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Contributed by Bill Bonner
Publisher of: The Fleet Street Letter



Today:  All Saint's Day

*** IT'S ALIVE! Tech Comes Back from the Grave! 
*** Telecoms connect...Nasdaq revives...up more than 5%...
*** But consumer confidence's just not the 
same... Edgy cows...false notes...and more!

*** Just as we were admiring the corpse of the big 
Technology Boom...recalling all the amusing moments we've 
had with the Cisco Kids and the River of No Return...

...Yes, and I admit, a tear was rolling down my cheek as I 
bid farewell to all the over-hyped wonders of the New 

...and then, all of a sudden, the Nasdaq sat up in its 
coffin and roared!

*** The Big Tech index rose 177 points - or about 5.5%. All 
the familiar forms came back to life. Cisco rebounded 
$5.81. Oracle jumped $1.38. "A lot of people," said Bill 
Meehan in the Financial Times, "were waiting to get back 
into Cisco and Intel." 

*** Apparently they were. The techs were "pretty 
attractive," said another analyst. So, investors bought the 
dip and there was rejoicing on Wall Street and throughout 
its many mass media outlets. Even Amazon went up nearly $4.

*** One source of the resuscitation was the French telecom 
company, Alcatel, which reported an increase in profits of 
109%. This put some juice back in the whole telecom 
industry. And with it, the rest of the tech sector seemed 
to revive too. As the Financial Times headline awkwardly 
phrased it, "Technology Is Back In Wall Street Good Books." 
[Good books? Exactly what is that supposed to mean? Maybe 
one of our British readers could translate.]

*** But the Nasdaq still ended the month of October down 
8%. From its peak in March to its October low, the Nasdaq 
lost more than 40% of its value.

*** But yesterday, there was no looking back. Once the 
cadaverous Nasdaq seemed to have made a miraculous 
recovery, the euphoria was hard to contain. The Old Economy 
rose along with the new. The Dow ended the session up 134 
points. There were 2047 stocks advancing on the NYSE; 893 
declined. 99 hit new highs; 51 hit new lows.

*** Dow stalwart GM motored 4% higher...Home Depot hammered 
up 5%.

*** And IBM rose 5%. But Big Blue is in a class by itself. 
The immediate reason for its share price boost was that the 
company announced it would - surprise, surprise - buy back 
more of its shares! 

*** Share buybacks have been IBM's major financial strategy 
for many years. "Since 1995," wrote Jim Grant recently, 
"Big Blue has spent $36 billion on share repurchases, $1 
billion more than its accumulated net income over the same 

*** Well, what's wrong with that? Investors are supposed to 
buy what they know...using their own personal erfahrung to 
gain an edge on other investors. Who knows IBM better than 
its own board of directors and managers? 

*** Uh...just one problem. The idea is to buy low. Serious 
investors accumulate assets at bargain prices...trying to 
avoid driving up the price. IBM does the opposite. 

*** "Early in 1995," explained Jim Grant, "IBM was paying 
2.3 times book value for its own shares... In the first 
three months of 2000, in what may or may not prove to be 
the last days of this long-running fandango, it paid 10 
times book..." This despite the fact that the company now 
carries 80% more long-term debt than it did in 1995.

*** The price of oil rose in Asian trading this morning - 
to just below $33/bl. Oil inventories in the U.S. still 
seem to be going down. There's a cold wind blowing here in 
Ouzilly... does it portend a colder winter? If so, the 
price of oil could return toward $40 a bl.

*** Consumer confidence took its biggest plunge since 1998. 
The Autumn of Anxiety syndrome is reaching into the homes 
of Mr. And Mrs. Middle America. 

*** But, for no particular reason, new home sales rose 9.2% 
in September.

*** Bond market quality spreads are at their highest levels 
since 1991. A recession is coming, says Bill King.

*** Investors, business people, and consumers are nervous. 
Equities, Earnings, Energy, the Economy...all the E's are 
troublesome. Something is different... (see: When Will 
Investors' Psychology Change?

*** "What did they know, and when did they know it?" asks 
William Fleckenstein. "With about the same frequency as the 
publication of the latest Stephen King novel, Merrill Lynch 
released another of its super-duper lists last week - the 
10-best recommended stocks of all time (or until they 
change their mind). One stock on the list was Solectron. 

