adjustment to 7.5% in SRA
8Jan2001 TIAA Traditional bond@58.62 [22.77%]
8Jan2001 TIAA Traditional eq-idx@75.79 [4.56%]
Values, 30Jan2001: stock, 194.41; equity-index, 81.01; MM, 20.60; bond, 58.44; inflation-indexed bond, 31.55; TIAA current yield in SRA, 7.5% (new money at 6.5%)
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%; 1999: 5.12%
Gain, January 1 through December 31, 2000: 9.99%
Total gain since January 1, 1988 (13 years): 216.83%
Compound annual rate of return: 9.28% (My long-term target: in excess of 10%)
Gain shown excludes the impact of additional monthly cash contributions.
Buying CREF stock on January 1, 1988 and holding it gained
503.36%, for a compound annual rate of return of 14.83%.
Nothing like a winning year when nearly everybody else had a
losing year, I say. Thanks to high yields in TIAA, and a good
year for inflation-indexed bonds, my retirement portfolio increased just shy of 10% in 2000. Since the typical index fund
lost almost 10% for the year, that gives me a 20% edge, which
goes a long way toward "making up" the deficiency which occurred
by my not chasing the mania in stocks.
You will note I have lowered my "long-term target" from 15% to 10%. 15% made sense back in the late 1980s and early 1990s, when I actually earned more than that for a few years; but I am now getting close enough to retirement, and enough sub-15% years have transpired, that it is virtually impossible for me to achieve a 15% overall growth rate before it's time to start drawing on these funds. (Let's just say I wouldn't want to take the risks that might make it possible.) With a little diligence, and more willingness to play the swings in the stock market, I hope to break the 10% barrier before retirement day.
Once it became obvious (with the Fed's panic easing on January 3) that I was not going to see the Dow trade under 10,000 any time soon, and once I had concluded that the Fed will succeed in reflating the bubble this time around, I didn't waste any time in putting my supplemental retirement annuity funds to work. 40% of these funds I left in TIAA, because the 7.5% yield looks very good with interest rates being pushed downward; 60% I put to work in a blend of the CREF (corporate) bond fund and the CREF equity index fund, which tracks the Russell 3000 stock index. From January 1, 2001 onward, new money added to TIAA in the SRA will earn only 6.5%. My money is in a "tranche" which may continue to earn 7.5%; TIAA-CREF will set the new rates for the year beginning March 1 sometime in February. The funds in my retirement annuity, currently in the inflation-indexed (mostly treasuries) bond fund, I will leave there for the time being, as I expect bonds generally to do almost as well as stocks for the next two or three years, and with much greater safety.
As of switch day, January 8, the investment percentages were as follows: TIAA, 18.217%; equity index, 4.595%; bond, 22.772%; inflation-indexed bond, 54.416%.
COMMENT on NYSE "Timer's Trend": The BUY signal on December 22, 2000 is still in effect.
