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Contributed by Bill Bonner
Publisher of: The Fleet Street Letter



Today:  Waiting For Capitulation

*** Dow and Nasdaq bounce as "All Eyes On Alan"...

*** How long before Cisco recovers? 10 years!

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*** Aggh! For the second time in the last two weeks, I lost 
hours of work on this #%$@ computer! Information Technology 
is having its revenge on me.

*** But you, dear reader, are the beneficiary - short notes 

*** As you already know - both the Dow and the Nasdaq 
rallied yesterday. 

*** "All Eyes on Alan" said both the NY Post and the 
Economist. The FOMC committee meets today and is expected 
to give the market another rate cut - either 50 basis points 
or 100 basis points - or something in between.

*** Investors don't know what to do. They don't want to 
sell, because they haven't yet given up on stocks. And they 
don't really want to buy either - because they've been 
taking losses for the last year and they're not sure how 
far this bear market could go on.

*** So, they mostly sit tight - and worry.

*** "Will the Fed go 50 basis points or 75?" asks Kevin 
Klombies. "We have no idea. Will it even matter? Maybe for 
a day or two."

*** "If the cut is 100, the market will jump," says John 
Mauldin. "You will hear this big sigh of relief from the 
Talking Heads and many declarations that the Bear Market is 
over if we get the Big Cut. Please remember these are the 
same people who have been telling you to buy the dips and 
markets only go one way. They know less than you do, trust 
me. Wait until the market seems to settle for a day or two, 
and then use the run-up as a selling opportunity."

*** Maybe a rate cut won't get turn the market around, 
after all. Maybe stocks will fall for another 6 
months...or, horrors, another year!

*** David Tice, a Daily Reckoning contributor and manager 
of the Prudent Bear Fund, was interviewed by the 
International Herald Tribune: "We expect the Dow will fall 
to 3,000 and the Nasdaq to below 1,000," said he. "It could 
take another 12 to 18 months." 

*** And even if the market turns long will it 
take to 'get even?' Gretchen Morgenson takes up the 
question in a NY Times article. Suppose, for example, that 
Cisco increases at 15% per year - about twice the market's 
historical average. Even at this rate, it would take 10 
years for the stock to return to its high of last March. 
And they're the lucky ones. Yahoo shareholders would have 
to wait 20 years.

*** A Reuter's report says that investors have lost $4.8 
trillion since last March 24th. They lost $900 billion last 
week alone.

*** Sooner or later, these losses have to change people's 
plans, attitudes - even their philosophies. The wealth 
effect turned people into high-tech existentialists. Will 
the poverty effect turn them into value-oriented 
fundamentalists? More below...

*** But for now..."calm and quiet prevails," writes Ms. 
Morgenson, "at least on the surface of the market." 
"America is still living in a boom time fantasy" says a 
headline on the Prudent Bear website. "Looking Beyond the 
Bear...The worse could be behind us," is TIME magazine's 
cover theme this week. 

*** But TIME's cover will not be talking about a turnaround 
when the big bottom finally arrives. Instead, TIME will 
tell us that Wall Street is history...and that investors 
should put their retirement money into collectibles, gold 
or Japanese stocks!

*** Japan's central bank is way ahead of the Fed. 
Yesterday, it announced it was cutting rates all the way to 
zero and will leave them there until the economy improves. 

*** The St. Louis Fed reports that cash (MSM) increased at 
an amazing 27.5% rate, annualized, over the last 3 months.
No one can accuse this Fed of being unwilling to destroy 
the currency in the name of economic growth.

*** "It's a complete Godot capitulation," said James Cramer 
of last week's market. 'Waiting for Godot,' by Samuel 
Beckett, was a big hit among intellectuals of the 50s and 
60s. Nothing happens in the play. Godot never even shows 
up. But sooner or later, Godot will keep his appointment 
and capitulate. More below.

*** I wonder what will happen to the neon sign on the 
Baltimore Raven's stadium? PSINet plummeted another 53 
cents yesterday - after the company announced that it would 
have to restructure its debts. The stock once traded at 
$50...but you can buy it today for only 19 cents. And in a 
few days - you might be about to get it for nothing.

*** But the day's "big loser" according to's 
Bethany Maclean was Intel. The stock "dropped 81 cents to 
$27.06 on some nasty language from Piper's Ashok Kumar." 
Kumar apparently doesn't expect the PCs to recover until 
late in 2002.

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You either stand for something, or you fall for everything.

An old saying

"It was very liberating" said my mother-in-law.

She remembers seeing the play, "Waiting for Godot," when it 
was first staged in New York.

The intellectual world was already running loose in many 
different directions. Artists were throwing paint on 
canvases. Writers were jotting down their most obscene and 
nonsensical pensees - as if they mattered. Philosophy 
teachers were putting forth the most absurd ideas to 
innocent students - and getting paid for it.

Yesterday, I said I was writing about nothing special. 
Today, I write to you about a special kind of nothing.