"This morning Solectron announced that it is going to 
acquire an Asian competitor for $2.5 billion and, wonder of 
wonders, the company needs to raise some money through 
equity and zero-coupon bonds entitled LYONs - a vehicle 
pioneered by Merrill Lynch. My question is, did the stock 
make the list because Merrill knew financing is coming? 
Nah, they wouldn't do that, would they?"

*** A congressional advisory group has recommended new 
federal subsidies to bridge the "digital divide." Think how 
much better Shakespeare's tragedies would have been if he 
had not been on the wrong side of the digital divide. Or 
Einstein's equations! 

*** Here in the middle of the French countryside, people 
seem edgy. Pierre was so concerned about the 'tension' 
caused by having Francois still working around the farm 
that he came to see me to ask me to get rid of him. 

*** Even the animals are edgy. Yesterday morning, two of 
Pierre's prize bulls were standing out in the middle of the 
road. The animals are so handsomely contoured - they make 
me hungry just looking at them.

*** After three practice sessions, the little choral group 
at St. Marcel's is to perform live today - at the 11 
o'clock mass for All Saints day. We never did quite learn 
our parts - but my hope is that the false notes will 
average themselves out...and the music will echo off the 
stone walls with confidence, if not accuracy.

*** So, you are spared. I don't have time to elaborate on 
when investors will meet their Waterloo, as promised. It 
will have to wait until tomorrow. Below you'll find an 
essay from the Daily Reckoning vault... adroitly selected 
by Addison, who's tapping his way through yet another 
French holiday in Paris.

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market briefly recovered... 

Following the carnage of October, stocks rose until April 
1930 - up 20%. Everyone thought the "correction" was over. 
Then in late 1930, the stock market got hammered again. By 
mid-1932, it had lost 90% of value. THE LESSON: never 
assume the worst has already passed. 

In Today's FREE INVESTOR'S LIBRARY you'll find two solid 
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Isabelle, here in the Paris office, tells me that just 2 or 
3 years ago the French didn't even celebrate Halloween. You 
sure wouldn't know it if you had taken le metro home last 
night. There were goblins, creepy drooling men, and witches 
galore. Some people even wore costumes. The French have 
truly begun to get into the spirit of Festivus... more 


p.s. This episode of The Daily Reckoning originally aired 
on November 1, 1999... enjoy. 


"Pumpkins. I'm going to plant pumpkins next year." Pierre 
has been raising beef - big, beautiful Limousin beef - and 
sheep for many years. 

But the European Union is forcing down the subsidies for 
beef. And sheep are disappearing from the region 
altogether...there are no longer any subsidies available 
for sheep farmers. French farmers cannot compete with those 
in New Zealand and Australia. And wool prices are so low it 
no longer pays to shear the sheep. 

Cereals, on the other hand, are heavily subsidized. The 
difference, Pierre explained, came about because the cereal 
growers could leave their farms in slack seasons and go to 
demonstrate in Brussels. Large groups of farmers always 
strike fear in what passes for the hearts of politicians, 
so the cereal farmers typically get half to two-thirds of 
their income from the subsidies...not from selling food. 

Farmers who raise livestock, on the other hand, cannot get 
away. They're forced to stay on the farm day after day to 
take care of the animals. They pose less of a threat to the 
taxpayers' purse. Even with the subsidies still in place, 
raising cattle is not a way to get rich. Pierre has 
suggested that we put our farms together. Apparently, you 
need bigger and bigger holdings to make money. And he needs 
to build a big new barn to make the operation more 
efficient. The return on investment? About 2%. 


Maybe pumpkins are the answer. The big orange vegetables 
are new to France. So is Halloween. All Saints' has been 
recognized and celebrated for many centuries. But Halloween 
is a new import from America, along with the whole shebang 
of decorations, customs and commercial opportunities that 
accompany it. Department store workers wore costumes in 
Paris last week -- stimulating interest and sales, no 
doubt. Even out here in the middle of nowhere, Halloween is 
catching on. 

