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Contributed by Bill Bonner
Publisher of: The Fleet Street Letter



Today:  Rage Against The Machine

*** Saved by a couple pennies of earnings! What a crazy 
*** The Really Big Bottom - still ahead...
*** Amazon orders more books...euro goes - surprise, 
surprise - down!... and $2 trillion goes to money 

*** "Uh, oh...oh la, la"...Rafael and Isabelle, the 
financial analysts who share the office with Addison and 
me here in Paris, were watching the Nasdaq. Yesterday 
morning, it looked like the Big Techs were going to have 
another very bad day.

*** But along came JDS Uniphase with 2 cents more of 
earnings last quarter than expected...and bingo! The 
markets turned around and ended the day in positive 
territory. Why would a couple pennies of earnings by a 
single overpriced company make any real difference to 

*** A back of the envelope calculation suggests that JDS 
Uniphase is selling for more than 100 times earnings... 
after losing $1 billion on about $800 million in revenue. 
If the company continues to grow by 100% per year for 
about 4 years, today's stock price will be justified. 
Will it? I don't know, but I'm perfectly happy to let 
someone else find out.

*** The Dow was up 53 points by the close of business. 
The Nasdaq rose 42 points.

*** 1455 stocks advanced; 1394 declined. 42 hit new 
highs; 108 hit new lows.

*** Each time the Nasdaq seems to be heading towards 
3000, it bounces back. So there was more salacious talk 
of 'bottoms' - with most investors convinced that a Big 
Bottom has been reached.

*** rose another $5 yesterday...pulling itself 
out of the mud. This is good news. Michel reported to me 
yesterday that Amazon had ordered another 60,000 francs 
worth of books from us - including many obscure titles 
that seemed impossible to sell.

*** But someone in the Amazon organization seems to have 
gotten wind of the Daily Reckoning's coverage of the 
Amazon story. Evidently, the folks floating down the big 
'river of no returns' don't appreciate my views. They 
think I don't like the company.

Not true. I love Amazon. Amazon - great company. Great 
business model. Just keep ordering those books.

*** And keep selling the euro. My rent fell again 
yesterday as the euro hit yet another record low. It's 
about 30% down from where it began. 

*** Kevin Klombies, who predicted the ECB intervention 
under $.85 a few weeks back, says $.82 is a support level 
for the euro... he's a buyer at $.80. Rick Ackerman 
expects the Esperanto Currency to drop to the mid-70s. 

*** Everybody had an opinion: "Business at the speed of 
molasses has driven capital out of euros by the 
billions," says the Oxford Club's Steve Sjuggerud. "It 
has been estimated that net outflow from Europe to the 
U.S. this year alone will reach $300 billion. 
Intervention by central banks in the currency markets 
will be helpless to stem the tide. In fact, a crashing 
euro may just be the kick in the pants these 
bureaucracies need." (see: The Bright Side Of A Crashing 

**** Half the stocks on the Nasdaq have lost half their 
value - a total loss of about $2 trillion. That money 
didn't go back to its rightful owners - it disappeared. 
It went to money heaven, where it will no longer be 
troubled by tort lawyers, newspaper columnists, rap 
singers, presidential campaigns, Lee Greenwood, Barbara 
Streisand, MTV or andouillette sausages. The presence of 
any of these things would make the promise of heaven the 
greatest fraud the human race has ever endured. 

*** And half the households in America own stock. 
Hmmm...let's see, that's a loss of about $40,000 per 
household! Yet, according to a University of Michigan 
study the average net worth of American households is 
just over $30,000. Hmmn...

*** And the losses have barely begun. The Nasdaq still 
trades at about 120 times earnings. It will probably fall 
in half, at least, before the Really Big Bottom is 
reached. Like all big bottoms, this one will be the 
result far too much consumption and far too little 
Calvinist discipline. 

*** "The American consumer is rapidly running out of new 
buying power," writes Dr. Kurt Richebacher in his October 
newsletter. Dr. Richebacher notes that consumer spending 
is going down. Why? "If you think it's due to credit 
restraint, you are grossly mistaken," he continues, "This 
restraint is coming from a highly surprising and, above 
all, ominous source: sharply lagging growth of personal 
real disposable income." In all of 1999 and the first 
half of 2000 real disposable incomes have been growing at 
less than half the rate of the GDP. And GDP grew at about 
half the rate of debt. And with the wealth effect in 
reverse and picking up speed, Americans have little money 
to spend. (see: Free Fall of the Dollar - a la 1987)

*** Oil rose 75 cents. Gold fell $1.30. 

*** There are rumors that a big bank in Argentina is 
close to going broke. Argentine Brady Bonds fell to yield 
more than 9% above U.S. government bonds. Now, there is a 
rumor of a U.S-led bailout. Take your pick - Argentine 
bonds or Amazon bonds. Both bring you more than twice the 
yield of U.S. bonds. But which is most likely to pay off?

