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Contributed by Bill Bonner
Publisher of: The Fleet Street Letter



Today:  The Invisible Candidate

*** Rough week ahead for stocks?
*** Apple stock splits - 2 for 1...the hard way...

*** Still, bullishness at record levels...a remarkable 
triumph for Mr. Bear...and a very unusual automobile

*** "Stocks Could Face Another Rough Week," says the 
headline on today's Reuters line. This was, of course, 
the same service that told us last week that stocks could 
expect clear sailing.

*** Alas, the seas were a little choppy last week. The 
Nasdaq took a loss of 105 points on Friday...which left 
it down 3.75% for the week.

*** The Dow suffered a drop of 173 points on Friday... 
bringing it down 1.75% for the week.

*** The immediate problem was earnings. Kodak, 
Intel...and then Apple announced disappointing earnings. 
But instead of taking it in stride, as the currency 
markets took the Danish vote against the euro, the 
individual stocks were pummeled.

*** Apple, for example, split two for one...the hard way. 
Apple shares dropped more than 50% in price - so you can 
buy more than two shares this morning for the same price 
you could have bought one on Friday morning. 

*** Investors are not digital men. They are analog - 
reacting, over-reacting...and under-reacting with 
whatever mob sentiments waft their way. Is a share of 
Apple really worth half what it was on Friday? Was it 
over-valued by 100% Friday? Or is it under-valued by half 
today? Why the harsh reactions to a few pennies of 

*** Readers may recall a small historical note: during 
WWI, it was in the U.S. that dissent from the war fever 
was most severely punished. Questioning U.S. 
participation in the war was made a criminal offense, 
whereas France and Germany were more tolerant. Why? 
Because, the case for participation in the war was 
weakest in the U.S. ...Americans had less at stake. 
Consequently, dissent was more dangerous to the war 

*** Likewise, investors severely punish companies that 
disappoint them. They've bought into the fever of Big 
Tech investing - and cannot tolerate any evidence that it 
may not be such a good idea.

*** Mark Hulbert made a similar point in a recent issue. 
He noted that investors got angry with him when he 
reported on bad performance by their favorite investment 
guru. He was surprised that they were not delighted - 
since he was doing them a favor by alerting them to poor 
results. Finally, Hulbert concluded, "investors aren't 
really open to changing their minds. They instead are 
looking for validation and reinforcement of the decision 
they've already made..."

*** Typically, 58% of earnings announcements are 
negative. This year, the figure is 64%. 

*** Last week's market action brought the Nasdaq down to 
a 9.75% loss for the year. The Dow is down 7.4% for the 

*** But utilities hit a new high on Friday and are up 40% 
for the year!

*** Pegasus Research, reported by Barron's, found that 
273 out of 339 Internet companies surveyed were losing 
money and "burning cash." has moved up to 
number 2 on the list of companies running out of money.

*** A poll from AAII has only 7% of investors bearish. 
This is an all-time low...and represents a remarkable 
triumph for Mr. Bear. Investors are overwhelmingly 
confident and complacent, despite a drop in the major 
indexes for the last 9 months...and one of the worst 
single months ever for the Nasdaq in September - a loss 
of 12.7%...not to mention large drops in the most popular 
and widely held stocks.

*** You can buy a share in Yahoo for only $94. It was 
$250 at the beginning of the year. Amazon, our river that 
goes nowhere, used to cost $113 a share, now you can buy 
one for $39. E-bay is about half of what it was in 
January. And the Internet incubus, I mean incubator, 
CMGI, is on-sale now at just $28, a discount of 82% off 
its January list price of $163.

*** But heck, this is the Nasdaq Nation... People buy 
stocks like they buy modern art - not because they like 
them, or because they understand them...but because they 
think some other fool will come along and buy them at an 
even more absurd price.

*** "Apple [is] not a technology company" writes Kevin 
Klombies "it merely manufactures boxes, powered by 
computer ...Apple is a low tech manufacturer with a 
trendy marketing gimmick that has been mistakenly given a 
high tech valuation... 33 times earnings? Maybe 6 times 
makes more sense."

*** About a year ago " (selling at $1.25, down 
97% from the all-time high of $42) had a $25 million TV 
commercial campaign showing a fictitious character, 'Reed 
Woodson' who walked, apparently naked, around his house 
while shopping for software on the Internet," writes Ray 
Devoe. But today "The 'Naked Man' campaign is gone," as 
are a host of other ludicrous ads produced by dot.coms 
with seemingly limitless ad budgets. "The president of," notes Ray, "was quoted as saying 'we could 
have told consumers what we sell, but we shot gerbils out 
of a cannon. What were we thinking?'" Indeed. (see: Where 
Have The Flying Gerbils Gone?

