07/14/01 "Monster Rally" Didn't Stop The Bleeding The Daily Reckoning
Weekend Edition
July 14-15, 2001
Paris, France
By Addison Wiggin
MARKET REVIEW: "Monster Rally" Didn't Stop The Bleeding
With the usual spin, pomp and ceremony Wall Street
analysts this week brayed away less than stellar
earnings reports…and encouraged their clients to buy,
buy, buy! The result? A "Monster Rally" - the best week
on Nasdaq in three months… and a little gleem in the
eye of every tech bull still looking for latent signs of
a "second half recovery". Perhaps, they are confusing
stock market gains with the real economy… do ya think? The Dow closed Friday up a "modest" 60 at to finish the
week at 10,539 - up a total of 286. The Nasdaq rose 9 to
2084 on Friday and ended the week up nearly 4%. The S&P
500 gained slightly to 1215 on Friday up just over 2%
for the week. Still, "not even Thursday's monster rally could stop the
bleeding at sagging stock mutual funds," reports
USAToday. "The average diversified U.S. stock fund fell
1.2%, and is off 8.1% for the year, according to Lipper,
the fund trackers." Only one fund category ended the week strongly… Gold!
The average gold fund climbed 1.2%. Gold funds are up
11.7% on average for the year. If mutual funds are down…401(k)'s aren't faring much
better. On Tuesday, the NYTimes reported that "for the
first time in the 20-year history of the popular 401(k)
retirement savings plan, the average account lost money
last year, even after thousands of dollars of new
contributions." The average account shrank to $41,919 in 2000 from
$46,740 in 1999, according to a report from Cerulli
Associates, a benefits consulting firm. With mutual funds and 401(k)'s in the dumper it might
just be time to rethink that good ol' "Buy N' Hold"
strategy. ADD'L PRICES FOR THE WEEK: Dollar hits 18-year high mid-
week
Gold: $267
Crude Oil: 26.59
Natural Gas: 3.25
CRB Index: 207
Dollar Index: 119
The Euro: .85… so sad
British Pound: 1.39
Japanese Yen: .80
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By Bill Bonner 07/13/01 REGULATION "…every industry loves regulations. It imposes costs,
but the costs are passed along to consumers. The real
benefit to the regulated is that it helps prevent
competition. So, I am grateful to the regulators. For
business reasons, I welcome the regulation of
newsletters with the same malicious delight as a dentist
looks forward to Easter candy…"
http://www.dailyreckoning.com/body_index3.cfm?id=606 07/12/01 ONE LONG, ONE SHORT "…Popularity is poison. Today, I bring you a poison
stock…and a possible antidote. Laying itself out on a
bed of quicksand, IBM has - so far - avoided sinking,
but its popularity won't pay off. On the other hand, an
easily-overlooked stock featured in this week's
Barron's, Consolidated Tomoka, is pretty 'darned
cheap'…"
http://www.dailyreckoning.com/body_index3.cfm?id=604 07/11/01 NO SAVING GRACE
Wednesday Guest Essay by Paul Kasriel "…[A]ll you have to do is look at the behavior of the
current account deficit in recent years to know that
Americans are spending more than they are producing. No
matter how you cut it, the combined American saving rate
for households, businesses and any other group you want
to include not only has gone down in recent years, but
it has gone deeper into negative, or dis-saving,
territory…"
http://www.dailyreckoning.com/body_index3.cfm?id=603 07/10/01 RUINOUS DISORDERS "…Webvan, one of the most majestically hollow business
concepts of the Internet bubble, has finally given up
the ghost - after having wasted more than a billion
dollars of investors' money. Excuse me if I get a little
misty-eyed; I will miss Webvan. Next to Amazon.com, no
dot.com company has served as such a bright, shining
illustration of how blockheaded people can be…"
http://www.dailyreckoning.com/body_index3.cfm?id=602 07/09/01 STUFF OF DREAMS "…On or before this coming Thursday, from the cloud-
capped towers of Waltham, Massachusetts, the nation will
get a small preview - I think - of where borrowing
against equity can lead. It is not likely to be pretty.
