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Contributed by Bill Bonner
Publisher of: The Fleet Street Letter

TUESDAY, 27 JUNE 2000 


Today:  The Summer of Love

In Today's Daily Reckoning:
*** Fruit flies...tree-toads...and yeast - all on the 
family tree
*** The Dow went went down...
*** Do you want some excitement?

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**** Is this a wonderful time to be alive, or what? 
Yesterday, the President of the U.S. and the British Prime 
Minister joined in announcing the near-completion of human 
genome project. Now we will be able to find our way 
around...with the help of this 'wondrous map'... more 

*** Buy the rumor, sell the news. Celera Genomics stock 
fell $13 as the news was announced. The company has a 
market cap of $6.46 billion. It lost $1.70 per share last 
year...or about $90 million. Many thanks to the charitable 
investors who fund this sort of project...

*** Overall, the Dow rose 138 points as this Summer of Love 
progressed from flirtation to deep kissing. And the Nasdaq 
rose 66 points.

*** Advancing stocks outnumbered declining ones 1482 to 
1341. But there were only 46 new highs, compared to 60 new 

*** Stocks and bonds rose, the press informs us, because 
investors believe Greenspan will not raise rates this 
month. Also, estimates of the expected budget surplus have 

*** The bigger picture, however, is that we are still in a 
bear market. Michael Belkin (via William Fleckenstien of "[A]s our work suggests, if the 
bubble peaked in March on a speculative orgy ignited by the 
misguided Federal Reserve Y2K monetary binge, then 
investors should consult market history for the level at 
which declines from bubble peaks usually conclude for a 
measure of current downside risk. If speculative bubbles 
are simply excessive deviation from long-term trend - then 
post-bubble corrections are just reversion to the mean. 

"Historical data shows a clear tendency for declines to 
reach the 200 week average area in the first decline after 
a speculative bubble peak. Tech and TMT are only about 
halfway to that support zone. Based on trend 
deviation/reversion theory, the Nasdaq and global TMT 
stocks still have 30 percent to 60 percent immediate 
downside risk. It's taking longer than usual to get there, 
but history suggests that it is premature to catch falling 
knives and a better buying opportunity lies ahead - at a 
much lower level (Nasdaq 2,200)"

*** The price of gold fell another 70 cents. I had a drink 
yesterday afternoon with an old friend, Martin Spring, a 
financial analyst from South Africa, attending the Gold 
Conference. The conversation never got to gold...but Martin 
has been covering Asian markets for 30 years.

*** "If you want some excitement," he said, forgetting that 
he was suffering from pneumonia, "look at Korea. When the 
Koreans decide to do something...they go at with 
astonishing energy and determination. And Korean stocks are 
cheap. Samsung is one of the world's leading electronics 
companies. And you can buy it at 9 times sales." 

*** Jeff Bezos said the reports that Amazon was running out 
of money were "ridiculous." The stock rose 1/16th of a 

*** And here's an interesting little note about what may 
come after the 'summer of love': "In practical terms," 
wrote Charles Maxwell, whose affiliation I do not know, 
"unless the coming winter approaches the highly-unusual, 
+13% warmer-than-usual season we have just passed through, 
US gas storage numbers are accumulating in a potentially 
disastrous pattern of insufficient gas to take this country 
through the full span of cold weather to April of 2001."
(See: Natural Gas Panic: Get Ready To Take Profits

*** "Biotech Investors Advised to Beware Hype" warned the 
headline on Reuters this morning. The Nasdaq biotech index 
rose 3.5% yesterday. It is up 38% for the year. 
Innocent investors take note: Biotech Bubbles are 
notoriously fragile. They swell up quickly...and then, like 
a summer romance...poof!

*** But what is good for humans - that is, the prospect of 
genetic tinkering - is apparently not so good for plants. 
While the human genome project is applauded, the genetic 
modification of food is thought to be the devil's own work. 
Biotech companies in the agricultural industry are 
shunned...and cheap...reports James Passin. 

*** The poor plants! Not only are they denied the benefits 
of genetic engineering, they are also eaten without mercy. 
Often live. Even people with the tenderness of heart to 
spare animals, seem to have no concern whatever for the 
suffering of plants.

*** A group of International Living 
( subscribers arrived in 
Paris yesterday - despite efforts of French air traffic 
controllers. The controllers went on strike to protest 
possible privatization initiatives. Most flights were 
canceled. Airports were deserted. 

*** This followed by a couple of weeks if French pilots' 
refusing to speak English. Air France thought it would 
require the pilots to speak English to controllers - as 
they must in the rest of the world's airports. But the 
experiment lasted on only 15 days. 

