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Contributed by Bill Bonner
Publisher of: The Fleet Street Letter



Today:  Losing It

*** Bill visits the modern day Gamorrah... the Fed 
rests... and the momentum turns...
*** A "pretty aggressive move to the downside" ... and 
the "Naz" gives back its summer gains...
*** Muckety-mucks net $1.8 billion... 

*** This is great. I flew for 13 hours and I can still 
see the Eiffel tower out of my window. I'm not kidding. 
It's right here in Las Vegas - a city lit up as if it 
were expecting to greet dignitaries from another 

*** Addison is writing the notes letter is 
below... Bill.

*** Bonjour. Yesterday the Fed met... and did nothing.

*** For the third consecutive time Greenspan and Co. 
ended their meeting of the minds fully rested, content 
the last of its rate hikes in June had sufficiently 
stymied inflation.

*** "In other words," reported the Wall Street Journal 
this morning "no hint of better days to come." Once the 
announcement hit "the momentum turned" in the markets and 
"there was no stopping it. No one wanted to step in ahead 
of what appeared to be a pretty aggressive move to the 

*** The Nasdaq, or "The Naz" - as you might see in a 
bulletin board populated by digital men - fell 165 points 
on the Fed decision... wiping out any early gains... 
ending the day down 3.2% at 3,455.

*** "The market has one, sick-looking tech sector on its 
hands..." began today's market recap on the Microsoft 
Investor website...The Naz is 32% off its March high, 
down an aggregate 15% for the year, and "has given back 
all it's summer gains." (WSJ)

*** Microsoft and Apple have sunk to 52-week lows. 

*** However, "old economy stalwarts" Dupont and Alcoa - 
producers of chemicals and aluminum - both had good 
days... helped the Dow retain a positive close.

*** The Dow, which saw mid-day heights above 10,850, 
slumped down late in the day to finished just 19 points 
higher at 10,719.

*** "The inexorable rebalancing of portfolios" writes 
Bill King, "from grossly over-weighted in technology to a 
more equitable weighting will perpetuate for a while. 
Yes, that means more liquidation [and an end] to the 'New 
Paradigm' one-decision - always buy stocks."

*** On the Big Board, as they say, 1330 stocks advanced, 
1,554 fell back. 

*** The S&P 500 barely moved... finishing the day at 

*** Goldman Sachs investment strategist Abby Joseph Cohen 
remains optimistic. The Journal reports she "expects 
[once third quarter earnings begin to be announced] the 
S&P 500 to hit 1575 by year's end, again of about 10% 
from here." That, Ms. Cohen explains in a letter to here 
clients, would reflect "our projected fair-value levels." 

*** The rumor yesterday, supposedly catching flight from 
internal reports at Merrill Lynch, was that IBM and 
Oracle might have to get in line behind Apple, Intel and and issue warnings they will not meet 
analysts expectations. 

*** One wonders from which companies Ms. Cohen is 
awaiting Q3 earnings, anyway. Earnings have not 
necessarily played an important role in the new era 
momentum-stock paradigm... "Since Ariba became a public 
company on June 23, 1999," writes Eric Fry "insiders have 
filed to unload about 13.2 million shares of stock, to 
realize about $1.8 billion. That's not a bad haul for 
officers and associated muckety-mucks of a profitless 
company that has amassed less than $200 million in total 
revenues since its inception in 1996." (see: Ariba, And 
All That Jazz

*** The dollar index advanced to 114. Gold dropped $1.50 
to $274. 

*** And over a week after fatuous efforts by governments 
on both sides of the Atlantic...oil is still above $30 
closing yesterday at $32.07... and the euro is still 
below $.90... slipping a skosch to $.87.

*** "The biggest reason for the euro's rout" writes Steve 
Hanke in Forbes, "is the dollar's role as the premier 
international currency."

*** For example "The world prices 90% of its commodities 
in dollars - oil among them," continues Hanke. "When the 
euro was launched, oil was trading at $13 per barrel. Now 
it is fetching $32, a 146% increase. For residents of 
euroland, that has translated into an unbearable 229% 

*** "Thanks to its stability, liquidity and low 
transaction costs," Hanke glows, "the dollar occupies the 
commanding heights, a position that is fortified with 
each passing day." Fortified that is, as long as 
foreigners - through direct investments - continue to 
encourage Americans to spend, consume and fritter... as I 
reported last weekend, American's savings rate dropped in 
August to negative 0.4%... the lowest on record. 

*** "While [foreign direct] investment flows rose 27.5% 
last year to $865 billion, that growth was far slower 
than the 43.5% rise of 1998," reports the Wall Street 
Journal. "The U.S. was the largest recipient of foreign 
investment, as the tendency toward investing in developed 
countries over emerging markets continued." A flight to 
value... it was called in the article.

