Co-brand Partnerships

award-5.gif (6517 bytes)

topsite.gif (1668 bytes)

webfifty.gif (6027 bytes)

drop_center.gif (2753 bytes)

wpe1.jpg (2095 bytes)

Email Login
New Users Sign Up!
Sign up for our weekly e-mail newsletter!
Tell Me More!

Enter your e-mail address
search by:

Current Weather
Enter Your City, State, or Zipcode:





Enter Symbol


Enter Symbol:


Enter Symbol:


Enter Symbol:


Enter Symbol


Search For:

Company Name
Ticker Symbol

Exclusive Broker

Enter Ticker




Contributed by Bill Bonner
Publisher of: The Fleet Street Letter



Today:  Traffic Accidents

*** Successful Investing according to Aesop - "a bird in 
the hand"...and the return of your capital...

*** Plunging wholesale prices, energy, interest 
it time to say: "sayonara"?...

*** What's the "Money Honey" to do?...Geneva - "City of 
Peace," but where are the Swiss?..."theory of ignorance" 
reprise...and more...

*** "The formula for valuing all assets that are purchased 
for financial gain," says billionaire investor Warren 
Buffett, "has been unchanged since it was first laid out by 
a very smart man in about 600 B.C. The oracle was Aesop and 
his enduring though somewhat incomplete investment insight 
was 'a bird in the hand is worth two in the bush'."

*** Today, in honor of it being Monday, we take a break 
from our usual "negative drivel" to report some positive 
news...and dispense with a smidgeon of advice. 

*** First, the news: last week - the same week Cisco 
announced profits dropping 84% - Buffett's Berkshire 
Hathaway announced 2nd quarter net profits 21% ahead of last 

*** "Aesop's investment immutable," says 
Buffett. "It applies to outlays for farms, oil royalties, 
bonds, stocks, lottery tickets, and manufacturing plants. 
And neither the advent of the steam engine, the harnessing 
of electricity nor the creation of the automobile changed 
the formula one iota - nor will the Internet."

*** "What people forget," says's Walter Palgrave, 
"is that what you earn on stocks and even the return over 
very long periods depends in part on what you PAY for 

*** "[Buffett] merely buys what is a good buy - at the 
time," says Lynn Carpenter, of The Fleet Street Letter. 

*** Carpenter's advice: "Start with the assumption that the 
market could do the worst possible thing - it could drop 
60% across the board - and take it from there." 

*** Eric, what's happening on Wall Street?


Eric Fry reporting from New York:

- What a novel idea...investors appear to be picking up on 
the Buffett theme and are favoring companies that produce 
profits over those that do not. The Dow gained 117 points 
Friday while the Nasdaq lost 6. For the week, the Dow shed 
less than 1% while the Nasdaq tumbled more than 5%.

- Of course, a week does not a trend make.

- Wholesale prices fell 0.9% in July, according to the 
Labor Department's latest PPI report - their biggest 
decline since 1993. Energy prices also plunged 5.8% during 
the month, the steepest drop in 12 years. The wags on Wall 
Street, in turn, have proclaimed that inflation - like 
polio or the Bubonic Plague - will never afflict us again. 

- With wholesale prices and energy and interest rates 
plunging faster than a Pamela Anderson neckline...could it 
be that inflation is not our problem at all? 

- "Those soothsayers that have been screaming 'deflation' 
because the Fed is too tight exhibit impaired reasoning," 
say Bill King. "Yes, deflation is a concern, but the Fed 
has been the diametric opposite of too tight. This is 
backward reasoning: 'I see deflation, therefore the Fed is 
too tight'...It's simply not correct, as Japan - and now 
the U.S. - is proving."

- Greenspan is both lowering interest rates aggressively 
and boosting the money supply - the two main tricks of the 
trade he has used to combat prior slowdowns. But neither 
corporations nor consumers are increasing their borrowing 
and spending.

- "Business loan activity has fallen drastically in recent 
months, and is now below the levels of late 1999 and early 
2000," writes Andy Kashdan of, citing a 
report from ISI. "[Meanwhile], consumer credit fell last 
month for the first time in four years."

- In fact, this may be our worst nightmare - a consumer who 
doesn't consume. He may even be turning into a "saver"... 
ugh ...and a stock-phobic saver, at that: "Just $36 billion 
has gone into all equity funds [this year], down from $233 
billion over the same time last year," calculates Charles 

- Echoing an oft repeated phrase here at the Daily 
Reckoning, Biderman notes that "during hard times, 
investors become more concerned about return OF their 
capital then return ON their capital..."

- Pull out your hankies and dry your eyes, Individual 
Investor will publish no more. A classic case of live by 
the bull, die by the bull, Individual Investor was nothing 
if not bullish, especially about tech stocks. The magazine 
was created and run by Jonathan Steinberg, who is more 
famous for being the spouse of CNBC's "Money Honey," Maria 
Bartiromo, than for his own adventures in publishing. 

