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Contributed by Bill Bonner
Publisher of: The Fleet Street Letter

FRIDAY, 19 MAY 2000 



*** The thrill is gone from this market...
*** Dollar hits new highs, gold doesn't budge
*** No Boo-Hoo in Soho

*** The thrill is gone. The Dow rose 7 points yesterday. 
The Nasdaq fell 106 points.

*** Investors seemed to be abandoning the big cap tech 
stocks -- against which I warned you weeks ago - in favor 
of utilities and financials. 

*** Cisco was hot a few weeks ago. Investors were happy 
to buy it at $81. Now you can pick up a share for $56. 
Microsoft, too, has been discounted -- from $119 a few 
months ago to $66 yesterday. And AOL traded hands at $95 
earlier this year. It is now at $55.

*** The market hasn't crashed. But it has changed. Fear 
hasn't moved in and taken over. But it has visited once 
or twice. Investors are more cautious than they were in 
March. That caution could, of course, disappear in a 
summer rally. We'll have to wait and see.

*** The "WSJ" reports that there are 380 IPOs waiting for 
an opportunity to go public. But times have changed. IPOs 
are no longer guaranteed to go up. Investors have gotten 
much more selective.

*** Another "WSJ" report says that lenders are giving 
away PCs to encourage borrowers. Could it be that even 
consumers are getting just a teensy bit worried too? Now 
they have to be bribed to go further into debt. These 
free PCs must be among the most expensive pieces of junk 
a family can acquire. In the "WSJ" example, a sub-prime 
borrower will make payments on a $40,000 mortgage until 
2015 -- at which time, she will have paid $79,560 and 
still owe a lump sum of $34,971.

*** Oil rose about a dollar -- to $30.33. Gold did 
nothing. And the dollar rose to a six-year high against 
the British pound, a 15-year high against the New Zealand 
currency...and an all-time high against the South African 

*** Nearly all of Africa seems to be drifting into the 
heart of darkness. "The Economist" calls it "The Hopeless 
Continent" on the cover of this week's issue. A photo in 
today's "Times" of London shows an infant whose hand was 
cut off by rebels in Sierra Leone. And investment guru 
Jim Rogers, who is famously traveling in Africa with his 
companion, sent an email yesterday saying he was "scared 
to death." Guns, murder...hey, it's just like home. 
You can follow Jim's journey into the heart of Africa on 
his website 

*** Have you seen RJ Reynolds lately? It's trading at 1 
times earnings and yielding 12.5%. It has $1.756 billion 
(unaudited) in cash. And the lowest price per share -- 
$24 -- in the Dow 30.

*** Reuters reports that companies are going into default 
faster than they did a decade ago when the junk bond 
market collapsed. David Wyss, chief economist at Standard 
& Poor's: "If this is happening at the peak of an 
economic boom, what happens in the next recession?"

*** I've run across a chart that shows in dramatic 
fashion how similar the rise in the Dow from 1920-29 is 
to the current bubble. Please take a look. (click "History May Not 
Repeat Itself...")

*** In Fiji political power is changing hands in the old-
fashioned way...that is, by force rather than fraud. A 
group of armed men stormed the parliament building on 
Friday. Yesterday, a Mr. George Speight announced that 
"the executive control of our country currently resides 
in my hands." 

*** A new love bug is circulating. It is said to be more 
dangerous than its predecessor -- changing the attached 
file name as it goes and doing more damage once a 
computer is infected.

*** In what was described by a Labour politician as "the 
biggest breakthrough in British race relations in a 
quarter century," a new directive from the European Union 
will shift the burden of proof when employers are charged 
with racism. Firms will have to prove that they are not 

*** Our office here in London is on the edge of London's 
fashionable Soho area -- also the home of -- 
which went belly up yesterday. But there is no need to 
look up as you wander Soho's streets. The crew that 
wrecked one of Europe's most promising Internet startups 
is not jumping out of the windows. In fact, the job 
market for people with Internet skills is so hot that 
even losing $130 million or so for your former company is 
no bar to employment. "I'm going to take the next two 
days off and start an new job on Monday," said one 
employee quoted in the "Daily Telegraph."

*** Also of interest in London, Damien Hirst, described, 
perhaps tongue in cheek, as an "artist," took his son's 
educational toy, designed to illustrate the human 
anatomy, and copied it as a 20 foot bronze sculpture. Art 
critics (if that is the right word for a person who heaps 
sycophantic adulation on works of pure imbecilic, 
retrograde ordinariness) described it as "a masterpiece" 
and "the first key work of British art for the 21st 
century." Aesthetically-challenged collector Charles 
Saatchi failed to see the humor in the piece and bought 
it for $1.5 million. But the creator of the toy, which 
the "Guardian" says "bears a remarkable resemblance to 
the sculpture," sued. The parties settled...