Polaroid 'took out the equity' when taking out equity
was in style. Now, there may be nothing left…"
http://www.dailyreckoning.com/body_index3.cfm?id=601 * * * * * * * * * * * * * * * * * * * * * * * * * * * * HEADLINE, NEWS And INSIGHT: Gold Funds Rising…China
And Big Government…Sham Wisdom and The Stock
Market…Japan In Trouble - Again…. and more… Will Mr. G's "Midas Touch" Restore Gold's Luster?
by John Myers A decade ago I was 14,000-feet deep in a South African
gold mine, sweating bullets and reaching for a bottle of
water. My tour guide, a hardened South African mine
executive, seemed immune to the heat. "Mr. Myers. Mr.
Myers!" I could barely hear him above the buzz of the
rock drills only a dozen feet away. "You must
understand," he yelled into my cupped ear, "the price of
gold always comes down to one thing and one thing only.
The number of U.S. dollars out there."
http://www.dailyreckoning.com/body_headline.cfm?id=1299 What China Could Have Been - And Its Lessons For The
West
by John Pugsley Unlike Europe, medieval China was unified under one
government. But in the mid-15th century, an anti-
technology faction overthrew the pro-technology faction.
Innovation and development came to a standstill. China
stopped sending fleets, dismantled the shipyards, and
outlawed oceangoing shipping. The rest is history.
http://www.dailyreckoning.com/body_headline.cfm?id=1296 Wall Street And The Business Of Sham Wisdom
by Lynn Carpenter Most of us who are in the market have a better idea of
how to run a business-we've done it-and therefore how to
size one up, than you can find in the drivel that comes
out of New York.
http://www.dailyreckoning.com/body_headline.cfm?id=1287 Godzilla Crunches Japan!
by Jay Akasie Whatever became of the world's second-largest economy?
As Japan's economy sinks further, questions arise as to
whether the new prime minister has answers for long-term
recovery.
http://www.dailyreckoning.com/body_headline.cfm?id=1286 * * * * * * * * * * * * * * * * * * * * * * * * * * * * FLOTSAM AND JETSAM: A Rainy "Bastille Day" in France As elsewhere, it's July 14. In France it's a national
holiday. Great parades, feu d'artifices (fireworks) and
dances are scheduled to commence any minute now. Trouble
is, it's raining like the dickens. Already the aerial
demonstration of France's elite air force, that
traditionally takes place over the city of Paris, has
been cancelled. On July 14th, 1789 a band of disenchanted and hungry
"sans culottes" - literally "without britches" - sought
to rescue their brethren downtrodden held captive in La
Bastille. What they didn't know was, due to very bad
conditions in the prison, for some time it had been all
but empty. When the dust cleared… only seven prisoners
had been freed. Still, the act of storming the Bastille
became a rallying cry for the Revolution. According to the historian Russell Kirk, the French
revolution was the first true revolution - an attempt to
remake society through man's capacity to "reason". The
revolutionaries destroyed the Ancien Regime - the
monarchy and its ties with Catholic Europe - converted
the churches into "temples of reason," and began the
French Republic at the calendar year one. Kirk contrasts the idea with the American revolution…
which he states was not a revolution at all, but a war
of preservation. American colonists, learned the hard
way, a rugged individualism on the frontier. There was
no need for a strong hand from patriarchal government in
the traditional European style, it wouldn't have done
much good anyway. Says Kirk, the Americans waged their
war to preserve a liberty they had learned of necessity. And here's an interesting historical factoid: La
Fayette, French hero of the American Revolution, fled
Paris during in the early 1790s - eventually joining
with an Austrian unit and leading an invasion of France,
in an attempt to restore the monarchy here. None of this is really important, of course… just a
few random observations from a newsletter editor on a
rainy holiday in Paris. Vive la Liberte,
Addison Wiggin,
The Daily Reckoning
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