*** "Last year's 20% revenue growth at FEMSA - a 110 year 
old Mexican beer company - beat all comers." Lynn 
Carpenter tells me. "Bud, for example, registered a mere 
4.5% growth, Coors did 8%. Moreover, FEMSA turned those 
sales into bottom-line profits; with a 40% income growth 
rate...Even a year-by-year 15% average [growth] is 
nothing to scoff at. But FEMSA can do twice that. It 
probably will." (see: Cheers To Mexican Beer, A Portfolio 

*** Oil fell 50 cents in Friday trading. Gold dropped $2. 

*** Tomorrow, Harry Potter Greenspan and the other 
prestidigitators at the Fed meet. After raising interest 
rates 6 times in the last 18 months, they will do nothing 
this time - it is too close to an election. 

*** The comptroller of the currency reports that problem 
loans in the U.S. banking system went from $50 billion in 
1998 to $100 billion this year.

*** Saturday, I bought another car - one of the bug-eyed, 
funky 2CV "deux chevaux" that you see all over France. 
Actually, you see fewer and fewer of them, since they 
stopped making them at least 10 years ago. Today, they 
are only driven by very old people - or very cool people. 
This car has a small, air-cooled engine and a top speed 
of about 55 mph, downhill. And it is cheap to 
important feature as Sophia is learning how to drive.

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"Are they habitual liars, or just plain stupid?"

Bill King,
Wondering why the media seem to favor Democrats

"Both Camps Call Debates Pivotal for U.S. Election" 
declares the headline on the front page of today's 
International Herald Tribune. 

Next to it is the kind of photo newspapers love. It 
shows, a man and his 12-year-old son getting shot in the 
Gaza Strip. The man was wounded; the boy was killed. The 
photo sends a hidden message: politics is 
better pay attention!

Politics can kill you...rob you...imprison and impoverish 
you. Politics can make life miserable - and does, in 
direct proportion to which it runs things. Show me a 
world saturated with politics - such as late-stage Nazi 
Germany or almost any-stage Soviet Russia - and I will 
show you a world of almost unrelieved misery.

Politics can also bore you - as the presidential debates 
are sure to do. Bush is a scarecrow, who desperately 
needs the media to give him a brain. Considered 
"lightweight," he will be careful to appear serious and 
intelligent as well as compassionate in the debates.

As big as this challenge is, Gore has an even bigger one. 
Tagged as 'wooden' or 'robotic' by the sensation mongers, 
Gore has to appear alive...even human. Perhaps DNA 
evidence would be admissible; the tin man needs a heart.

If either of the candidates has any dignity or common 
sense left, after months on the campaign trail, these 
presidential debates are a good opportunity for him to 
unload it. Both candidates will pander to the lowest 
common denominator of the TV audience...and the even 
lower denominator of the media. The media are the 
kingmakers now - spinning the news subtly this way or the 
other in order to favor their own agenda...and nudge the 
indifferent voter in the direction they want.

Politics - that is, the use of force - cannot make things 
better. Improvement is accomplished with anti-politics... 
that is, the private, personal efforts of millions of 
people working together cooperatively. Government can 
order people to work. It can force them to do this and 
that. It can steal the money of one man and give it to 
another. It can interfere with the market in countless 
ways - all of them negative. Even a kiss - ordered at 
gunpoint - loses its appeal. 

It is no mystery why the media favors democrats. The 
Democratic Party typically favors slightly more politics 
than their Republican adversaries. A study from the 
National Taxpayers Union, for example, found that Gore 
has proposed five times as much additional spending as 
his adversary.

The mass media cannot report the transactions that make 
the world a better place. There are too many of them: A 
young man tinkers in his garage and comes up with a 
better way to write a software program...another man 
takes a long lunch to visit his aging parents...a woman 
writes a new book or brews a pot of coffee. A corporation 
opens a few factories. A young girl gives her father a 
kiss on the cheek to send him off to work. 

Instead, reporters focus on mass-events, mass hysteria, 
mob-thinking...and politics. Democrats promise more 
politics. They want more ballots and more bullets - more 
force and less persuasion. The news media loves it.

