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Contributed by Bill Bonner
Publisher of: The Fleet Street Letter



Today:  The World's Most Despised Stocks

*** The Rise and Fall of Big Tech - NY TIMES
*** 5 straight weeks of falling Nasdaq prices...and 
they're still falling. But now it's official - we're in 
"bear mode."
*** Heating oil supplies on East Coast - "scary"

*** "Run out and get yourself fully invested in 
technology stocks right now-today," advises an e-mail 
promotional message from Michael Murphy. "This time 
around you'll be kicking your profits all the way to the 

*** Elsewhere, economist Paul Krugman, calls the U.S. a 
"miracle economy" where "the good news keeps on rolling 

*** And Ed Hyman reports that equity fund managers are 
still as fully invested as ever.

*** The theory of a tech-led, eternal bull market is 
still intact. But the experience of most investors is 
another story.

*** I'm even beginning to feel sorry for lame-brained Ms. 
Wu. Stocks in South Korea fell by another 4% this 
morning. Damage was widespread in Asia - with the index 
in Taipei also falling nearly 4%.

*** U.S. investors didn't do much better. The Nasdaq 
tried to rally, after 5 straight weeks of falling prices, 
but Mr. Bear was on the floor...and at the end of the day 
prices were down 72 points.

*** The Nasdaq is now, more or less officially, in a bear 
market. It is down 36% from its high - representing a 
capital loss of more than $2 trillion. Wealth effect... 
where are you?

*** Yes, finally, Reuters reported the words of an 
analyst who admitted, "we're in bear mode," as the Nasdaq 
came to rest just 4 points above its May 23rd low of 

*** And now that the bear has been officially greeted, he 
is expected to grab his hat and coat and leave. "We are 
close to the bottom," said Fred Wilson of Flatiron 
Partners, a leading tech and venture capital 
firm. Mr. Wilson also described why Fortune 500 companies 
were not increasing their spending on the world wide web 
in classic terms: "they don't get it."

*** Those poor corporate execs - upon whom the Promethean 
light of the New Era never shines! The Dow went down with 
the Nasdaq yesterday...everyone suffered, New Economy, 
Old Economy...saint and sinner...those who 'get it' and 
those who don't.

*** The Dow lost 110 points. Declining stocks outpaced 
advancing ones, 2 to 1. The ratio on the Nasdaq was even 
greater. And the number of new highs on the NYSE was only 
one-fifth the number of new lows.

*** On Wednesday, when it reached its low for 2000, the 
Nasdaq was down 22% for the year. The Dow was down 9%.

*** "The bear market that began last spring is now on the 
verge of breaking wide open," writes William 
Fleckenstein. Maybe. But 'never underestimate the power 
of denial' says Fleckenstein. 

*** Qualcomm lost $9. Yahoo! was down $17! And Amazon - 
down $2 5/8ths to close at $27 and change.

*** GE is worth more than half a trillion dollars. It, 
too, fell yesterday - after meeting expected earnings 
numbers, but not exceeding them. GE is still trading at 
about 50 times earnings. It yields less than 1% and has 
been growing at about 14% per year for the last 5 years. 
GE may be a great company - but why would you pay 50 
times earnings for such a huge company, with so little 
growth? It doesn't make sense. 

*** Motorola, the world's largest cell phone manufacturer 
fell 19% - after announcing slower growth. Could it be 
that everyone who wants a cell phone already has one? Or, 
that cell phones are no longer a status symbol? My friend 
Greg reports that he was at a funeral where, at the 
dramatic climax, as the preacher's voice was wrapping 
around the "ashes to ashes, dust to dust" lines like boa 
around a swamp rat, the mourning was interrupted by 
someone's cell phone. In another episode, Greg was 
enjoying a private tour of Buckingham Palace with a small 
group... which again, was interrupted by cell phones.
Maybe people have had enough. 