*** "The Mexican government has a history of developing 
little bits of its coast," writes Kathy Peddicord from 
Mexico. "Now it has set its sights on the Costa Maya. 
Traveling in this region in early August I saw diggers at 
work cutting new roads and crews at work stringing 
electrical cables. The infrastructure is on its way. Soon 
these long stretches of white sand won't be so difficult 
to get to. And when access is easier...prices will rise."

"This is a moment of opportunity for the investor," she 
adds. "This land will be worth more in a few years than 
it is today. Maybe a lot more." (see: Return to Costa 

*** An actual telephone call at the office yesterday:

"Hello..." Rafael answered the phone.

"'re not Amelie. I was calling my cousin 

"I'm sorry, Madame, but there seems to be a problem with 
the phones lines...we often get wrong numbers..."

"Did I dial the wrong number...?"

"'s probably the right number ... the lines must 
be crossed..."

"Well, could you give her a message...?

"But, Madame, she is not here...this is a publishing have the wrong number...

"But you said it was the right number...Then let me speak 
to Georges..."

"You don't seem to understand, the phone lines are dialed the right number...but you reached 
me...not your cousin..."

"What are you doing in her apartment...?"

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"I think I will strangle myself."

Thus did Henry, 10, begin his letter. 

One of 6 children, Henry realizes that a little dramatic 
flourish will get the reader's attention. 

It turned out that he was not really upset...but merely 
frustrated. He has been staying at an abbey deep in the 
French countryside with his school class. He mentioned 
something about a fire - but, like the key clue in a 
mystery novel, gave no further details. His only 
complaint, with himself, was that he kept losing pens and 
pencils - and perhaps underwear.

Henry seems to have a flair for writing. In an earlier 
stage of his academic career, parents were called in to 
the school to encourage the children to write. Each 
parent worked with two or three students. But Henry was 
so prolific, he needed one long-suffering parent all to 

And maybe I have already told you this, but I will do so 
again - the story of how Henry, at the age of 6, came to 
be considered a genius by his teachers.

You may be wondering, as you often must, what this has to 
do with investing. Well, I don't know either. But since 
the Daily Reckoning is free, I feel entitled to some 
gratuitous bragging about my children from time to time. 
And perhaps, you'll find something in this story or what 
follows that may be useful to you.

When kids begin school they are given a simple test to 
make sure they are ready. The children at 5 or 6 cannot 
yet read, so pictures of various things are held 
the kids are asked to identify them.

Well, the background to the story is that we were living 
on our farm in Maryland, and Henry would help milk the 
cows and goats from time to time. Being an inquisitive 
chatterbox, he kept the dairyman busy by asking 
questions, inducing a flow of information about the dairy 

So, when the teacher held up the cards, Henry correctly 
identified the cat as a cat, and the dog as a dog...but 
when he got to the cow Henry chirped, "Oh...that's an 
American short-horned milking breed."

Part of the program out at the abbey was an introduction 
to computers and the Internet. Every child in the 
civilized world is now supposed to learn how to use the 
Internet before he learns how to conjugate verbs or find 
the median line of a triangle.

What's more, teachers now expect their students - at 
least here in Paris - to have access to the Internet at 
home. Homework assignments often involve Internet 

So important is Internet access thought to be that 
editorialists worry about the 'Internet gap' between rich 
countries and poor ones, and between black and white 
population groups in the US.

At this point, dear reader, you may be expecting a 
curmudgeonly - almost sourpuss - comment from your 
editor. I won't disappoint you: 

Now that the Internet is considered an indispensable 
learning tool, I can't help but wonder how the poor 
unfortunates in pre-Internet, pre-Bandwidth plenty era 
ever got along. Aristotle, Archimedes, Plato, Plutarch, 
Gallileo, Michaelangelo, Erasmus, Pascal, Newton, Jimmy 
Rogers, Jefferson...why do I even bother to list the 
names? Rockefeller, Carnegie, any era, in any 
pursuit...throughout all of mankind's history - people 
have done remarkable things without ever getting an email 
message or typing out www. 

Dylan Thomas, who was born on this day in 1914, wrote in 
ink on - would you believe it - paper:

"In my craft or sullen art
Exercised in the still night
When only the moon rages
And the lovers lie abed
With all their griefs in their arms,
I labour by singing light
Not for ambition or bread
Or the strut and trade of charms
On the ivory stages
But for the common wages
Of their most secret heart"

"What we call progress," said Havelock Ellis, "is the 
exchange of one nuisance for another nuisance." 

