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Contributed by Bill Bonner
Publisher of: The Fleet Street Letter



Today:  Sex, Fish, and Packaged Meat

*** Dow up 23% in last 6 weeks - where to from here?

*** Nokia loses connection... 

*** Global warming?... Fishmeal, sausage casings, 
cybersex...and more! 

*** In June of 1995, the Dow was only at 4550 and the 
Nasdaq was still under 1000. Investors were not unhappy. 
Indeed, there were those among us who considered even those 
levels as a kind of wishful thinking and dismissed stock 
buyers as fools.

*** Nevertheless, led by the Fed's 7 rate cuts over the 
next 12 months, both the Dow and the Nasdaq took off. The 
Dow rose 158% over the next 5 years. The Nasdaq shot up 
450%...and then went up another 37% to over 5,000 in early 
March, 2000.

*** Then, on March 10th, stocks began giving up their excess 
valuations. But after correcting more than half the 
Nasdaq's gain and a bit of the Dow's, prices are once again 
rising. The Dow is up 23% in the last 6 weeks, bringing the 
current P/E for Dow stocks to 24. The Nasdaq is up 40%. 
Investors losses, estimated at $4 trillion in March, have 
been lightened to only $2.8 trillion.

*** Richard Russell writes: "History has shown that when PE 
ratios are as high as 22, the expected median return over 
the coming ten years is five percent. What does median 
mean? It means that there may be mini-bull and mini-bear 
markets over the coming ten years, but when these are all 
averaged out, the median will be below five percent."

*** Where to from here? Let's see what happened today on 
Wall Street. Eric Fry reports:

Nokia told Wall Street, "Sorry, wrong number," and 
investors promptly knocked its stock off the hook.

The Finnish cell-phone company's shares dropped a 
staggering 19% after warning that it would sell about 
100 million fewer handsets this year than the 500 
million it predicted it would sell just two months 
ago. Nokia mentioned as well, that its earnings for 
the current quarter might be about 1/4 less than the 
Wall Street seers had been expecting.

The unwelcome news sent the Nasdaq cascading about 3% 
lower within minutes of the opening bell. But by 
day's end, the gutsy index finished with less than a 
one-point loss. The Dow likewise recovered from early 
morning losses to gain about 26 points on the day.

The on-again-off-again gold market was "on" 
yesterday, gaining $3.60 per ounce to recoup most of 
what it had lost on Monday. The barbarous, and ever-
perplexing metal, now stands at $271.75 per ounce. 
Gold stocks gained about 3%.

French prime minister, Lionel Jospin, mastermind of 
the 35-hour work week, advocates yet another way to 
undermine his nation's productivity - extend two-
weeks' paid paternity leave. I wonder if Jospin has 
thought this through. A recent academic study from 
the SUNY, Stony Brook determined that 55% of French 
men report having sex two to three times per week. 
Only 33% of American men boast of similar 
frequencies. What chance does economic productivity 
stand against the reproductive kind? (Bill, how do 
you find the time to get your work done?)

"Corporate America's Profits on the Skids," declares 
a Reuters headline. "More than anything else, the 
surge in the profitability of American corporations 
has been the root of the U.S. stock market's 
incredible run in recent years," commented Business 
Week recently.

Dr. Richebacher responds: "The U.S. profit miracle of 
the late 1990s is just another fairy tale...The 
reality of American business profits since 1995 is 
that they increased at only about 6% per year. Wall 
Street celebrated "a profit boom that never 
happened," says Richebacher. (see: The American 
Profit Myth)

Profits are falling - even from the modest levels of 
the last 5 years. Dozens of major corporations issue 
profit warnings each week. There is no sign of an 
improvement and the effects are far-reaching. "A 
swift and severe ad slowdown has taken the breath 
from more than one media executive," the Industry 
Standard reports.

The US economic slowdown may be cutting far deeper 
than most folks believe. State tax receipts are 
collapsing. It turns out that neither jobless 
workers, nor investors without capital gains, pay 

Here's a thought. If the consumer is willing and able 
to spend us out of recession, why are so many credit 
card company officers and board members selling their 
stock? Is it not curious that the guys holding a 
front-row seat for the consumer credit spectacle are 
selling their shares so feverishly?