*** Meanwhile, "you can own the best companies in 
Argentina right now for 68 cents on the dollar" Writes 
Steve Sjuggerud. "By buying the Argentina Fund... you get 
an underlying value of about $15 per share, priced at 
the market price closer to $10. A rise from $10 to $15 in 
this fund would mean a 50% gain for you and me, and the 
stock market doesn't have to rise at all for that to 
happen. The current "discount' to net asset value just 
has to go away." (see: The Best of Argentina For 68 Cents 
On The Dollar

*** I notice too, today that the news headlines are all 
a-glitter with news about Gore and Bush going "head-to-
head" last night. Sounds painful. But maybe they ought to 
try more of this activity. Between the two of them they 
might find a brain.

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"Could September be a down month for the Web?" asked 
James Cramer in a recent column. "Is it possible that not 
only was there no natural lift to the Net come the fall, 
but it has ticked down?"

"Wouldn't shock me," he continues, "the Net has gone from 
being the most exciting thing in our lives to a giant 
drag in no time flat and everybody who's involved with it 
knows this but refuses to admit it. We go right along 
staring at the Media Metrix numbers and page-view data 
and we pretend that everything's just fine. But stocks 
don't lie. The Net, for now, has had it."

Just to remind you, James Cramer was one of the people 
who "got it" early. He founded a web-based financial 
service called "" Like most people, his 
enthusiasms followed his balance sheet. If I recall 
correctly, the Street, sans, once valued Mr. 
Cramer's web business at more than a billion dollars. 

Mr. Cramer was, understandably, very fond of the World 
Wide Web. There are two kinds of knowledge, as Nietzsche 
pointed out and I am fond of repeating. The first kind is 
the knowledge you get first-hand or that you infer from 
the experiences of others. Nietzsche called this 

The second type of knowledge - what Nietzsche called 
erfahrung - is what you might pick up from presidential 
debates...or the editorial pages of newspapers...or you 
might gin up yourself with a little abstract thinking and 
time on yours hands. I'm going to use Nietzsche's terms 
here in the Daily Reckoning in order to give it the vapor 
of pseudo-intellectualism that I strive for. 

Cramer's knowledge was an example of "wissen." Though a 
big fan of the web last year, he began to notice that it 
did not work the way it was supposed to. With no profits, 
there was no way to determine what companies were worth. 
For a while, people thought you could make money on the 
web just by getting a lot of people to visit your site. 
So websites were valued on the basis of how many 
'eyeballs' they had. 

But in a now-famous remark which I reported to you at the 
time, Cramer wrote: "I've got news for you. They don't 
take eyeballs at the bank. They take cash. They only take 
eyeballs at the eye bank." 

As time went on - Cramer found it harder and harder to 
make money on the web...and his stock price fell. But the 
web might soon get a big boost. An explosion of 
bandwidth, says James Davidson, "gives you another chance 
to capture gaudy wealth..."

"In fact," Davidson writes, "I expect that the gigabit 
Ethernet will be just as disruptive as the personal 
computer...I expect exponential growth of bandwidth to 
dramatically improve productivity because it will 
significantly expand the capacity for the effective 
action by the ablest individuals." People can listen to 
Brittany Spears all over the world. 

Davidson's point is that the explosion of bandwidth makes 
it possible for the stars in many other professions to 
develop worldwide audiences - as bandwidth and the web 
destroy borders. 

"Who needs visas?" asks a headline in this week's Forbes, 
making Davidson's case. The article describes a company 
in Santa Clara, CA, that puts engineers, software 
programmers and other specialists on assignment. U.S. 
companies no longer have to settle for 2nd rate local 
engineers. Now they can get the Brittany Spears of 
engineers - from Bengladesh...or maybe Croatia - without 
worrying about immigration. The techies work via 

Will this produce the explosion of "promethean light" 
that Gilder expects? Who knows? But if Cramer is right - 
a lot of people are getting bored with the Web...and it 
may be a huge commercial flop, too. Davidson didn't "get 
it" until recently. 

Meanwhile, Cramer seems to have lost it: "The great sums 
spent to make great [web]sites," he writes, "look like 
colossal wastes if even the best of them, Amazon, is 
having trouble making money. (Is that even the intent of 
those guys? I can't tell anymore.)

"For me, I've seen the absurd, ridiculous anomalies of 
the Web firsthand. You pay $3 a week for Time magazine, 
but it's free on the Web, as though all those technology 
costs associated with publishing on the Web didn't exist.

"So, the Net sinks as we all come to grips with the idea 
that this great medium, which is much faster and more 
alive than the print or the fax or the weekly version, is 
unpalatable as a place to get a return."

Ever willing to go out on a limb on your behalf, dear 
reader, I predicted that the web would be the biggest 
breakthrough since the printing press...and the biggest 
flop since...well...Y2K... 

It looks like I was right. Cramer: "The hope was that the 
organic growth of the Web would morph into something 
advertisers would clamor for even as readers refused to 
pay. The September figures show otherwise.

"It's the Web's endgame. Who would have thought it would 
have arrived so soon?"

Your correspondent in Las Vegas, searching for the 
Promethean light...and never quite "getting it."

Bill Bonner
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)

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Last modified: April 01, 2001

Published By Tulips and Bears LLC