____________________________ NYSE TIMER'S TREND _______________________________
Wed 1 Nov 00 . |# . |10899.47 |+. *
Thu 2 Nov 00 . | # |10880.51 | + *
Fri 3 Nov 00 . | #. |10817.95 | .+ *
Mon 6 Nov 00 . | # |10977.21 | + *
Tue 7 Nov 00 . |# . |10952.18 | + *
Wed 8 Nov 00 . | #. |10907.06 | + *
Thu 9 Nov 00 .# I . |10834.25 |+. *
Fri 10 Nov 00 # I . |10602.95 + . *
Mon 13 Nov 00 # I . |10517.25 |-. *
Tue 14 Nov 00 . I .# |10681.06 |-. *
Wed 15 Nov 00 . I# . |10707.60 |-. *
Thu 16 Nov 00 . #I . |10656.03 |-. *
Fri 17 Nov 00 . #I . |10629.87 + . *
Mon 20 Nov 00 #. I . |10462.65 |-. *
Tue 21 Nov 00 . #I . |10494.50 | - *
Wed 22 Nov 00 #. I . |10399.32 |~.-*~~~~~~~~~~~~~~~~~~~~~~~~
Fri 24 Nov 00 . I # |10470.23 | - *
Mon 27 Nov 00 . I #. |10546.07 |-. *
Tue 28 Nov 00 . #I . |10507.58 |-. *
Wed 29 Nov 00 . #I . |10629.11 |-. *
Thu 30 Nov 00 #. I . |10414.49 |-. *
Fri 1 Dec 00 . I #. |10373.54 |-. *
Mon 4 Dec 00 . I# . |10560.10 |-. *
Tue 5 Dec 00 . | .# |10898.72 +. *
Wed 6 Dec 00 . # . |10664.38 +. *
Thu 7 Dec 00 . # . |10617.36 |+. *
Fri 8 Dec 00 . | . # |10712.91 |+ *
Mon 11 Dec 00 . | . # }|10725.80 |.+ *
Tue 12 Dec 00 . | #. |10768.27 |+ *
Wed 13 Dec 00 . |# . |10794.44 |+ *
Thu 14 Dec 00 . #| . [|10674.99 |+ *
Fri 15 Dec 00 . #| . |10434.96 |+. *
Mon 18 Dec 00 . | # ]|10645.42 +. *
Tue 19 Dec 00 . | #. |10584.37 +. *
Wed 20 Dec 00 # I . {|10318.93 +. *
Thu 21 Dec 00 . |# . |10487.29 +. *
Fri 22 Dec 00 . | .# }|10635.56 |+. *
Tue 26 Dec 00 . | # |10692.44 |+. *
Wed 27 Dec 00 . | . # |10803.16 |+ *
Thu 28 Dec 00 . | . # |10868.76 |.+ *
Fri 29 Dec 00 .# | . |10786.85 |.+ *
Mon 2 Jan 01 . |# . |10606.15 | + *
Wed 3 Jan 01 . | . # |10945.75 | .+ *
Thu 4 Jan 01 . | . # |10912.41 | .+ *
Fri 5 Jan 00 . | #. |10662.01 | + *
Mon 8 Jan 01 . | .# |10621.35 | .+ *
Tue 9 Jan 01 . | .# |10572.55 | . + *
Wed 10 Jan 01 . | . # |10604.27 | . + *
Thu 11 Jan 01 . | . # |10609.55 | . + *
Fri 12 Jan 01 . | .# |10525.38 | . + *
Tue 16 Jan 01 . | . # |10652.66 | . + *
Wed 17 Jan 01 . | . # |10584.34 | . + *
Thu 18 Jan 01 . | . # |10678.28 | . + *
Fri 19 Jan 01 . | # |10587.59 | . + *
Mon 22 Jan 01 . | . # |10578.24 | . + *
Tue 23 Jan 01 . | . # |10649.81 | . + *
Wed 24 Jan 01 . | . # |10646.97 | . + *
Thu 25 Jan 01 . | . # |10729.52 | . + *
Fri 26 Jan 01 . | .# |10659.98 | . + *
========================================================================
COMMENT on NASDAQ "Timer's Trend": We have a BUY signal (our
first) on January 22, 2001.
