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
Even after my wife's father died (second parent to die), we kept the two lines because my wife liked to still be able to reach me (and have other people get through) while I was "on the computer". This became even more essential when I became "the world's oldest webmaster" (as I like to tell people when they ask me what I do for a living) in the early 1990s, with the advent of the browser and the subsequent rapid commercialization of the Internet, and I could be (and still can be) "on the computer" for hours at a time.
So we were regularly forking over $70 to $100 per month for phone service. $15-plus per line for the two phone lines, $20 per month for "Bay State East" service on the primary line, which lets us call for up to one hour per month anywhere in eastern Massachusetts, $10 or so per month for the minutes in eastern Mass. that exceeded the hour, and $15 to $35 per month for long-distance phone calls. In fact, "Bay State" service, when originally introduced, allowed us to call anywhere in Massachusetts (not just the eastern half) for two hours per month. Then the courts broke up AT&T, and the service shrank to exclude the 413 calling area. (A bummer, when you consider the dividing line is only three towns away.) And then the time was reduced from two hours to one, and the price went up.
When cell phones first appeared, my wife (who is a certified phonaholic) commented that she couldn't imagine why anybody would want to make phone calls in the car. Even for her, there was sanctuary in at least one place without phones.
But then she took a job at a school system with a 48-minute commute, part of which was on a very busy (and dangerous) highway which is constantly under construction, in a car rapidly approaching old age. One time, she had a flat tire and was able to reach me only because she got the flat right near a gas station which had a pay phone.
And the cost of cell phone service was coming down. Two years ago, when Bell Atlantic (now Verizon) Wireless was offering 200 anytime minutes, plus free nights and weekends, for only $30 per month with a two-year contract, and a price break on the phone to boot, I suggested that, at least for safety reasons, she should probably carry a phone with her in the car. And part of the attraction of the cellular phone was the larger (than Bay State East) calling area.... all of eastern Mass. plus a chunk of southeastern New Hampshire, plus all of Rhode Island. We figured that by using the cell phone for her non-local calls on nights and weekends (when most of them were made anyway) we no longer would run over our Bay State East minutes on our hardwired phone line. (And that turned out to be the case.) So the real, additional cost of the safety that came with carrying a cell phone was only $20 per month.
Within a month we were hooked on the convenience of the cell phone, and we considered whether I should get one, too. (I can remember, when I'd be at a daylily meeting, she would call the pay phone in the lobby and, if she was lucky, somebody might just happen to be in the lobby and might just happen to answer the phone because it might be a real call, not some psycho spouting obscenities.)
I said to her, you know, if I get a cell phone too, we wouldn't need the second phone line coming into the house. When I'm on the computer, I would be tying up the primary line, but I could leave the cell phone on, and you (or a few select friends who have the number) could get through to me. At the time, Bell Atlantic was offering 20 anytime minutes, with the first minute of all incoming calls free, and free nights and weekends, for $20 per month. Now, I am not a big user of the telephone. My cell phone would be primarily for my wife to reach me wherever I was, so this was the ideal plan for me. And the phone itself was only $30. (Ultimately not a great deal, the phone is troublesome, but what did I, as a first-time buyer, know about cell phones?)
So we did it, and we subsequently dropped the second hardwired phone line into the house. Net per-month cost: around $0.
This spring, as our two-year contracts reached expiration, we took another good look at our phone service. One of our frustrations was when we were traveling.... if we used the cell phones, we would essentially pay double long-distance charges, first a roaming charge for being outside our home area, then a long-distance phone charge for the call home. If she used her cell phone to call me on my cell phone while we were in, say, Pennsylvania, make that four times the cost. So the cell phones were essentially useless when we were on the road.
I had an additional interest: When we were away from home, I felt "detached" by not being able to connect to the Internet. Our internet service providers (my work, or the commercial ISP my wife has at a bargain rate through her work) are toll calls outside the Worcester area (for mine) or Massachusetts (for hers). For a while, there were a few nationwide free ISPs who supported the Macintosh, but with the crash of the dot-coms they disappeared. (You can still find free ISPs for the PC, but not for the Mac.)