- Fred Hickey reminds us of the Individual Investor legacy. 
"Maria Bartiromo titled her August 2000 column in her 
hubby's Individual Investor magazine: 'Ready for a 
Rebound.' Column subheadings were: "Nasdaq 6000?" and 
"Soaring Semis."

- "'In the Nasdaq 6000?' section, Maria cited Morgan 
Stanley analyst Mary Meeker, who was then claiming that the 
Internet sector had bottomed...Maria noted that Meeker 
liked Yahoo,, eBay, Cisco Systems, Broadcom, Sun 
Microsystems, Lucent and Motorola..." 

- With the exception of eBay, all of Meeker's 
recommendations lost 70% or more in the ensuing months. "My 
purpose is not to embarrass Mary Meeker or Maria B.," says 
Hickey, "but to make the point that you'd better not hop on 
the train just because the Wall Street touts are telling 
you to."


Back to Addison Wiggin, in Paris...

*** "There are 5 regions of the world," said the 
philosopher Tallyrand, "Europe, the Americas, Asia, 
Africa...and Geneva." 

*** Over the weekend, my wife Jennifer and I traveled to 
Geneva for her birthday. It happened to be the final 
weekend of the annual Fete de La Gen�ve - an enormous week-
long festival in which the entire city participates. The 
highlight? A 2-hour musical fireworks display set to the 
music of Wagner, Puccini, Verdi...and Run DMC (among 

*** Geneva, the so-called "City of Peace," is the first of 
the world's great melting pots. "Tolerance" being a major 
theme since Calvin brewed beer there in the 1500s, Geneva 
now plays host to residents from 157 countries. As if to 
prove the point...we stayed in a "French" hotel run by 
Koreans, ate Thai noodles served by Philippine women and 
savored Portuguese pastries while watching throngs of Arab 
women in full veil wander by...we wondered "Where are the 
Swiss?" on more than one occasion.

*** Before leaving on Sunday we toured Lake Geneva by boat. 
The sun was pleasant and warm. Sailboats were out in 
force...On one side of the lake we passed by the Baron von 
Rothschild's enormous 19th Century chateau. On the other, 
almost directly across, we passed the little villa Lenin 
inhabited in 1914 while plotting the Russian Revolution. 
The irony, I think, was lost on our skipper, who spoke with 
a perfect British accent.

* * * * * * * * * Advertisement * * * * * * * * * 

You Can't Afford to Ignore the Energy Crisis...Or Profits 
of 276%...390%...1,955% 

We are on the verge of the most serious energy crisis ever, 
and there's nothing George W. Bush, Alan Greenspan or even 
OPEC can do about it. Learn the truth they're not telling 
you, as well as the little-known companies set to make 
money hand over fist. 

Click here to read your free report.
* * * * * * * * * * * * * * * * * * * * * * * * *

The Daily Reckoning Presents: A DR Classique originally 
broadcast on April 19, 2001

TRAFFIC ACCIDENTS or The Theory Of Ignorance
By Bill Bonner

"Skepticism, like chastity, should not be
relinquished too readily."

George Santayana

A website offers us an opportunity to "Vote for the 
Dumbest e-Business Moment."

The first contender is the "summer of 1970" in which 
"Kajsa Leander is born in Lund, Sweden...several 
months later, Ernst Malmsten is born, also in Lund. 
Together, they go on to found an ill-fated 
multinational high-fashion e-tailer called"

The site lists a number of bizarre and amusing 
events in the life of the bubble - 
confirming both my faith in man's ability to delude 
himself with visions of grandeur...and my new Theory 
of Ignorance.

Noted, of course, is Dec. 16, 1998, when Henry 
Blodget predicted that would go to $400 a 
share. He was not joking - it did. But shares in can now be purchased for just a little 
over $10. And don't be surprised if they are 
eventually free.

And there is that day in June 1999, when Mark 
Beier, CEO of, appeared on CNBC's 
Squawkbox dressed only in his boxer shorts. The gag 
was designed to underline the fact that you could 
buy everything you needed over the Internet - 
dressed only in your underwear. Of course, it might 
have been taken as a forecast of what would happen 
to's shareholders. They have lost 
their shirts...and maybe even their the 
stock has dropped to 28 cents. This week's issue of 
Barron's has it listed as one of the companies 
scheduled to run out of operating cash this month.

"One of every three publicly traded 'Net outfits' 
stands to run out of cash within the next 12 
months," says Barron's. "And that does not count 
those that already burned out."

"The remaining 214 companies," continues the report, 
"had negative earnings before interest, taxes, 
depreciation, and amortization of $2.29 billion, 
substantially higher than the negative $1.37 billion 
EBITDA in the previous quarter."