"By far the heaviest selling occurred at Capital One 
Financial," the Wall Street Journal reports. "Capital 
One's chairman and chief executive officer, Richard 
Fairbank, sold one million shares, and Nigel Morris, 
the company's president and chief operating officer, 
sold 878,146 shares...This year, Mr. Fairbank has 
cashed in about $139.8 million of shares, and Mr. 
Morris about $100.5 million." Hey, a man's gotta eat, 
don't he?

*** Hmmm, what else? Global warming, maybe? An article in 
The American Spectator describes the work of an 
oceanographer who found a way to "concoct a 3,000-year 
record of the temperatures of the Sargasso Sea near 
Bermuda." What did he discover? Temperatures were warmer in 
the medieval era and then turned colder during the 'little 
ice age" of the mid-1700s. It appears that the earth has 
been warming since then. Maybe greenhouse gases are 
accelerating the natural warming process. And maybe they're 
not - no one knows. But the record shows that temperatures, 
like markets, go up and down on their own.

*** I had dinner with Martin Weiss last night. He was in 
good cheer when I met him, but we had another bottle of 
wine anyway. "Don't worry," said Martin, "the coming global 
depression will reduce carbon dioxide emissions much more 
than the Kyoto Treaty." That's a comfort. 


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Question: What do the Bay of Pigs invasion, the Kennedy 
assassination, George W. Bush (the senior), fishmeal, cat-
fights between teenage girls, foot-and-mouth disease and 
on-line smut have in common?

The answer is no joke. In fact, it's a darn cheap stock 
selling at just over 1 times sales - with $83 million in 
the bank. We asked The Blue Team's Dan Denning to take a 

By Daniel Denning

In 1953, the eminent George Herbert Walker Bush, future 
president and pŠre apparent, formed the Zapata Petroleum 
Corporation - an energy company. In 1954, the corporation 
created Zapata Off-Shore Company, later headquartered in 
Houston, to drill for oil in the Gulf of Mexico. 

As you might expect, the firm did well. Bush, president of 
the drilling concern, sold out a few years later...and 
Zapata became Bush the Elder's meal ticket to Texas oil 
wealth. But not before some people think the company's 
offshore rigs in the Gulf were used as a staging ground for 
the CIA-sponsored invasion of Cuba in 1961.

Who really knows about these things. But the Bay of Pigs 
was known said to be known in CIA circles as "Operation 
Zapata." And the names of two of the landing ships carrying 
the 1,300 Cuban-American soldiers were Houston and Barbara 
respectively. Coincidence? Maybe. Titillating though, 
considering that Bush named his combat aircraft in WWII 
after his wife.

For New World order conspiracy theorists the Zapata story 
only gets better. Zapata - and Bush - have reportedly been 
linked to the assassination of John F. Kennedy in Dallas on 
November 21, 1962. (One web site our researchers found even 
suggests the Bush family fortune was made arming Hitler and 
the Nazi's through a series of shell companies set up by 
Bush's father Prescott and the white shoe New York law firm 
of Brown Brothers Harriman.)

>From such illustrious beginnings, the Zapata story only 
gets bizarre. By the 90's, Bush's connection with the 
company long since dissolved, the company sold off its 
energy businesses and came under the ownership of financier 
Malcolm Glazer. 

Glazer's interests are many and varied. He's a private 
investor with holdings in restaurant and food services 
equipment, television broadcasting, baking, real estate, 
and health care. He owns the Tampa Bay Buccaneers of the 
National Football League. 

But Glazer's Zapata holdings are by far the most 
interesting. Zapata owns 61% of an outfit called Omega 
Protein Corporation, once a division of an 
independent public company and the largest U.S. producer of 
fish meal and fish oil. Both come from menhaden - an 
inedible fish caught of the East Coast and in the Gulf of 

Fishmeal is primarily used as a protein additive for animal 
feed. The fish oil gets exported to Europe for use in 
margarine, shortening, and a handful of industrial uses - 
which we could not discover.