My children held the first Halloween party in this region 
three years ago. The invitees had barely heard the word at 
the time. The kids took a candlelight tour of our attic, 
with staged shows of various spook-house exhibits. In one 
room, however, I decided to surprise them. I lay on a a room with wallpaper peeling off the walls and 
creaking floorboards...and put a sheet over me as though I 
were a corpse waiting for an undertaker. 

As the kids came in, I began making a low growling 
noise...and then sat up. The kids were so alarmed and 
shrieked so loud I was afraid someone would call the 
police. Then they flew down the circular steps so fast that 
their little bodies were still spinning like tops as they 
swirled out the front door and into the yard. 

That was three years ago. Now, Halloween decorations are in 
many stores. 

Along with new things to buy and a new opportunity for 
secular celebration. 

There is a world of difference between All Saints' and 
Halloween. The spirits that one honors on All Saints' were 
not, after all, all saints. They were real. They were 
spirits that might be honored...or feared. (Of course, if 
you don't believe in the spirit have no 
business celebrating All Saints' anyway.) 

But regardless of your views on the afterlife, All Saints' 
requires at least some reflection...on the lives of our 
forebears, on the challenges they faced and perhaps the 
lessons that could be learned from them. At the very least, 
you might stand before the grave of someone you 
knew...offer flowers...and spend a moment recalling the 

This is not a ritual that lends itself to the Internet age. 
(But who knows...maybe you'll be able to order flowers via 
Internet...and maybe the screen will prompt you to think 
about certain aspects of the deceased. And maybe will be a big hit as an IPO, giving people a 
way to celebrate the ancient holiday without ever leaving 
their day-trading terminals.) [Who would have thought this 
comment would seem so outdated just one year later?... 

Halloween, on the other hand, is an example of what 
Philippe Muray calls "Festivus." Muray has noticed the way 
in which the genuine, dark, primeval, wild and dangerous 
currents and undercurrents in society have been tamed...and 
transformed into harmless celebrations. This applies not 
merely to the shift from All Saints' to Halloween, but also 
the political process, where genuinely revolutionary 
parties have been replaced by a token opposition and 
emasculated rebels. 

Last week I noted how you cannot even say what you want 
about taxes anymore...without fear of criminal prosecution. 
Yet, is there any real opposition - of a sort that might be 
described as dangerous to the government? No, we celebrate 
the First Amendment now; we do not practice it. 

Likewise, America celebrates liberty. It is like empty expression...a hollow festival... 
something to feel good about. No reflection required. No 
risk, either. But what would the ghosts of Jefferson and 
Adams think of us? 

Who cares? As the GDP increases...stocks rise...and the 
spirits of Liberty remain in the grave...pumpkins are the 
business to be in. 


Bill Bonner

P.S. Reader Kathryn George straightened me out. All Saints' 
Day was first celebrated in 607 by Pope Boniface IV, when 
he converted the Pantheon Temple to Christian use. It was a 
day to remember the Christian martyrs persecuted by the 
Romans. Pope Gregory II proclaimed the following day, Nov. 
2, All Souls' Day, to remember all dead Christians. The 
French, always torn between Catholicism and rationalism, 
compromised...rolling them both together into a national 
holiday on the 1st. 

Halloween, on the other hand, is a pagan Celtic 
ritual...imported to America from Ireland. Some Christians 
are appalled at the rise of Halloween over All Saints', on 
this, the 2000th year since the birth of Christ. They 
believe Halloween honors Satan, and marks a return to 
paganism by modern society. 

But the truth is, the rise of Festivus means that all the 
gods...even pagan gods...are dead or dying. Is there a day 
set aside to honor dead gods? Who gathers at their 
gravesites to remember them? How about Huitzilopochtli? It 
is said that as many as 50,000 maidens were sacrificed to 
him in what is today the capital city of Mexico. Surely, 
that deserves a moment of reflection. 


FESTIVUS - Festivus is the name given by Philippe Muray to 
the latest phase in European (including American) 
civilization. The gods are all dead. So are the 
politicians. Who would die for his religion today? Who 
would die for his politics? Or for matters of principle? 
Serious ideas, holidays, ideologies, virtues, religions, 
cultures and convictions have all been hollowed out. They 
are no longer honored. They are merely celebrated.
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...

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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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serious warnings and the state of the market with gentle humor"

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Last modified: April 01, 2001

Published By Tulips and Bears LLC