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Contributed by Bill Bonner
Publisher of: The Fleet Street Letter



Today:  Deathwatch

*** Oooh...that Mr. Market - always full of tricks...

*** "Election Still in Doubt" says a headline on today's 
Reuters wire...I know I have my doubts...Hillary for 

*** When the going gets tough...Heidi gets going; More poop 
on miracle of collective thuggery...and, 
yes, more!

*** Mr. Market is full of surprises. On Tuesday analysts 
were almost unanimous - whoever won the election... 
Wednesday would produce a rally.

*** Well, Wednesday came and went. Neither Mr. Bush nor Mr. 
Gore had won. And the market did not rally. Instead, the 
Nasdaq fell more than 5% - or 184 points. The Dow was down 
too - 45 points.

*** You have to admire Mr. Market - he always seems to have 
some tricks up his sleeve and always finds new ways to make 
fools out of us.

*** Take poor Henry Blodget - the Merrill Lynch Internet 
analyst who never met a he didn't like. He was 
bullish when the dot.coms hit the market as IPOs. He was 
bullish when prices shot up into the stratosphere. And he's 
still bullish - now that they've come back down with a 

*** For example, Mr. Blodget was bullish on when 
it trading at $14... and then, after the stock had fallen 
about 90% - he downgraded his rating from "buy" to 
"accumulate." If you wanted to accumulate shares you 
certainly could have gotten a lot of them. They were 
trading at only 8 cents on Tuesday when the company 
announced that it was putting itself to sleep.

*** Of course, the e-pet lovers did everything they could 
do to save the company. But, to paraphrase a NY Daily News 
headline from years ago: Wall Street to Dot.coms: DROP 
DEAD. More below...

*** Meanwhile, is also in the news as another 
key executive announced her departure. Fortune Magazine's 
2nd most powerful woman in business, Heidi Miller, said she 
was leaving last week, after 9 mo. in the world - 
and about a 90% collapse of the stock price. When Heidi 
joined things were much different. The 
financial media wondered how Old Economy companies would be 
able to keep talent in the face of competition from the 
stock options and glamour of the world. Now we know 
the answer. When the going got tough for Ms. Miller, she 
got going - and will probably end up right back in the Old 
Economy where she began.

*** "The American people have now spoken," Bill Clinton is 
reported to have said to the NYTimes, "but it's going to 
take a little while to determine exactly what they said."

*** With the election still in doubt, analysts described 
Wall Street yesterday morning as a "wait and see 
situation." But investors could not wait to dump tech 
shares. Cisco had let the cat out of the bag: inventories 
were piling up - look for weak sales ahead. Cisco fell more 
than $4 yesterday. Broadcom sold off by $24. 

*** The whole sparkling spectrum of the tech rainbow 
clouded over yesterday. And a few companies, such as, mentioned above, plunged into darkness. - the name-your-own-price auction site - fell 

*** 1301 stocks advanced on the NYSE yesterday. 1477 
declined. There were 86 new highs; 38 new lows.

*** The dollar rose - with the Dec. Dollar Index up to 118. 
The euro, of course, fell - but it still above its previous 

*** "Today, Europe's central banks sit on a huge dollar 
hoard of $222 billion," writes Dr. Richebacher. "One of the 
arguments against selling dollars is that it would come at 
a heavy cost to the ECB's exchange reserves. But what is it 
that makes these reserves so precious? ... Nothing but 
foolish thinking." 

*** In fact, Richebacher wonders, "what would happen to the 
euro-dollar exchange rate if the ECB declared its dollar 
reserves 'excessive', and decided to unload about $50 
billion? To be sure, the mirage of dollar strength would 
vanish within minutes. It would cause panic. Under a system 
of floating exchange rates, such a decision appears 
rational." (see: Europe's Large Dollar Hoard

*** Oil fell slightly. Gold rose 70 cents. 

*** The election is still in doubt. But whoever wins may 
turn out to be the big loser - perhaps the Herbert Hoover 
of the 21st century. William Fleckenstein explains:

"When millions of Americans realize that not only are they 
not going to be rich soon, but they may also have problems 
keeping their jobs and retiring at all, whoever is in power 
will be blamed. 