Installing Connectix VirtualPC and Windows 95 on a travelling Mac, just for an Internet access which would be glutted with ads, was not really an option I wished to pursue. This led me to Sprint PCS, which does support the Macintosh for wireless Internet connections, though it took me a long time to get that answer out of the Sprint reps. (For you tecchies, this is a very recent change. Version 2 of the $99 wireless web kit, now shipping, has the Mac modem script and installation instructions for the Mac, eight pages' worth, in the user manual. The installation instructions for the various flavors of Windows fill up 65 pages. Mac users also need an adapter, not available from Sprint, to convert from a 9-pin serial COM-port connector to a round 9-pin ADB serial connector for older Macs, or a USB connector for newer Macs.)
The clincher, however, came with the service plans. Verizon is currently offering "unlimited nationwide long distance" in a 1500-minute-per-month plan for $40 per month..... but with a catch: You have to make your calls from inside your home area, now expanded to include the Northeast down into the DC area, to get the "free" calls; elsewhere in the country, you pay the usual roaming and long-distance charges. Sprint is currently offering a 1200-minute-per month plan for $35 per month that includes "real nationwide long distance" from calls made anywhere in the country, as long as you are using their cellular network.
Now, $35 per month is more than the $20 per month of my old Verizon plan. But that plan isn't available any more.... no more free nights and weekends.... and I would have to sign up for at least $30 per month to get enough minutes for equivalent service. (Guess Verizon had to cover the cost of that expanded home calling area somehow.) But look at the increased convenience for us.... on the road, with Sprint we could stay completely in touch with friends at home. Every call, in our out, would be a "local call", as long as we used my phone. And for me, I would be able to make "local calls" to connect to our Internet service providers.
Then, after we checked a few months' phone bills for our hardwired line, and discovered that $15 per month was the minimum for our long-distance calls, we realized we would never need to make a domestic long-distance call on the wired phone again.... just pick up my cell phone, we'd never use up that 1000 off-peak minutes. Net cost of the new plan (before wireless Internet access): about $0.
So I decided to switch to Sprint. My old Verizon (Bell Atlantic) phone was bulky in my pocket, and would frequently unlock itself under friction pressure. My new phone is a much smaller Samsung 8500 with a closable cover and a much easier-to-use interface. After rebates, it was only $50.
The wireless web (data) interface is free for three months under my plan, after that will cost $10 per month. This added cost is well worth it, in my opinion, for the added functionality and freedom of (admittedly slow) Internet access from anywhere. Imagine my surprise when I found I could connect to my and the PIGs' brokers using only the cell phone, even before I had hooked it up to my Macintosh PowerBook. The prices of the stocks shown in the portfolios in this month's issue of The Contrarian's View, for example, I obtained through the cell phone's web interface (while I was doing my classical-music radio shift).
My Sprint plan also includes 50 free messages per month, so I set up a tailored Yahoo! web page (per Sprint's directions) to get the closing stock market indexes sent to me at 4:15PM each business day. This doesn't work, and Sprint can't seem to get it to work for me. I surmise the marketing types started selling this feature before the tecchies could get it working properly on a large scale.
Since my wife is now month-to-month with her Verizon cell phone (no more free nights and weekends for her, either), I suggested to her that if she signed up for Verizon's $40 plan, we could drop Bay State East service on our hardwired line.... because she'd get ten times the minutes of Bay State East during off-prime time, and (if she chose to use them) one and a half times the minutes during prime time, beyond what her current plan offers. And when we travel, at least through the Northeast, we can keep in touch by cell phone when we're in different places. She agreed, and we're going to do it.
OK, Nick, you say, enough about your phones. What's your point? And why is my phone company in trouble?
The point is: Back in the dark ages, we were paying about $75 per month minimum for our phone service. Shortly, we will be paying about $99 per month ($16+$35+$40+taxes), eventually $110 per month after I begin paying for my data-connection service, but we are virtually guaranteed we will never see those $130-per-month bills we used to get a decade ago in months with a lot of long-distance calls. After adjusting for inflation, the cost of our communications is coming down. And look at the increased functionality: The security of assistance being only a phone call away when you're driving alone. Keeping in touch with each other and with friends when travelling. Internet access anywhere.
In five to eight years, what I see is: You pull out your Palmphone with its glorious full-color screen and press a button to connect to the web (your cellular provider is also your ISP). A quick check, no new e-mail messages. You call up your portfolios to see how they're doing for the day, and look at the graphs of the indexes. In your reminders, you see that you should call to schedule the dog's rabies shot; a single button-press fetches the vet's number from the phone book and places the call.