____________________________ NASDAQ TIMER'S TREND ____________________________ Wed 1 Nov 00 .# I . | 3333.39 | - * Thu 2 Nov 00 . I #. | 3429.02 |-. * Fri 3 Nov 00 . I# . | 3451.58 |-. * Mon 6 Nov 00 . & . | 3416.21 + . * Tue 7 Nov 00 . & . | 3415.79 + . * Wed 8 Nov 00 # . I . | 3231.70 |-. * Thu 9 Nov 00 # . I . | 3200.35 | - * Fri 10 Nov 00 # . I . | 3028.99 |~.*-~~~~~~~~~~~~~~~~~~~~~~~~ Mon 13 Nov 00 # . I . | 2966.72 | . - * Tue 14 Nov 00 . & . | 3128.27 | . - * Wed 15 Nov 00 . #I . | 3165.49 | . - * Thu 16 Nov 00 # . I . | 3031.88 | . - *< Fri 17 Nov 00 #. I . | 3027.19 | . - * Mon 20 Nov 00 # . I . | 2875.54 | . - *< Tue 21 Nov 00 # . I . | 2871.45 | . -* Wed 22 Nov 00 # . I . | 2755.34 @|*.~~~~-~~~~~~~~~~~~~~~~~~~~~ Fri 24 Nov 00 . I# . | 2904.38 | . - * Mon 27 Nov 00 #. I . | 2880.49 | . - * Tue 28 Nov 00 # . I . | 2734.98 | . - * Wed 29 Nov 00 # . I . | 2706.93 | . - * Thu 30 Nov 00 # . I . | 2597.93 | . -* Fri 1 Dec 00 .# I . | 2645.29 @|. - * Mon 4 Dec 00 # . I . | 2615.75 @|. -* Tue 5 Dec 00 . I# . | 2889.80 |. - * Wed 6 Dec 00 #. I . | 2796.50 |. - * Thu 7 Dec 00 # . I . | 2752.66 |.- * Fri 8 Dec 00 . I #. | 2917.43 |.- * Mon 11 Dec 00 . I# . | 3015.10 |-. * Tue 12 Dec 00 # I . | 2931.77 |- * Wed 13 Dec 00 # . I . | 2822.77 |- * Thu 14 Dec 00 # . I . | 2728.51 |.- * Fri 15 Dec 00 # . I . | 2653.27 |. - * Mon 18 Dec 00 # . I . | 2624.52 @|. -* Tue 19 Dec 00 # . I . | 2511.71 @|~*~~~-~~~~~~~~~~~~~~~~~~~~~~ Wed 20 Dec 00 # . I . | 2332.78 @|~.~~*~-~~~~~~~~~~~~~~~~~~~~~ Thu 21 Dec 00 # . I . | 2340.12 @|. - * Fri 22 Dec 00 . & . | 2517.02 |. - * Tue 26 Dec 00 #. I . | 2493.52 |. - * Wed 27 Dec 00 . #I . | 2539.35 |. - * Thu 28 Dec 00 . & . | 2557.76 |- * Fri 29 Dec 00 . I # | 2470.52 |-. * Tue 2 Jan 01 # . I . | 2291.86 | - * Wed 3 Jan 01 . I #. | 2616.69 |-. * Thu 4 Jan 01 . I# . | 2556.83 + . * Fri 5 Jan 00 #. I . | 2407.65 |-. * Mon 8 Jan 01 # I . | 2395.92 | - * Tue 9 Jan 01 . I# . | 2441.30 |-. * Wed 10 Jan 01 . | # | 2524.18 |-. * Thu 11 Jan 01 . | . # | 2640.57 + . * Fri 12 Jan 01 . | # | 2626.50 | + * Tue 16 Jan 01 . | .# | 2618.55 | .+ * Wed 17 Jan 01 . | . # | 2682.78 |~.~+~~~~~~~~~~~~~~~~~~~~~~~~~~~~* Thu 18 Jan 01 . | . # | 2678.49 |~.~~+~~~~~~~~~~~~~~~~~~~~~~~~ Fri 19 Jan 01 . | # | 2770.38 | . + * Mon 22 Jan 01 . | # }| 2757.91 | . + * Tue 23 Jan 01 . | . # | 2840.39 | . + * Wed 24 Jan 01 . | . # | 2859.15 | . + * Thu 25 Jan 01 . # . | 2754.28 | .+ * Fri 26 Jan 01 . | .# | 2781.30 | .+ * ---------------------------------------------------------------- ========================================================================"Timer's Trend" is based on 4% and 10% exponential moving averages of the New York Stock Exchange or NASDAQ advance/decline lines (that is, the ratio of advancing to declining stocks). There are many symbols shown above, but the ones that count are the braces:
NEXT ISSUE - will appear about February 28. /Nick Chase