The Internet is certainly a handy communications tool... 
like the telephone or the television. But it doesn't 
improve the quality of a writer's poetry...and could even 
reduce the wage rate 'of their most secret heart.' Like 
TV and the telephone, the Internet is a great tool for 
people who want to waste their time or the time of 

Hardly a day goes by that doesn't demand hours of time 
spent handling various Internet-related chores. My e-mail 
in-box has hundreds of messages in it at any given 
moment. Which ones are important? Which ones are insipid? 
Which ones will interrupt my thought process or maybe 
even my sleep? I just don't know. But I know it will take 
me a long time to find out. As I have pointed out many 
times, the world has not too little information, but too 
much - most of it useless rubbish.

No respectable desk from Helsinki to Singapore is without 
its computer screen. Take it off, and the desk is like a 
4-star general without his clothes on...a figure of 
ridicule and contempt. And yet, how many hours of each 
working day are wasted, sorting through the useless 
information delivered in bulk via Internet?

Sophia, doing a research project for school, spent hours 
on the Internet trying to find out about some event in 
history. In less than a minute, better information was 
available from a discarded set of encyclopedias, now 
gathering dust on the shelves, like the forgotten horse 
collars in the barn. 

You may want to disregard this letter as the ruminations 
of a romantic fuddy-duddy, but not every technological 
development is beneficial. Television, which lights up 
the houses of even the poorest families in America, is 
probably a net loss to everyone. Hours and hours are 
wasted in silent viewing - which could have been used to 
produce things...or at least to get in a good argument 
with your spouse. Who has not lost a good drink...or a 
good meal...or maybe even moment of honest reflection to 
the constant bawling of the electronic media?

Are people richer since the advent of the Information 
Revolution? Not really. Real incomes peaked in the 70s. 
People work more hours now, and more family members work 
per household, but real disposable income per hour worked 
is actually down. And most recently, as noted above, real 
incomes are actually rising at only half the rate of the 

What's more, the Internet is expensive - eating into net 
family income like a starving Ethiopian into a banana 

"Twenty years ago," observes Marc Faber, "[a family] 
spent its income on housing, clothing, food appliances, 
cars a radio and a TV. Today, it will spend additional 
money on a DVD player, computers, fax machines, printers, 
several cellular phones and a whole host of other new 
electronic gadgets...modern society requires people to 
continuously enlarge the 'basket of goods' that are 
considered necessary to lead a 'good life.' 

My question is simply this: is all this communications 
gear really improving the quality of life? Or is it 
impoverishing us...drowning us in trivial pursuits and 
time wasters as television did?

If the Internet does not make us richer...perhaps it 
makes us happier. The most popular websites, I am told, 
are those that offer pictures of people without any 
clothes on...doing things that are usually done in 
private. Surely, this amusement must lift the spirits of 
the general population. After all, Bush's comment that a 
NY TIMES reporter resembled a 'major league' fundamental 
aperture lifted his poll standings. 

But the only surveys I have seen on this subject suggest 
just the opposite. People report that they are less happy 
today than they were before Al Gore invented the 

The only figure I have readily in hand is this (from the 
Internet, of course):

*** A shrinking share of Americans is happily married. 
The percentage that said their marriages were "very 
happy" fell from 60% in the mid-1970s to 53% by the late 

What to make of this? What to make of the Internet...and 
all the other communications paraphernalia...? 

It is not necessarily bad...but like every technological 
'improvement' - it comes at great cost.

Your upbeat...plugged in...e-savvy correspondent...

Bill Bonner

P.S. Soon after Henry was declared a 'genius,' I decided 
to conduct my own test:

"Henry," I asked, "if you were in the bathtub with the 
water running...and the water was getting up to the 
rim...and you couldn't turn the water off...what would 
you do?"

"Uh," said the genius pre-schooler, who didn't think of 
pulling the plug, "go get you, Dad."

P.P.S. A better-known poem from Dylan Thomas:

"Do not go gentle into that good night,
Old age should burn and rave at close of day;
Rage, rage against the dying of the light.

Though wise men at their end know dark is right,
Because their words had forked no lightning they
Do not go gentle into that good night.

Good men, the last wave by, crying how bright
Their frail deeds might have danced in a green bay,
Rage, rage against the dying of the light.

Wild men who caught and sang the sun in flight,
And learn, too late, they grieved it on its way,
Do not go gentle into that good night.

Grave men, near death, who see with blinding sight
Blind eyes could blaze like meteors and be gay, 
Rage, rage against the dying of the light.

And you, my father, there on the sad height,
Curse, bless, me now with your fierce tears, I pray.
Do not go gentle into that good night.
Rage, rage against the dying of the light." 
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

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