"[I]t is almost preordained ...given the size of the bubble 
that has been created and the number of participants that 
have become involved. The stock market is the economy. It 
is on shaky ground and bad things are going to happen. In 
my opinion, it is not debatable and the die has been cast."
(see: It's Not About Indecision

*** "Those whom the gods wouldst destroy are granted their 
first wish." That warning from ancient Greece may apply to 
presidential contenders as well as American consumers 
looking for something for nothing. American conservatives, 
voting for George W. Bush, could find their worst 
nightmares realized - as predicted by William Rees-Mogg 
more than 9 months ago. Lord Rees-Mogg guessed that 
Republicans would win the White House - but that they would 
be destroyed by the inevitable collapse of the great 
financial boom.

*** Then, the nation, troubled and bitter, would turn to 
the junior senator from New York for presidential 
leadership in the 2004 election: Senator Hillary Clinton.

*** But we will have to wait and see.

*** One DR reader was disturbed by the logic of democracy. 
His idea, stripped of its puerile slogans, is that people 
who resent taxes are selfish and uncaring. And yet, if this 
same reader were confronted by a group of thugs in a bad 
neighborhood, he would probably be offended if they took it 
upon themselves to redistribute his wealth. Isn't it 
amazing how collective thinking transforms grand larceny 
into a virtue? Even more remarkable is that the voter, like 
the thug, gets to express his own virtue collectively, with 
other peoples' money ...and thus relieves them of the need 
to actually be kind to the poor fellow next door.

* * * * * * * * * * * Advertisement * * * * * * * * * * * * 
Before Labor Day we began with a simple warning...


Bear market sentiment works hardest against the bull's 
highest flyers: Intel, Sun, Oracle - you name a tech 
darling - we'll show you how far they will fall...

? Yesterday's carnage: Oracle down 6.59%, Cisco 
down 8.15%, Intel down 7.58%, and Sun - nearly 
a perfect 10 - down 9.98%. 

? Trouble is, you may own these stocks and not 
even know it. If you still haven't - now is the 
time to check your 'retirement' money. Will it 
be there when the bear is done mauling? 

Your FREE report: "While The Nasdaq Burns" will tell you 
which stocks to sell. And, suggest 7 value-for-all-time 
companies to keep your money safe. After a day like 
yesterday - you simply can't afford to miss While The 
Nasdaq Burns. Read it immediately.

While The Nasdaq Burns:
* * * * * * * * * * * * * * * * * * * * * * * * * * * * * *


A few months ago, Gary North reminds us, the cover of Money 
Magazine told investors how to get rich:

Tech Stocks: Everyone's Getting Rich!
Here's how to get your share.

That should have been a tip-off...when 'everyone's getting 
rich' - it's time to sell, not to buy. 

"A week later," Gary continues, "the Nasdaq peaked. Now the 
mania is faltering. One sign is the enormous volatility of 
stock prices. On October 25 Nortel Networks fell 28% in 
three hours... Why? Because it announced earnings of 18 
cents per share...' beating Wall Street estimates of 17 
cents a share... But its revenue 'fell below analysts' 

Investors are no longer in love with techs and dot.coms. In 
fact, the relationship has gone a little sour. At times, it 
seems that investors are just waiting for an excuse to dump a man waiting for an old car to break down so 
he'll have an excuse to buy a new one.

Owning techs is no longer cool. In fact, it is as likely to 
be a cause of embarrassment as pride.

If, a year ago, you had told someone that you were loaded 
up with Intel, Cisco, Nortel, Amazon, Dr. Koop and the 
other 'must own' shares of the Information Age, and you 
would have immediately signaled that you were forward-
looking, successful...maybe even rich. 

