| …Death Rattle for the 20th Century… THE DAILY RECKONING OUZILLY, FRANCE THURSDAY, 30 December 1999 * * * * * * * * * * * * * * * * * * * * * * * * * * * *
In Today's Daily Reckoning: ****************************************************** *** Rocket Chips blast off -- my lunatic hypothesis
discredited *** Consumer confidence at 30-year high *** Promise them anything… but give them Qualcom
******************************************************
*** The Rocket Chips blasted further into the darkness
of space yesterday -- with the Nasdaq closing at a new
record above 4,000. The techs and nets are now
completely free from the gravitational pull of earnings,
yield, or memories of Christmases past. *** As Alan Abelson put it, "Those who do not learn from
history are destined to make a bundle in the stock
market." *** Thus, those who've ignored the lessons of history
and common sense -- and boarded the Rocket Chips -- have
made a fortune. *** Okay, so much for my lunatic hypothesis… the moon
is waning -- but the techs and nets are still waxing.
I'll wait for the next footsteps in the hall. *** The Dow was up slightly yesterday. But at a record.
The S&P was up too. *** But they were still 2 1/2 times as many new lows as
new highs on the NYSE. *** The Nasdaq is now up an unbelievable 84% for the
year. Investors evidently had something on their mind
other than 5 golden rings on the fifth day of Christmas.
They are pouring money into the Rocket Chips in
anticipation that they'll move to warp speed in January. *** This is "the biggest opportunity for wealth creation
in anybody's career," said one analyst quoted by the
Financial Times. Another warned, however -- "we're not
going to make 6% per week forever." *** The FT explained the New Era: "…optimists say
prospects for a market upswing of extraordinary
proportions are undiminished because the internet has
fundamentally transformed productivity and business." *** Trouble is, this manic episode is based on
falsehoods and lies, not truth -- more evidence
coming… stay tuned. *** Consumer confidence has reached its highest level
since October of '68. That was a "new era" too. The
market topped out on Dec. 3rd, 1968. Real values did not
recover until the early 90s. *** Here's another of Rick Ackerman's predictions for
the new year: " A bunch of Texas plaintiff's lawyers
launch what turns out to be the hottest IPO of them all,
sue_the_bastards.com, a Web-based incubator for class-
action lawsuits. The company later becomes the first
dot.com firm to pay a dividend after it extracts a $20
billion settlement from stadium vendors who are found
guilty of gouging customers for beer, peanuts and hot
dogs since the late 1960s." *** Here's a quote that makes my point about Democracy
and market manias -- "Men, it has been well said, think
in herds; it will be seen that they go mad in herds,
while they only recover their senses slowly, and one by
one." -- Charles Mackay. I would add that they go broke
in herds too… but get wealthy one by one. *** Communism is dead? Doesn't look that way in Africa.
"To get the record straight," writes a DR reader, " We
now have in this region 5 communist governments let by
Marxists - they are Mugabe, Zimbabwe - Njomo, Namibia -
Kabila ,Zaire(DRC) - Mbeki ,South Africa, and Dos Santos
of Angola. They are terrorist Governments all backed by
the USA, and the UK. (Three are part of the BRITISH
Commonwealth)… ZIMBABWE is dying, no petrol, no
foreign currency for travel or imports of necessities…
think of us and all the black men dying in Africa this
Christmas while enjoying your fare in that lovely place
France…" *** Internet investors will buy anything. Addison von
Lunz sent me a story about a couple of guys who went on
message boards and ran the 15 cent stock of a printing
company, named NEI Webworld (a web is a type of printer
as well as a place for investors to lose money) to $15.
They made $370,000 in two days. *** They're still dickering with the hijackers aboard
the Indian Airlines plane. Latest word is that the
terrorists have changed their demands -- they're now
asking for shares in Qualcom… which is now thought to
be worth 25 times as much as it was a year ago. *** Did Irwin Jacobs, Qualcom's CEO find strike gold
under the company's San Diego headquarters? Are you
kidding? If he'd done that, Qualcom would be a penny
stock.
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* * * * * * * * * * * * * * * * * * * * * * * * * * * Death Rattle for the 20th Century Too early for a wake. Too soon for a eulogy. An autopsy
is out of the question. The body isn't even cold yet. But I can't help reflecting on the amazing 1900s… soon
to pass away, out of sight and out of mind… …which leads me back, as Yeats put it, "where all
ladders start, that old rag and bone shop of the heart." One of my favorite movies is a film which may never have
even made it to US screens… "Stalingrad." Made by a
German filmmaker, it tells the story of a squad of German
troops who are sent into the battle of Stalingrad in
WWII. The opening scenes show the troops relaxing on the
beaches of Italy. Then, they are on a train to the
eastern front. Their young officer addresses a letter to
his sweetheart, explaining how exhilarated he was to be
in the company of his comrades-in-arms. I do not remember his lines. But I recall their message:
Finally, being sent to the front, his life had meaning
and purpose. It was the message of the mob -- the
rallying spirit of football fans… but at a game played
for mortal stakes. Like the good soldier he was, the hero of the story did
not question the war, or even the strategy with which it
was pursued. His job was to fight. He had his place, his
role, his purpose. Stalingrad was a military blunder of epic proportions.
The Germans dithered and foolishly allowed themselves to
be cut off. Nine hundred thousand troops were taken
prisoner. Very few of them survived the Russians'
prisoner of war camps. Maybe a couple of thousand. But the greatest blunder of the entire century -- and
what made it the bloodiest century in history -- was the
way the intellectual classes embraced politics and used
it to give meaning and purpose to their lives. Down in that rag and bone shop of the heart, people need
the support of the crowd. Thousands of Ph.D. theses in
psychology… as well as undergraduate research
projects… have explored this dimension of the human
character. People feel the need to fit in -- to be a
part of something greater than themselves. They look to
others… to the crowd… to give them courage, meaning,
and purpose. The mob's imagination is not limited by experience or
common sense. Well fed, rested troops, tanned from the
Italian Riviera, and surrounded by what must have seemed
like an abundance of materiel, may well imagine that
they could conquer Russia. Likewise, a mob of investors
can imagine that they will all get rich buying and
selling stocks among themselves. Mobs turn men in to
fools. The hallmark of the 20th century was the abandonment of
private life for empty promises of mob politics. Hitler
began by promising property and national pride. He then
initiated campaigns to make life safer and healthier --
gun control and anti-smoking efforts were not born in
America; they were products of Nazi Germany. The promises -- like the valuations of the Nasdaq 100 --
got further and further removed from good sense. It was
not long before soldiers of the Third Reich were on
their way to front lines in both the East and the West -
- another colossal blunder that military strategists had
warned against for at least a generation. But people want to believe in politics. Nietszche spoke
for the intellectual establishment when he said that God
was dead. Politics replaced God -- it gave people a
rational, revolutionary plan that provided order and
purpose. David Horowitz's memoire, "Radical Son"
describes his parents' search for a place in 1930s
America. They were the children Jewish immigrants to
America and felt out of place. Communism gave them a
sense of belonging, a new role to play, and an agenda. "I believe in politics," is how one radical feminist
described her creed. She and millions of others embraced
it. And the result has been a century of Stalingrads. Few people will mourn when this century ends. Bill Bonner
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