At work, you put the Palmphone into its cradle to connect it to a keyboard, mouse and large flat-panel display. While you're there, you're wirelessly connected to the organizational network, at no cost to you, of course. (No need to "connect to the computer".... your Palmphone is the computer.) When you're not at work, you can call or connect to the Internet anywhere, all for a flat monthly fee.
The reason your long-distance phone company is in trouble is that the per-call cost to you of making long-distance phone calls is rapidly approaching $0. In the not-too-distant future, you will be able to connect to anywhere in the country, for any length of time (or at least for a very large number of minutes) for a flat monthly fee, just as you pay for your Internet access now. If your landline phone company won't do it for you.... which it probably won't, it's too hidebound.... then your cellular company will. And if the cellular companies won't do it, then you will see little boxes on the market that will allow you to place long-distance calls over the Internet. However it comes about, per-call charges for domestic long distance are a dying entity.
AT&T shareholders, you may have noticed a rather substantial cut in your dividend. Given that the cash produced by the company's cash cow is threatened, I wouldn't expect a dividend increase anytime soon.
The reason your local phone company is in trouble is that people are rapidly switching to cellular to make more of their calls. The add-on services provided by your landline company - "Bay State East", "Circle Dialing", or whatever - are rapidly becoming obsolete. There's no need to pay extra to have a reasonably-sized calling area when the cellular outfits will let you call all over a multistate area for a fixed cost. (I calculate that, for last month, our Bay State East minutes used cost us about 80 cents per minute, double what we would have paid for using the cell phone if we had run over our minutes allowance in the plan, which we didn't.)
Remember, your local phone company loses money on providing basic hardwired telephone service into your home. It makes money on the add-ons such as Touch-Tone, Caller ID and the various wider-area calling plans, plus intrastate long-distance calls outside your calling area. Cellular service threatens this. Because it's regulated, your local company is "guaranteed" a profit, though as usage of the add-ons falls away you may see the cost of "basic" service rise sharply, perhaps to the point where you'd no longer want to keep it.
If your local company is both a landline and cellular provider (Verizon or Sprint, for example), its business is secure, but as more of the usage shifts to cellular, where the competition is fierce and where the profit margins will eventually be slimmer, the overall profit margin of the company will shrink. If your local company does not do cellular, it has a problem. If you are invested in a company most of whose revenue stems from long-distance phone service, you have a problem.
Is there a way the landline phone companies can reinvent themselves in the cellular and Internet age? Yes, I think there is, if they move to improve DSL service for Internet connections. Currently it's cantankerous and limited. (At our home here in Worcester, the financial backwater of America, we are too far away from the phone company's central office to get DSL, and we're in the city.) They need to figure out, quickly, how to make DSL more reliable and how to get it to more people.
Even then, they will face fierce competition. Currently cable (through a cable modem) is, in my opinion, the best way to get high-speed Internet access into the home. But it's expensive - here in Worcester, $40 per month for the (useless to me, and unwanted) cable TV programming, which we must buy before getting the $30-per-month Internet-service add-on. (If you already have and enjoy cable TV, the $30 add-on cost is competitive with DSL.) Cable modem speeds are 10 megabits per second into the house, 3 megabits out, as long as too many of your neighbors aren't logged in. DSL speeds are similar, without the drop-off as people log in.... when it works right. So your local phone company should have an edge here, if it can get its act together.
But other competition looms. Internet service by satellite is now available, providing about 1 megabit per second into the house and 300 kilobits out, for around $70 per month. Not as fast as cable or DSL, but a lot better than a 56K modem. But it's currently available only for the PC.... no Mac or Unix/Linux support.... and it's not clear if you can use it on more than one computer at a time in the home. I expect to see more competition and much better service in this area very soon.
And then we have wireless internet access by cell phone. Today this is really poky - 14.4 kilobits per second - not fast enough to do any really useful work (other than e-mail), especially on those web sites that are loaded up with useless graphics. But the cellular network is being upgraded (in two stages), and in about three years I expect to see wireless Web access speeds that will compete with those now provided by the satellite services.
If you want my opinion, I think that eventually the wireless people.... cellular and maybe satellite, but mainly cellular.... will win out here, too, for two main reasons: (1) convenience - using your Palmphone, you will be able to seamlessly shift from your wireless network at work, to the cellular system on the road, to your private network installed in your home; and (2) building the facilities to transmit signals through the air is much cheaper than running and performing maintenance on wires to everybody's houses, or (with the possible exception of cable) adding the equipment to get high-speed Internet flowing through those wires.