*** Today is Ho Chi Minh's birthday. Ho learned his 
politics in Paris, where he worked as a waiter.

+ + + + + + 

With stomach churning volatility, is now the time to buy 
and hold tech stocks? In less than four weeks Intel stock 
went up a healthy 31%. In just the next two weeks, it 
lost nearly 10%. But with the power of leverage in a 
speculative market, you could have bought January $90 
call options on Intel for an astounding 628% profit. 
Higher profits faster with less volatility. For more 
information on options trading strategies for gains of 
53%, 100%, 222% and 700% please visit 

+ + + + + + 

* * * * * * * * * * * * * * * * * * * * * * * * * * * * * 


Technology produces its own share of wrong turns and dead 
ends...not to mention ironies and contradictions. 

Gene mapping and other very new technologies have no 
immediate or even visible profit potential. But the very 
uncertainty of their prospects helps to expand the 

Yet, at the beginning of this century, the very newest 
technology also had potential -- an explosive potential 
in fact, as least as great as that of the human genome 
project or the Internet. 

In 1895, the electron was discovered. And exactly 100 
years ago, Max Planck found that the rules of classical 
physics were inadequate to explain what the study of the 
atom revealed. He described the "smallest common coin in 
the currency" of physics as a "quantum." 

Five years later, Einstein saw that light followed the 
principles of quantum physics...and Niels Bohr, in 1913, 
realized that quantum theory also applied to matter 

Then in the mid-`20s, a uniquely talented group of 
physicists came together in Copenhagen, under the 
guidance of Bohr, to develop the Copenhagen 
Interpretation of quantum mechanics.

Today I am interrupting my story of the Battle of 
Britain. Elizabeth came to London yesterday. My partners 
and I would have been content to go out to dinner, 
discuss business and drink. But Elizabeth's arrival 
changed the direction of our evening. Instead of enjoying 
ourselves, we would have to be improved by some cultural 
experience. So, with dreary hearts we passed the bars, 
spilling over with happy drinkers, and a movie theater 
with "Gladiator" emblazoned on the marquis in letters 
two-stories high, and arrived at the Duchess Theatre in 
Covent Garden.

Entering the theatre, we saw a small, empty stage. 
"Danish modern," said my partner, a comment on both the 
barrenness of the stage set and our expectations for the 
evening's entertainment. But the play, Michael Frayn's 
"Copenhagen," was anything but barren. Instead, it was a 
rich and elegant look at one of the most remarkable 
episodes in the history of science, ideas and war.

I will not review the play for you. I merely wish to tell 
you some of what it was about. The specific dramatic 
event chosen by Frayn was the meeting in Copenhagen 
between Bohr and Werner Heisenberg in 1941, about a year 
after the Battle of Britain was over. Europe was at war. 
Denmark was an occupied country. Heisenberg was in charge 
of the German atomic energy program. 

In 1900 the secrets of the atom had at least as much 
potential as the secrets of the genome today. Though many 
advances emerged from atomic research, it produced just 
two very dramatic products. The first was dropped on 
Hiroshima in August 1945. The second was dropped on the 
investment world about 30 years ago -- nuclear power. 
Both bombed. The first was destructive to human life. The 
second was destructive to money. As mentioned here a few 
days ago, nuclear power plants now change hands for less 
than half of 1% of the original cost of construction.

But of course, the future could not be foretold in 1928, 
anymore than it can be today. Besides, Heisenberg had 
just made a fascinating discovery: that one could not 
know the present, either. Heisenberg showed that the more 
accurately you knew the position of a particle, the less 
accurately you could tell its velocity. That insight 
became known as the Heisenberg Uncertainty Principle. 

Uncertainty (I do not shrink from stating the obvious 
when it is called for), prevails in the rest of life, 
too. The observer and the observed are inseparable.

Investors, for example, may think they are objectively 
viewing the stock market and making decisions based upon 
what they see. They do not realize that what they see is 
of their own making: they look at the market and see the 
reflection of their own emotions and aspirations. Their 
greed, or fear, or indifference produces the market 
action they see. 
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)

Open your mind with the most stimulating e-mail newsletter that you'll ever read, The Daily Reckoning. To receive this free daily email newsletter click here now.

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Last modified: April 02, 2001

Published By Tulips and Bears LLC