*** I don't even own a cell phone. If you want to talk to 
me, come down to the Paradis bar...

*** Daily Reckoning readers may remember that at least 6 
months ago I called the Big Techs the "worst place" for 
your money. Now this from the NY TIMES: "Many investors, 
and many mutual funds," says an article titled The Rise 
and Fall of Big Tech, "entered this year with their 
largest investment in some of the stocks that have done 
the worst." For example, "Janus Capital, the mutual fund 
company, made headlines in January when it bought an 
entire secondary offering of Healtheon WebMD, since 
renamed webMD, paying $62 a shares. Yesterday, with the 
stock under $10 a share, Janus disclosed that it had sold 
most of the shares." (see: 5 Big Tech Time Bombs You May 
Own - And Not Even Know It!)

*** The price of oil fell a little in NY yesterday, and 
then rose a little in Asia overnight. Or was it the other 
way around? Experts say there is 51% less heating oil in 
stock on the East Coast than there was a year ago.

*** "The American Petroleum Institute (API) reported 
yesterday," writes David Tice, "that U.S. distillate 
inventories (including diesel and home heating oil) 
actually declined over 3 million barrels to 113 million. 
This was the largest drop since February." "Scary" said 
an analyst quoted by Bloomberg. Last year was an 
unusually mild winter. We may not be so lucky this time. 

*** The currency markets, meanwhile, have been fairly 
calm. But there is bound to be excitement ahead. Colin 
Negrych, as reported by William Fleckenstein:

"The U.S. has $65.5 billion in reserves to defend the 
dollar. This is a pittance relative to the value of U.S. 
assets held by foreigners, both securities and business 
interests. When the dollar starts to fall against the 
euro, as it has been doing for years against the yen, the 
"dollar crisis" mentality will take hold. The U.S. 
macroeconomic imbalances make a 25- to 40-percent 
adjustment in the dollar the most likely outcome. This 
event will be resisted in every way possible, but the 
efforts will fail.

"The U.S. has sucked in massive amounts of foreign 
capital with captivating tales of high returns and low 
risk bolstered by high growth and low inflation, all made 
possible by a surge in productivity resulting from the 
application of technology. There is now plenty of 
evidence the foregoing is a fatal fiction."

*** Last year, "there was a bunch of money, but it was a 
bunch of dumb money," said one ad exec on ZDnet News, 
referring to advertising budgets. "We are not 
going to see 17 advertising on the SuperBowl," 
said another. Yahoo! and a host of other Internet portal 
sites are feeling the pinch during this Autumn of 
Anxiety... Yahoo! shares fell 21% yesterday.

*** Kevin Klombies: "When oil prices fall, the drillers 
and service companies get clobbered; when the tech cycle 
ends we find the main customers for almost every one of 
these companies are... other tech companies. Incestuous? 
Absolutely. A pyramid scheme. Quite probably." 

*** "Don't worry about coal going away for one minute." 
says Dan Ferris. In fact, you can expect just the 
opposite. "The electricity crisis could be solved 
overnight. The generating capacity - 85,000 megawatts, 
almost double the capacity of the entire state of 
California's 46,000MW - is available now just by pushing 
existing coal plants."

*** According to Ferris, existing plants use between the 
65% - 70% of their capacity. But they can operate up to 
85%... That extra demand could account for another 150 
million to 200 million tons of coal demand... on top of 
the one billion tons we're currently using. Bottom line? 
Coal demand will continue to track electricity demand. 

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

The Natural Gas Squeeze... 

A Textbook Model for Making Money on Energy Stocks in the 
"New Economy":

- 65% of US households heat with gas... 

- Supplies are 15% below last year's level... 

- High demand + tight supply = skyrocketing prices

Natural gas is right on the heels of oil. Here's how you 
can cash in on next "energy commodity" to shoot higher 
than expected in a very short amount of time: 
* * * * * * * * * * * * * * * * * * * * * * * * * * * * * 


"Oh, it's not the fall
That hurts you at all
It's the sudden stop."