How might I invest in this? I see fierce competition ahead, rapidly declining cost to the
consumer and slim profit margins in the business of providing high-speed data access. I think
the hefty profits will be made by the people who create the Palmphones - or maybe the
software for the Palmphones - just as previously, obscene profits were garnished by the
makers of computer equipment and software. There will be a built-in one- to three-year cycle
of technological obsolescence for these gadgets, particularly when it's something you have
with you all the time, it's become very personal. With so many new features constantly being
added, people are going to want to keep upgrading their Palmphones to the latest thing.
By intervening in the money market aggressively and cunningly - thereby introducing new speculative flows into equities - the Fed has given its seal of approval to a stock market that many investment professionals refused to touch even with other people's money. - Jim Grant
Since its birth in 1913, there are 10 occasions when the Fed has made 4 consecutive Discount Rate cuts. In 9 of those 10, the DJIA was higher 18 months later - and by an average of +35.5%. The sole exception was 1930 as the economy slid into a depression and the DJIA lost another 50% in 18 months. So what your investment decision boils down to is this: The only way to bet AGAINST a bullish scenario right now is to bet IN FAVOR of a deflationary accident. - Jim Stack
I think it's clear that since the secular market peaked (as an aggregate) last year, the Fed has been playing a dangerous game. They're trying to walk a tightrope between a Weimar (Germany, circa 1923) hyper-inflation, and a U.S.-style deflation (circa 1933). It might look possible on a back room research paper, but it's not like catching a falling knife that someone is holding in front of you. It's more akin to trying barehanded to catch a knife dropped off a 10-story building. This, due to the velocity of money and today's "point & click" decision making and trading. - George Ure
The Federal Reserve is often not in control of things, particularly in the short run. Sometimes the markets are in control of events rather than the other way around. We only have one pill [the federal funds rate] and that is not always suitable to all circumstances. - Paul Volcker
Recently, M2 and M3 growth has skyrocketed... (M2 +11.3%, M3 +13.2% 3 month annualized growth rates as of February 25). This monetary surge is equivalent to those that accompanied the Fed's Y2K credit expansion over a year ago, or the late-1998 LTCM bailout. Those were bullish events for the U.S. equity market... that is, until the monetary binge ended. Those previous two episodes coincided with an expansion of Federal Reserve Credit.... An increase in Fed credit is supposed to be associated with a lower fed funds interest rate and higher money supply growth. A decrease in Fed credit is supposed to be associated with a higher fed funds interest rate and lower money supply growth. That's the theory. This year, reality has contradicted theory. The Fed has cut the fed funds rate 100 basis points - but Fed Credit has declined 2%.... The bulge in the money supply is not coming from Federal Reserve operations.... Also, the money supply bulge cannot be fully attributed to the banking sector - commercial bank credit is up just $28.4 billion (0.5%). The double-digit annualized percentage gains in U.S. money supply must have another source. That source appears to be Fannie Mae - the U.S. housing lender. We.... think [this] is probably bullish now (for equities, not bonds) and Apocalypse Later. Credit expansions are usually bullish for equities. - Michael Belkin
The Fed is cutting interest rates in the face of the rising inflation rate. This is something new. We think that great things lie ahead for the CPI. - Jim Grant
We have a recession. The government numbers that were released Friday [April 27], of course, don't show the economy retreating. In fact the 2 percent growth in the nation's gross domestic product during the first quarter was so far above the 1 percent Wall Street was expecting that bonds went into a tailspin.... But anyone who lives in the real world - which doesn't include any address near Wall Street or anywhere in Washington where you can see a monument - knows what the economy is really doing.... how did the Commerce Department come up with economic growth of 2 percent - which not only indicates that the U.S. is nowhere near a recession but that business conditions are pretty good? It's a cruel trick. First off, the bulk of the 2 percent GDP gains came from improvement in the trade deficit. Without that, growth would have been a mere 0.4 percent. And the trade deficit number, you need to know, is 98 percent guesstimate.... On top of that there's the miscalculation of inflation.... If all the statistical trickery was taken out of the way the government calculates inflation, GDP would have gone negative 1 percent - or maybe even 2 percent.... And the fourth quarter of 2000 would probably also have had a contracting economy. - John Crudele