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Powers and thoughts within us, that we
Know not, till they rise
Through the stream of conscious action from where the 
Self in secret lies.

Another Charles Maxwell

In 1831, Michael Faraday made a discovery. When a piece of 
copper is held near a varying magnetic field an electric 
current is produced - a process called electromagnetic 
induction. This, and Orsted's discovery of the opposite 
phenomenon, that an electric current produces a magnetic 
field, formed the basis for what Professor Gordon believes 
was one of the 'first order' revolutions of the 19th 
century: electrical power.

But then, as now, no one could predict the future. When 
Faraday was asked what practical use his discovery might 
have, he responded: "What use is a baby?"

Life goes on. No one is quite sure where it is going...but 
it is in motion. This is true at both micro and macro 

My daughter, Sophia, is not sure her life is going forward. 
We had a birthday party for her last weekend. She is 
leaving for the US this week, where she will turn 18 in a 
few days. She'll spend the summer in New York, taking care 
of nieces and nephews. We'll stay in touch with her by e-
mail. But when I passed her room in the evening, I 
discovered something you can never get from an e-mail. 

The digital, Internet Age...proclaimed as a communications 
revolution is an imposter. It is not a revolution at all - 
as I pointed out yesterday. What's more, it may stifle 

As I passed Sophia's room, I heard quiet sobs. 

Pater Familias knocked softly, entered and looked at his 

"Were you crying?" 


Had this been an e-mail exchange, we could have moved on to 
other subjects. But I could see from her face that she was 

We had a nice talk. Sophia is both frustrated and 
frightened. Life only begins for teenagers after they leave 
home. Sophia is ready to begin her life - but still trapped 
with her family (in a foreign country no less!). Plus, she 
is afraid of what the future might hold.

"Don't worry," said the Father Knows Best imitator with 
little imagination, "everything will be all right. Life 
goes on. We just don't know where it goes. Or how it goes."

Yesterday, life went on. All the world's newspapers 
announced the news today:

The "most wondrous map ever produced by humankind" was how 
Mr. Clinton described it. It would be "the instruction book 
for human life," said James Watson, the American scientist 
who won a Nobel Prize for helping to discover the double-
helix structure of DNA in the human genome.

Both Watson and every other commentator compared the genome 
project as a revolutionary advance, on a par with the 
invention of the printing press.

Thus has the 'summer of love' begun. With the deepest 
secrets of life itself mapped out for all the world to see. 
And its deepest mysteries still yearning to be discovered.

All the world will be able to see the genome. John Sulston, 
director of the UK's Sanger Centre, which sequenced a third 
of the genome, said he had been obliged to make some 
"pretty stern statements" to prevent the genome being 
privatized. Unlike the printing press, apparently, the 
genome is considered so important that it cannot be owned. 
It must be shared. Kept in the public domain like a latrine 
in a public park or the air traffic control system at 
Charles de Gaulle airport in Paris.

Quick to find a politically correct significance from the 
project, Craig Venter the head of Celera Genomics, 
announced that "what we have shown is the concept of race 
has no scientific basis." Of course, as the Herald Tribune 
reports, "scientists have found no known function for 97% 
of the genome." Meanwhile, it was also revealed that "we 
share ...98% of our genetic material with chimpanzees and 
51% with yeast." We are all the United Colors of Benetton, 
after all. 

President Clinton, a religious man, attributed God with 
creating the gene sequences of life. Others were not so 
sure. One, quoted in a Financial Times article, thought the 
genome project should put creationism to rest forever - 
since man seems to have been created in the image of, say, 
the tree toad or fruit fly, with whom we share most of the 
basic codes of life. 

One of the very interesting things about science - and life 
itself - is that it takes us in directions we had not 
intended to go. No one was able to foretell that the 
printing press would lead to the reformation and 
generations of religious wars and to the settlement of the 
New World. Who could have predicted that the invention of 
the internal combustion engine would have led to the 
Blitzkrieg and the Battle of Britain? No one now knows what 
the genome project will yield. We don't know how it will be 
used - or to whose benefit. Both Clinton and Blair 
proclaimed that it could not be used to lower insurance 
premiums for those with good genes. But surely other uses 
will emerge.

Scientists themselves often credit forces beyond their 
rational minds with the discoveries they make. James Clerk 
Maxwell, who elegantly expressed the known relationships 
between electricity and magnetism in the 1860s said, 
awkwardly, on his deathbed: "What is done by what is called 
myself is, I feel, done by something greater than myself in 

The humane genome project is just a baby. A love child from 
the summer of 2000. It's self in secret still lies. Who 
knows what it will be when it grows up?

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 02, 2001

Published By Tulips and Bears LLC