But now, the same statement will provoke looks of pity and 
contempt - the kind of looks that are normally given to 
people who forget to attach the cords to the bungee before 
they jump. "How could you be so stupid?" will come to the 
minds of your interlocutors, if not to their lips.

The collective mood that drives stock prices has changed. 
Several websites have sprung up specifically to mock the 
losses in the area. Instead of marveling at 
the new tech and net breakthroughs of the New Economy - as 
did the aforementioned issue of MONEY MAGAZINE - these 
sites watch 'burn rates' and estimate when companies will 
run out of money. As Gary North put it, "The venture 
capitalists will become vulture capitalists. They will buy 
the bankrupt mistakes of other venture capitalists for 
pennies on the dollar."

One of these sites is called Deathwatch. Dr. North quotes 
from the homepage of October 16:

"Most of the stocks on Deathwatch are in the tank, just 
like we predicted. Not that this is rocket science. All we 
do is look at cash flow. When you run out of money, you're 
in trouble. The incredible thing is that, for a brief 
period in 1998 - 1999, people believed otherwise."

"Some stock graphs on Deathwatch have flat-lined. Trading 
in those stocks has ceased. We'll be seeing more of those," 
says Deathwatch triumphantly.

Ray DeVoe surveyed the carnage in mid-October. 

AOL - down 44%
AT&T - down 59%
Cisco - down 39%
Dell - down 61%
Hewlett Packard - down 38%
Intel - down 52%
Microsoft - down 55%
Lucent - down 76%
Oracle - down 33%
Worldcom - down 59%
Yahoo - down 73%

Ray discovered that $2 Trillion of market capitalization 
had been lost in just 14 of the biggest, most popular tech 
stocks. (see: What Went Wrong With Wall Street

Smaller companies suffered even greater damage:

Breakaway Sys. (seems to have broken down) - down 96%
MicroStrategy (now with a micro cap) - down 93%
Palm (which seems to have lost its pilot) - down 71%
Priceline - down, down, down 97%.

Gary North quotes Christopher Byron with a similar 
recitation of the wreckage on Oct. 23:

"Almost all advertiser supported Internet stocks have 
similarly collapsed," wrote Byron. "24/7 Media, Inc., an 
Internet advertising shop, has dropped 89 percent so far 
this year, to about $7. DoubleClick Inc., the leading 
Internet ad agency, has fallen 90% to $12. Even Yahoo, 
Inc., the largest online search service and bluest of the 
blue-chip Internet stocks, has dropped 74 percent since 
Jan.1, to $55.25."

"All business-to-consumer Internet stocks have crashed," 
continues Byron, and "Almost all business-to-business 
stocks have tanked."

The Financial Times today carried an article about, whose shares dropped below one pound 
yesterday. The company made its co-founder, Martha Lane-
Fox, famous as "the best-known woman in the world." 
But is down 80% from its peak and is now a 
penny share - where probably most of the surviving dot.coms 
will end. 

"What major financial columnist or economic forecaster 
predicted any of this in January," asks Dr. North. 

"The U.S. stock market mania has captured the financial 
experts," Dr. North continues, "as thoroughly as it has 
captured the investors." 

And it is far from over. The Nasdaq 100 still has a P/E 
ratio of 125 - with a lot more downside and many more 
deaths to watch before health is restored., though now a penny share, still has 90 
million pounds in cash. At their present burn rate of 4 
million per month - they can survive for nearly two years. 
Perhaps in that time they will even discover a way to make 

And the company still has a market capitalization of 150 
million pounds. How much will the company be worth if and 
when if finds a profitable business model? Maybe 10 million 
pounds. Maybe nothing. But the deathwatch on the tech 
sector won't stop until the rattles and wheezes have ended, 
last rites are performed, and the corpses are finally 
dumped in Potters field.

Hallelujah, even unto the grave.

Your cheerful, caring correspondent...

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...

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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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Last modified: April 01, 2001

Published By Tulips and Bears LLC