Recessions are like earthquakes. Little ones do not do much damage, but big ones are horrible. In both cases, lots of little ones is the way to avoid a big one. The Fed has failed America, not because it has been unskillful, but because it has been trying to do the wrong job. When economies avoid recessions for a long time, then euphoria takes over. Stock markets rise to absurd heights and lending gets out of control. Japan's troubles started when the so called Izanagi Boom came to end. This was probably its longest uninterrupted boom ever. The US has followed in Japan's footsteps. In little more than a decade we have had stock market bubbles in Japan, South-East Asia and Wall Street. Those who ignore history are condemned to relive its troubles. Central bankers should learn that they must watch asset prices as well as the cost of living. - Andrew Smithers
The mania has for all intents and purposes, ended. The greatest bull market in history is now undeniably over, taking with it a secular bull market that has endured since 1982. It is time for the recognition phase of the bear market to commence. For months, investors have been like deer caught in the headlights in the middle of the road, frozen by incomprehensibility, unable to understand what is happening and unable to act. Now, as investors lie by the side of the road, we expect they will soon examine their wounds and act in disgust. We should expect an entire generation of investors to now swear off stocks. From the Beardstown Ladies, to day trading housewives to sixth-grade trading contestants, the world will return to normal. - Alan M. Newman
Certainly the market is undergoing a very serious reversal. One indicator is the television ads for brokerage firms. A couple of years ago they were smug, with the underlying message, "You too can be rich". Now they focus on how smart they are and how safe your money is. The message would resonate stronger if they hadn't been so stupid with your money in the first place. - John Myers
Based on the latest 10Q's and 10K's coming in their door, the NASD Research Department calculates that cumulative earnings for all 4800 domestic stocks traded on the Nasdaq Exchange have fallen to $8,934,115... down 67% from $27,129,247 at the end of last year. This, naturally, has sent the calculated P/E Ratio soaring [to 288]! So while there are "values" appearing out there on Wall Street, one must stretch their imagination to include very many of the high techs among them. - Jim Stack
People who bought tech stocks, or any other kind of stocks, because they think it's going to go up next year, or because their neighbor told them to do it - they should get out of the investment world. That is not a way to make money over time. - Charles Munger
What did corporate America really get for all the billions spent on routers, computers and software? What did it gain from all the preaching, hectoring and lecturing it endured from the oh-so-superior technophiles? Probably not much. But for a while, the spending had a very flattering effect on corporate income statements as well as on productivity levels. Capital investments, unlike consumer spending, are treated as current income by the seller, while the cost is expensed, over time, by the buyer. The net effect is to leave businesses with higher profits in the short-run, but expenses spread out for years to come. These expenses should be offset by higher levels of productivity and future profits - but, in this respect, IT spending could be a big disappointment. - Bill Bonner
We are currently looking for a new owner for the following defunct websites' subscription
newsletter userbase. I thought they might be of interest to you. We are looking for 20 cents
per user: 8,000 users, mostly small-cap investors who received a bimonthly newsletter with
stock tips and advice and other investment information. - Tom Samco
Now that we've experienced the initial surge, unfortunately I'm not expecting a lot of upside action through the summer. I expect overall modest upward pressure on stock prices (which pundits will interpret as a "summer rally", a creature that's mostly myth) into August, with a correction in September or October. At some point in October, prices may be at the same level they will be at some point in May.... that is, with the Dow nudging 11,000 and the NASDAQ in the low 2000s. I could be wrong about this.... indeed, I would like to be proved wrong and see a bigger rally, my retirement day is coming closer.... but I don't expect to be.
The bigger price gains will have to wait for the (historically-favorable) November 2001 through March or April 2002 period. The bond-market rally, though still intact, is also weaker than I would like, indicating that the Fed is winning in its efforts to reflate the economy by destroying the currency, and higher inflation rates probably lie several years ahead.
Since I have been incorrectly categorized as a permabear, my biggest task may be convincing those who remain bearish that the benign outcome I anticipated is coming to pass, and will continue to come to pass. You mean, this is it? We've seen the biggest financial mania in history, and there's no ugly downside? No granddaddy bear market? Stocks will not be selling at undervalue? No depression? Just a relatively benign postwar-style bear market, followed by more Fed-induced bullish bullshit? Those "buy on the dips" dips are going to be proved right once again? (Aarrrgh, I can't stand it!!)