The Libertarian candidate for president - Harry Browne - 
is perplexed. He is the invisible man of the national 
election...never mentioned in politic company.

According to a recent letter from the Browne campaign:

* Harry Browne leads the third party pack in
Georgia with 4%. Buchanan trails at 1%, and Nader
isn't even on the ballot.

* Harry Browne is tied with Ralph Nader in
Illinois at 3%, and leads Buchanan by two points.

* In Colorado, Nader leads, but Browne is close
behind with 3%, while Buchanan polls only 1%.

* In Kansas, Nader and Browne are tied, and Browne
leads Buchanan 2 to 1.

* According to the Zogby, Rasmussen and Hotline
national polls, Harry Browne is tied with Buchanan

* And yet, a Lexis-Nexus search reveals that
national media coverage of these three candidates
is way out of balance. Buchanan is getting 60
times as much attention as Browne, and Nader is
receiving even more coverage.

On Sunday's "Meet the Press," for example, the nation got 
to hear the views of Mr. Buchanan and the insufferable 
Ralph Nader. Both Bush and Gore could drop dead on 
election day and neither of these men would have a chance 
of being elected. Still, Harry Browne was excluded. 


The Libertarian candidate has a problem with the press. 
If elected, he would reduce the size and importance of 
all the ruling estates - including the 4th one. 

Foreign policy? What foreign policy? Browne wouldn't have 
one. Would he favor the expansion of Medicare...medical 
vouchers...medical savings plans...or a whole new 
national health system? Forget it - health would be a 
personal matter and the government would play no role.

Imagine you were a reporter. What would you write about? 
You could cover campaign finance reform - the 
Libertarians would eliminate it as a subject of 
discussion. How about suits against Microsoft and other 
corporate giants? Forget it, the anti-trust division 
would be out of business. 

And what would much-coveted 'access' to top officials in 
a Browne administration be worth? Not much.

And who would even want to conduct an interview with 
Browne? He doesn't even want to talk about politics - he 
wants to talk about matters of principle. He is a wet 
blanket on the whole election process...a dissenter from 
politics whose own partisans are likely to defect at the 
first opportunity.

Principles are rarely seen or heard in political circles. 
In the middle of the 19th century, Wilhelm I of Prussia 
was offered the imperial crown of Germany by a parliament 
of his subjects. He could not take it, because he 
believed, as a matter of principle, that the elected 
representatives in parliament had no power to offer it. 
Only those who wore the crown themselves - other princes 
- could offer the imperial crown. 

In a way, this is Harry's problem, too. He is asking for 
the crown...but will refuse to exercise the power that 
comes with it. If he will not play the game of politics, 
why should the kingmakers in the media give him the 

Political reporting from, 

Bill Bonner 

P.S. This is about all the election coverage you will get 
from me. I promise. 
About The Daily Reckoning:
The Daily Reckoning... "more sense in one e-mail than a month of CNBC."  That's what readers are saying about The Daily Reckoning.

Bill Bonner, recognized internationally as a brilliant writer, entrepreneur
and publisher of The Fleet Street Letter, offers you his daily market
commentary absolutely FREE. For the first time, outsiders are getting a peek into his powerful and profitable investment insights. Bill's practical contrarian advice empowers even average investors to protect their hard-earned wealth and achieve amazing gains.

Bonner writes his email letter from Paris, France, each morning --
describing the wacky, wonderful world of investment, politics and everything remotely related. Irreverent. Sharp. Honest. Thoroughly, unabashedly contrarian. It's also among the fastest growing e-letter on the Internet.  It's a brand new service... but it has a distinguished history..

For nearly 62 year, The Fleet Street Letter, the oldest investment
advisory letter in the English language has consistently delivered
invaluable economic and political foresights to savvy investors. Current readers regularly enjoy impressive investment gains even as the market falters. Here's more from his online readers...

"My small portfolio has followed true to my wife's description of my
investment philosophy, "buy high and sell low." However, that has changed since I started religiously reading DR... I credit this reversal of fortune directly to The Daily Reckoning"

" Your Daily Reckoning is the best in business commentary... mixing
serious warnings and the state of the market with gentle humor"

"It is actually better than some of the newsletters that I pay to

"Your statements and philosophy have kept me from storming into the market and in fact [I'm] making some money in put options" (Frank)

Open your mind with the most stimulating e-mail newsletter that you'll ever read, The Daily Reckoning. To receive this free daily email newsletter click here now.

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Last modified: April 01, 2001

Published By Tulips and Bears LLC