Walking Out
By Percy Sledge

"Contrary to my friend Marc Faber," writes Jim Davidson, 
recently born again as a New Era believer, "I do not 
believe that the High Tech investment boom will soon 
sputter to an end...For those who believe the New Economy 
is just hype, I can only advise you to fasten your 

Fastening ones seatbelt sounds like good advice. But, the 
protection may be more useful against a sudden decline of 
the tech sector than the rapid acceleration that Jim 

The theory of the New Era is that information technology 
has overcome the boom/bust cycle... or that Metcalfe, 
Moore and the Lambda Factor have overpowered Graham and 
Dodd. Value no longer matters. What matters is having the 
right technology. And don't worry about greed and 
fear...or inflation. Anyone who pulls out of tech 
investments now is just a 'scaredy cat,' says Michael 
Murphy. These 'Profit Rockets' as another tech promotion 
calls them, are headed for the heart of the cosmos.

Despite the theory, the world's experience with 
extraordinary market lift-offs of all sorts - as I 
described a couple of days ago - is that they never 
escape the gravity of the boom/bust cycle. They go up; 
then they go down. And they usually come to rest at about 
where they began. If that is the case this time...that 
is, if experience trumps the new era theory...what can 
you expect?

Applying theory will give you any answer you want. 
Clairvoyant Jeff Bezos describes Amazon in 10 years. And 
Al Gore, who invented meteorology, describes the North 
Pole in 50 years. Neither has any clue what will happen 
in such distant future.

But experience gives us a hint of what might happen in 
the near future: 

"Assume that sometime in the future," says Marc Faber, 
speaking of the Nasdaq, "it will give back at least five 
years of previous capital gains (the average period that 
bear markets in the US have given back). Again assuming 
that we saw the peak in the Nasdaq in March (as I 
believe), this would take the index down to around 

A fall in the Nasdaq will almost certainly be accompanied 
by a fall in the Dow. Bears are not that choosy.

So what do you do? How can you protect yourself? Where 
can you invest your money?

"I would expect," writes Faber, "under almost any 
circumstances, an out-performance of value and emerging 
economy stocks compared to major US indexes such as the 
S&P 500 and Nasdaq." (see: Contrarian Profits

While 'the good news keeps rolling in' for the miraculous 
U.S. economy...many other parts of the world have had 
nothing but bad press. Untouched by the Promethean light 
of the new era, their stock markets have been festering 
in darkness...rocked by the booms and busts of investors 
who "don't get it." 

"Generally, every year several stock markets tumble off 
their peaks by at least 50%," writes Edward Bozaan of 
Waterford Partners, courtesy of Marc Faber. "In the last 
two years, there have been more declines in the 70% to 
90% range than ever previously recorded." 

Why do these markets collapse? Bozaan offers the usual 
analog explanations: war, government, currency markets 
and so forth.

"Sri Lanka is a prime example..." he says, "now down 75% 
off its peak. The government's war with the Tamil Tigers 
is now in its 15th year. President Chandrika 
Bandarankaike, whose life is under constant threat, has 
survived two suicide attacks in the last year alone. In 
one, she was severely injured and partially blinded, and 
several dozen others were killed." 

Could darned cheap Sri Lankan stocks now be worth buying 
- as a counterbalance to the darned expensive ones on the 
Nasdaq? Maybe.

"Many stock market declines," Boozan continues, "can 
offer terrific investment opportunities."

Just as every extraordinary market boom seems to lead to 
an equal and opposite extraordinary market bust... 
Newton's law seems to work in reverse. "For example," 
Bozaan explains, "12 months after hitting bottom, most of 
the emerging markets shown below bounced back, with the 
average one gaining 75.8%. Some rose as high as 700%. And 
24 months after their lowest point, many returned with 
remarkable agility and strength: the average one rose 
148.7%, and several rose as high as 1,000%.

Okay. Mr. Bozaan has caught my interest, and I hope 
yours. Tomorrow, I will give you some of Mr. Bozaan's 
recommendations in the world's most despised stock 

Your very humble servant, still searching for the turn on the Promethean Light...

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"

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Last modified: April 01, 2001

Published By Tulips and Bears LLC