Well, not quite. The Fed has bought itself an aborted recession at a very high price. The current "bull market" begins from a very high level of stock prices, prices which prior to 1993 would have been considered outrageously overpriced. This bull market depends on the Fed inducing people to again drive stocks from overvalue to extreme overvalue, and in my opinion they won't be as successful as the last time around (though some stock averages will see new highs). The trend has changed, but we're talking about a decades-long reversal here, and it takes awhile for the new trend to become clear. Also, the Fed, through its actions, is substituting systemic risk for market risk, presumably on the theory it has much better control over the latter. That remains to be seen; I feel the Fed's eventual failure is inevitable, though unpredictable. (Just not right now.)
As for the benign nature of the recent bear, that depends on one's point of view. You will note
that in my retirement funds, where I am widely diversified, in the first quarter of 2001 I
suffered a 2.1% loss, only the second quarterly loss for me since TIAA-CREF first permitted
switching in 1988. I'm very cautious in investing these funds and I'm not used to losses. I
can see why someone who had his or her retirement funds "invested" in the equivalent of a
NASDAQ index fund (40% or greater loss in the bear; three years down the tubes) might be a
tad peeved.
Original cost (adjusted): $ 4,998.21
Present value: $ 4,180.64
Increase: $ -817.57 [-16.36%]
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 -5.15%, for a compound annual rate of return of -0.36%. COMMENT on "Phoenix": There is no change since the last issue
B. "Professors' Investment Group (PIG)" - investment club portfolio.
SUMMARY - "PIG":
Original cost: $ 9,024.00
Present value: $15,268.30
Increase: $ 6,244.30 [+69.20%]
COMMENT on "PIG": I have not yet bought the $1000 worth of a mutual fund holding
Japanese stocks. (With Japan, there doesn't seem to be any great rush. It will get done.)
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: $11,033.24
Increase: $ 2,707.05 [+32.51%]
The performance of this portfolio (including its predecessors)
from January 1, 1987 to the present is 0.68%, for a compound
annual rate of return of 0.04%.
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%]
1Feb2001 i-i bond@31.78 eq-idx@80.84 [26.76%]
Values, 30Apr2001: stock, 177.31 equity-index, 73.85 MM, 20.86; bond, 59.17; inflation-indexed bond, 32.79; TIAA current yield in SRA, 7.5% (new money at 6.5% through June 30, 2001)
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%; 2000: 9.99%
Gain, January 1 through March 31, 2001: -2.10%
Total gain since January 1, 1988 (13.25 years): 210.19%
Compound annual rate of return: 8.92% (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
426.15%, for a compound annual rate of return of 13.36%.
COMMENT on NYSE "Timer's Trend":
We currently have a BUY signal on April 18, 2001.