Admittedly, if odd, it's a short leap from oil rigs in the 
Gulf to fish byproducts produced there. But that's only 
Zapata's core business. Since Glazer came on board - along 
with 14 other Glazers on the payroll - Zapata has launched 
itself into businesses as diverse as on-line sex and food 
casings for frankfurters, bologna, and salami. 

If the Glazers can be accused of anything, it's having too 
much cash and too little sense. In 1999, at the zenith of 
the Internet boom, the Glazer's launched and 
suffered the fate of so many future failed on-line 

In the heady days of Internet start-ups, theory was all 
that mattered. Even if by experience Zapata was a fish-meal 
company, they could theoretically still make a fortune by 
tacking a ".com" on to the company's name. The goal of To become "...a leading advertising and e-commerce 
platform by aggregating Internet users through a network of 
independent third party websites." Huh?

The company added: "We do not have any significant assets 
or a network in place and we have not formally entered into 
any strategic relationships nor generated any revenues." As 
to those (non-existent) revenues, the company stated 
" to generate revenues from the network 
through advertising, e-commerce, sponsorships, and other 

Only later would it become clear what the "other means" 
might be. But the company was optimistic. " is 
focused entirely on the future - a future in a global 
Internet marketplace whose limits are not yet visible."

There aren't too many web sites that people will pay to 
see, unless the goodies on the site are especially 
valuable...or just plain raunchy. Zapata's first bid for 
on-line site was a hip, smart, and sexy San Francisco-based 
website called Bianca's Smut Shack. 

We paid a visit to the Smut the interest of 
research, of course. We wanted to see what kind of asset 
Zapata tried to acquire. No less an authority than Wired 
magazine called the Smut Shack "an on-line community of the 
Web's naughtiest intellectuals - it's smart, high-minded, a 
peep of class amidst orgiastic moans of crass." Bianca, 
founded in 1994, was one of the first on-line sites 
dedicated to the not-so-sophisticated art of cyber sex. 

Zapata backed out of the deal. They opted instead for a 
quartet of different sites designed to cater to niche web 
markets. The most interesting of these four... a site 
called: "Sissyfight" is an interactive 
game played mostly by teenage girls on-line. 

The website describes the game as "an intense war between a 
bunch of girls who are all out to ruin each other's 
popularity and self-esteem. The object is to physically 
attack and majorly dis (insult) your enemies until they are 
totally mortified beyond belief." Like, a totally awesome 
business model. Totally.

Our experience is that teenage girls do this quite well in 
real life, without the help of the Internet. Yet The New 
York Times called Sissyfight "fascinating." And it was 
favorably reviewed in such august publications as Wired, 
Salon, Details, and Seventeen. 

Alas, the "visibility" thing caught up with 
all was for naught. In December 2000, Zapata shut the site. 
The owners concluded: "operations were not likely to become 
profitable in the foreseeable future." Zapata has since 
moved back into the two businesses it knows: fishmeal...and 
sausage casings.

Zapata's other main holding is a 38% stake in Viskase 
Corporation. Viskase makes "casing solutions." That is, 
they make "cellulosic casings" used for packaged meat. 
Things like ham, bologna, and "other" processed mystery 
meats...a useful business we're inclined to believe very 
few people know how to do profitably. 

Viskase is modest, but respectable - with over $48 million 
in sales in the first quarter of 2001... down7.2% from the 
year before. The main drag on earnings attributable to a 
decline in European sales in the wake of the foot-and-mouth 
and mad cow scares. 

Right now, Viskase has a market cap of $17 million with $20 
million in cash. The current share price of $1.11 is just 
off the 52-week low of .90 cents.

What remains attractive about the parent company, Zapata - 
is the $83 million in cash it's sitting on. To what extent 
is the Glazer family a liability? Who knows...but the real 
question seems to be - is that much cash too good to pass 
up at the current price of $21.25? 

With a pedigree as diverse as this one... Zapata might just 
be one for the trophy shelf.


Dan Denning,
On the prowl for cash-rich survivors...

Daniel Denning is the editor of The Daily Reckoning 
Investment Advisory. If you're interested in investment 
ideas and insights consistent with those you read in the 
Daily Reckoning please enroll in -

The DR Blue Service

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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: June 13, 2001

Published By Tulips and Bears LLC