The intellectuals of the late 19th century and the early-to-
mid 20th century rejected the ideas, beliefs, and traditions 
of the past. Gone were the plots, the dialogue, the 
melodies, the rules, the values, the shapes - almost 
everything. In architecture, for example, the corbelling, 
moldings, medallions, capitals, plinths and just about 
every other detail that added grace and beauty were 
stripped away - to leave buildings of supposedly surpassing 
practicality and undeniable ugliness. Melodies were taken 
out of avant-garde music. Recognizable forms were removed 
from 'modern' art. Literature gave up the stories and 
narratives that had sustained it for 4,000 years.

This left the intellectuals with plenty of nothing to work 
with. "Waiting for Godot" is required reading in English 
literature departments. It illustrates what nothing looks 
like in drama. With neither plot nor dialogue - the play 
is as empty as a modern artist's head. 

But that doesn't mean it is boring. I read it last night, 
fascinated. I wondered what Vladimir and Estragon would 
not do next:

Estragon: Let's hang ourselves immediately!

Vladimir: From a bough? (They go towards a tree.) I 
wouldn't trust it.

Estragon: We can always try.

Vladimir: Go ahead.

Estragon: After you.

Vladimir: No, no, you first.

Estragon: Why me?

Vladimir: You're lighter than I am.

It must be liberating to write like this. You don't have 
to have any talent. Nor do you need much training. 

Democrats and social meddlers loved it. All of a sudden, 
the world was a new brick wall - and they had a can of 
spray paint.

Still, to really succeed, even as a no-talent artist, you 
have to understand how the game is played...

This was true in the financial world too, in the last half 
of the 1990s. The craft of investing was cut off from its 
customary rules and values. The real 'things' in which a 
business's worth was traditionally measured were upstaged 
by various forms of nothing - 'technology'...'information'
... 'intellectual capital'...hits, eyeballs...and so on. 

Our own Porter Stansberry feels this liberation most 
keenly: "The critical point is this," writes Porter, "I 
don't believe that the real fundamentals of any business 
can be found on its income statement or its balance sheet. 
Instead you have to look further into the business and the 
technology that provides the framework for commerce. You 
have to understand the forces that will produce the 
spontaneous order of the market and you have to project how 
they are likely to change in the future."

But existentialism as applied to investment analysis has a 
spotty record: 

"Among the harsh realities, one stands out," writes 
Gretchen Morgenson. "Of all the hot air generated during 
the great bull market of the late 90s, none propelled stock 
prices further than the notion that new economy stocks were 
a breed apart and should not be held to stringent, old 
economy investing standards. Internet companies and cutting 
edge telecommunications concerns, after all, were 
revolutionizing the world."

On January 10, 2000, Henry Blodget - celebrity Internet 
analyst for Merrill Lynch - explained that "valuation is 
often not a helpful tool for determining when to sell 
hyper-growth stocks." Blodget was discussing the price of 
Internet Capital Group - a company whose stock price, then 
$173, seemed to rest on nothing. 

Today, $173 will buy you 57 shares of ICG. Not-so-
astonishingly, investors decided they would prefer 
something for their money rather than nothing.

Samuel Beckett was an odd character. Born near Dublin, he 
lived much of his life here in Paris. He would visit with 
James Joyce here - the two of them sitting together, often 
with nothing to say.

What was there to say? Conversation, said Beckett, was "an 
unnecessary stain on silence and on nothingness." Why ruin
a perfectly good nothing?

But now it is the 21st century...and the 3rd millennium. 
Beckett died in the same year the Japanese Bubble popped - 
1989. The nothing movement in art, architecture, music and 
literature continues - but it is feeble, propped up like an 
old outhouse with money from taxpayer with little money 
and private foundations with little sense.

And, of course, the bubble on Wall Street has burst - 
though investors have not yet capitulated.

Estragon: What do we do now?

Vladimir: I don't know.

Estragon: Let's go.

Vladimir: We can't.

Estragon: Why not?

Vladimir: We're waiting for Godot.

Estragon: Ah...

Your correspondent...

Just wondering about the meaning of it all..

Bill Bonner 
About The Daily Reckoning:

Daily Reckoning author Bill Bonner

Bill Bonner is, in spite of himself, a natural born contrarian. Early each morning, Bill writes The Daily Reckoning—his take on the financial markets and what’s going on in the world—and sends it off by e-mail before most Americans’ alarm clocks have buzzed. Many readers say it's the first thing they want to read when they get up—not only because it's informative and thought provoking, but also it's inspiring, in its own quirky and provocative way.

Of course, there's much more to Bill than his daily market commentary. He's also the founder and president of Agora Publishing, one of the world's most successful consumer newsletter publishing companies. Bill's passion for international travel and big ideas are reflected in the company he's successfully built. In 1979, he began publishing International Living and Hulbert's Financial Digest . Since then, the company has grown to include dozens of newsletters focusing on health, travel, and finance. Bill has vigorously expanded from Agora's home base in Baltimore, Maryland since the early ’90s—opening offices in Florida, London, Paris, Ireland, and Germany.

Agora's publication subsidiaries include Pickering & Chatto, a prestigious academic press in London and Les Belles Lettres in Paris, best known as a publisher of classical literature in bilingual editions.


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Last modified: April 01, 2001

Published By Tulips and Bears LLC