For the moment, it looks like my trend-bucking in March has paid off.
____________________________ NYSE TIMER'S TREND _______________________________
Mon 29 Jan 01 . | . # |10702.19 | . + *
Tue 30 Jan 01 . | . # |10881.20 | . + *
Wed 31 Jan 01 . | . # |10887.36 | . + *
Thu 1 Feb 01 . | . # |10983.63 |~.~~+~~~~~~~~~~~~~~~~~~~~~~~~~*
Fri 2 Feb 01 . | # |10864.10 | . + *
Mon 5 Feb 01 . | . # |10965.85 | . + *
Tue 6 Feb 01 . | . # |10957.42 | . + *
Wed 7 Feb 01 . | # |10946.72 | . + *
Thu 8 Feb 01 . | .# |10880.55 | . + *
Fri 9 Feb 01 . | # |10781.45 | . + *
Mon 12 Feb 01 . | . # |10946.77 | . + *
Tue 13 Feb 01 . | .# |10903.32 | . + *
Wed 14 Feb 01 . | # |10795.41 | . + *
Thu 15 Feb 01 . | . # |10891.02 | . + *
Fri 16 Feb 01 . |# . |10799.82 | .+ *
Tue 20 Feb 01 . |# . |10730.88 | + *
Wed 21 Feb 01 . & . |10526.28 |~+~*~~~~~~~~~~~~~~~~~~~~~~~~
Thu 22 Feb 01 . & . |10562.61 |+. *
Fri 23 Feb 01 . #I . |10441.90 + . *
Mon 26 Feb 01 . I . # |10642.53 |+. *
Tue 27 Feb 01 . I # |10636.88 |+. *
Wed 28 Feb 01 . I .# |10495.28 | + *-------------------
Thu 1 Mar 01 . I# . |10450.14 | + *
Fri 2 Mar 01 . | .# |10466.31 | .+ *
Mon 5 Mar 01 . | . # |10562.30 | .+ *
Tue 6 Mar 01 . | . # |10591.22 | . + *
Wed 7 Mar 01 . | . # |10729.60 | . + *
Thu 8 Mar 01 . | .# |10585.25 | . + *
Fri 9 Mar 01 . | . # |10644.62 | . + *
Mon 12 Mar 01 #. I . |10208.25 | .+ *
Tue 13 Mar 01 . & . |10290.80 | + *
Wed 14 Mar 01 #. I . {| 9873.46 |*+.~~~~~~~~~~~~~~~~~~~
Thu 15 Mar 01 . I #. |10031.28 + . *
Fri 16 Mar 01 #. I . | 9823.41 | - *
Mon 19 Mar 01 . I # | 9959.11 |-. *
Tue 20 Mar 01 . & . | 9720.76 |-. *
Wed 21 Mar 01 #. I . | 9487.00 |-.~*~~~~~~~~~~~~~~~~~~~~~~~~
Thu 22 Mar 01 # . I . | 9389.48 | .- *
Fri 23 Mar 01 . I # | 9504.78 |-. *
Mon 26 Mar 01 . I . # | 9687.53 |-. *
Tue 27 Mar 01 . I . # | 9947.54 + . *
Wed 28 Mar 01 . #I . | 9785.35 |+. *
Thu 29 Mar 01 . & . | 9799.06 | + *
Fri 30 Mar 01 . I # | 9878.78 | + *
Mon 2 Apr 01 . #I . | 9777.93 |+. *
Tue 3 Apr 01 # . I . | 9485.71 | - *
Wed 4 Apr 01 .# I . | 9515.42 | - *
Thu 5 Apr 01 . I . # | 9918.05 |-. *
Fri 6 Apr 01 #. I . | 9791.09 | - *
Mon 9 Apr 01 . I # | 9845.15 |-. *
Tue 10 Apr 01 . | . # |10102.74 |+.~~~~~~~~~~~~~~~~~~~~~~~~~~~~*
Wed 11 Apr 01 . & . |10013.47 | + *
Thu 12 Apr 01 . | # |10126.94 |+. *
Mon 16 Apr 01 . I #. |10158.56 | + *
Tue 17 Apr 01 . | .# |10216.73 | .+ *
Wed 18 Apr 01 . | . # }|10615.83 |~.+~~~~~~~~~~~~~~~~~~~~~~~~~~*
Thu 19 Apr 01 . | .# |10693.71 | . + *
Fri 20 Apr 01 . # . |10579.85 | .+ *
Mon 23 Apr 01 . # . [|10532.23 | .+ *
Tue 24 Apr 01 . | #. |10454.34 | + *
Wed 25 Apr 01 . | . # ]|10625.20 | + *
Thu 26 Apr 01 . | . # |10692.35 | + *
Fri 27 Apr 01 . | . # |10810.05 | . + *
Mon 30 Apr 01 . | . # |10734.97 | . + *
========================================================================
COMMENT on NASDAQ "Timer's Trend": The NASDAQ has confirmed the NYSE with a
BUY signal on April 30. We never did get to the 1500 area, though I expect to see that level (and lower) within a few years. Think Japan, early 1990s, and be patient.