What a sad end to such a magnificent delusion: The 
Internet Age. The dot.coms have lost a total of 
About $1 trillion in value since early 2000. 

But there is something magical about big, dumb 
ideas. In any specific application, they may be 
demonstrably absurd. 

The "boo crew", for example, as the 450 employees at were known, spent money as if, well, it was 
not their own. Expensive offices in London, New 
York, Paris, Munich, Stockholm...$5,000 a day to 
fashion consultants just to perfect the look of 
"Miss Boo" on the website. 

This was a company with almost no sales...whose 
managers were burning through $135 million, with 
almost nothing to show for it.

Who in the rag trade would spend his own money that 
way? No one. The actual experience of doing business 
and having one would weed out such 
teach them. 

But it was a New Era...and people believed in the 
Big Ideas behind it. Even when they didn't work in 
practice, people still had faith in the theory.

That is why the War on Drugs continues too. Hundreds 
of thousands of people are sent to jail. Billions 
are spent on "law enforcement." Otherwise harmless 
drug users are driven into a world of crime and 
sordid company. No, I don't mean politics, I mean 
street crime. 

You can make something illegal, but you can't make 
it unpopular. In the movie "Traffic," the daughter 
of America's drug czar begins using illegal drugs 
while her father is away in Washington waging war 
against them. 

The perverse irony of the film is sure to appeal to 
Daily Reckoning readers. Nothing quite works out as 
it is supposed to. And in the end, the nation's drug 
czar realizes that his problem is at home, not in 
some distant command post, directing a phony war. 

The Theory of Ignorance maintains that people know a 
whole lot less than they think they know. But as 
someone has observed, it's not what they don't know 
that gets them into trouble, but what they think 
they know that ain't so.

When a man drives down the road, he makes thousands 
of decisions every minute - any one of which could 
be fatal. But he knows what will happen if he turns 
the steering wheel in the wrong direction and 
usually ends up where he intended to go.

But his ignorance of cause and effect increases as 
the subject of his decisions gets farther and 
farther away from his immediate, personal 
experience. In fact, like the intensity of heat, it 
diminishes by the square of the distance from the 

At a far enough remove from his own experience, the 
same man who drives himself down the street without 
accident sees no road signs, no white lines, no on-
coming traffic. He drives his tractor trailer 
straight into a concrete wall...and seems genuinely 
surprised when the results are fatal.

Thus do investors buy shares in companies that do 
things they would never do in their own businesses 
and support big dumb ideas - population control and 
the War on Drugs, for example - which offer no 
identifiable benefits to anyone. 

Also on Barron's list of dot.coms running out of 
cash is It is trading at 20 cents and 
scheduled to run out of money in August or 
September. But every dog has its day, and enjoyed one brief day of imbecility, 
when investors paid $97 for the stock - a price 
equal to 350 times the revenues per share booked in 
the entire life of the business. Was there a single 
person in the entire world with business experience 
to justify such a price? No, of course not. It only 
made sense within the context of the New Era theory. 

Finally, in May 2000, the deadly duo from Lund 
called it quits..."It's easy to say that we spent 
$135 million on Concordes and Champagne," Malmsten 
tells the NEW YORK TIMES, defending himself, "but we only 
drink vodka."

Raise a glass to the dotcommers. We'll miss them. 

Your faithful correspondent,

Bill Bonner

* * * * * * * Advertisement * * * * * * * * * * *

After The "Tech Wreck": Waiting For The Other Shoe To Drop

In the first wave, big, big companies - among the largest 
in the world - dropped like cement blocks in the Hudson. 
Hard-working investors were forced to foot the bill. $4 
trillion lost...on paper.

The real cost? Private retirement "dreams" on 

How could it happen so fast? Worse, if Intel or Cisco can 
be on the ropes in a matter of months - which Dow titans 
will follow? Most investors don't have a clue... 

Do you? 

Before you invest another dime - read this free report. It 
will make you think twice about "safe" investing in the 
* * * * * * * * * * * * * * * * * * * * * * * * *

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.


Search for it at the TulipSearch Open Directory
Investment Bookstore Investment Newsstand Market Mavens Report



Tulips and Bears
Internet Stock Talk
Traders Message Boards
Traders Press Bookstore

City Guides
Travel Center
Bargain Bloodhound

TulipHost...coming soon
TulipTools...coming soon
...coming soon

Questions or Comments? Contact Us

Copyright � 1998-2002 Tulips and Bears LLC.
All Rights Reserved.  Republication of this material,
including posting to message boards or news groups,
without the prior written consent of Tulips and Bears LLC
is strictly prohibited.  'Tulips and Bears' is a registered trademark of Tulips and Bears LLC

Last modified: August 13, 2001

Published By Tulips and Bears LLC