____________________________ NASDAQ TIMER'S TREND ____________________________
Mon 29 Jan 01 . | . # | 2838.34 | . + *
Tue 30 Jan 01 . | .# | 2838.35 | .+ *
Wed 31 Jan 01 . | # | 2772.73 | .+ *
Thu 1 Feb 01 . | .# | 2782.79 | . + *
Fri 2 Feb 01 . # . | 2660.50 | .+ *
Mon 5 Feb 01 . |# . [| 2643.21 | + *
Tue 6 Feb 01 . | .# | 2664.49 | + *
Wed 7 Feb 01 . #I . {| 2607.82 |+. *
Thu 8 Feb 01 . I# . | 2562.06 |+. *
Fri 9 Feb 01 # I . | 2470.97 +~.~*~~~~~~~~~~~~~~~~~~~~~~~~
Mon 12 Feb 01 . I #. | 2489.66 + . *
Tue 13 Feb 01 . #I . | 2427.72 |-. *
Wed 14 Feb 01 . I #. | 2491.40 + . *
Thu 15 Feb 01 . I . # | 2552.91 |+. *
Fri 16 Feb 01 # . I . | 2425.38 + . *
Tue 20 Feb 01 # . I . | 2318.35 |-. *
Wed 21 Feb 01 # . I . | 2268.94 |~-~*~~~~~~~~~~~~~~~~~~~~~~~~
Thu 22 Feb 01 #. I . | 2244.96 | .- *
Fri 23 Feb 01 # I . | 2262.51 | . - *
Mon 26 Feb 01 . I #. | 2308.50 | .- *
Tue 27 Feb 01 # . I . | 2207.82 | .- *
Wed 28 Feb 01 #. I . | 2151.83 | .- *
Thu 1 Mar 01 .# I . | 2183.37 | .- *
Fri 2 Mar 01 # . I . | 2117.63 | .- *
Mon 5 Mar 01 . & . | 2142.92 | . - *
Tue 6 Mar 01 . I .# | 2204.43 | - *
Wed 7 Mar 01 . & . | 2223.92 |-. *
Thu 8 Mar 01 # I . | 2168.73 |-. *
Fri 9 Mar 01 # . I . | 2052.78 |~-*~~~~~~~~~~~~~~~~~~~~~~~~~
Mon 12 Mar 01 # . I . | 1923.36 | .- *
Tue 13 Mar 01 .# I . | 2014.78 | . - *
Wed 14 Mar 01 # . I . | 1972.09 @| . - *
Thu 15 Mar 01 # . I . | 1940.71 @| . - *
Fri 16 Mar 01 # . I . | 1890.91 @| . *-
Mon 19 Mar 01 .# I . | 1951.18 | . - *
Tue 20 Mar 01 # . I . | 1857.44 @|~.~*~-~~~~~~~~~~~~~~~~~~~~~~
Wed 21 Mar 01 # . I . | 1830.23 @| . - *
Thu 22 Mar 01 # I . | 1897.70 | . - *
Fri 23 Mar 01 .# I . | 1928.68 | . - *
Mon 26 Mar 01 # I . | 1918.49 | . - *
Tue 27 Mar 01 . & . | 1972.26 | .- *
Wed 28 Mar 01 # . I . | 1854.13 | . - *
Thu 29 Mar 01 # . I . | 1820.57 | . - *
Fri 30 Mar 01 . #I . | 1840.26 | . - *
Mon 2 Apr 01 # . I . | 1782.97 | . - *
Tue 3 Apr 01 # . I . | 1673.00 @|~.~~*~-~~~~~~~~~~~~~~~~~~~~~
Wed 4 Apr 01 # . I . | 1638.80 @| . - *
Thu 5 Apr 01 . I #. | 1785.00 | . - *
Fri 6 Apr 01 # . I . | 1720.36 @| . - *
Mon 9 Apr 01 .# I . | 1745.71 | . - *
Tue 10 Apr 01 . I # | 1852.03 | .- *
Wed 11 Apr 01 . I #. | 1898.95 |-. *
Thu 12 Apr 01 . I # | 1961.43 |-. *
Mon 16 Apr 01 # I . | 1909.57 + . *
Tue 17 Apr 01 . & . | 1923.22 |+. *
Wed 18 Apr 01 . | . # | 2079.44 |+.~~~~~~~~~~~~~~~~~~~~~~~~~~~~*
Thu 19 Apr 01 . | . # | 2182.14 | + *
Fri 20 Apr 01 . | #. | 2163.41 | + *
Mon 23 Apr 01 # | . | 2059.32 | + *
Tue 24 Apr 01 . #| . | 2016.61 |+. *
Wed 25 Apr 01 . | .# | 2059.80 |+. *
Thu 26 Apr 01 . # . | 2034.88 + . *
Fri 27 Apr 01 . | .# | 2075.68 + . *
Mon 30 Apr 01 . | . # }| 2116.24 | + *
========================================================================
"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 May 30. /Nick Chase
INTERNET READERS: My thanks for the concern that many of you have shown because the February and March issues were not posted to the Internet. It has been a busy period, with a vacation, surgery and out-of-work period included. I format and post issues to the Internet in my spare time. No spare time, no posting. (These issues still reside partly-HTML-formatted on various computers.) Being one of the biggest Internet freeloaders around, I must point out that subscribers who get their paper issues mailed to them continued to get them on a more or-less regular basis. (You take money, you gotta deliver product.) There must be a lesson in this somewhere....
February 2001 issue, March 2001 issue.