A Wonderful World

Time is on my side, yes it is.

Jagger and Richards

What a wonderful world!

It’s amazing how easy it is to feel superior to other people – especially here in Florida. At the Marriott in Delray Beach all you have to do is keep your clothes on.

Sitting beside the pool earlier today I found it difficult to keep my mind on my work. So many people wandered by in various degrees of deshabille. Not that my head was turned by pulchritude or prurience. Not at all. Instead, the allure was the same as you have looking at a dog with a broken leg or a house whose roof was blown off in a hurricane.

These people had sustained a lot of damage.

Your editor may not look much better au naturel. But at least he kept his head and remained fully dressed.

Many of the people beside the pool were so grotesque they shouldn’t even have gone out in public, much less removed their clothes. If they desired to make a public spectacle of themselves – they should have charged admission.

It was not always so, dear reader. There was a time, believe it or not, when people were more careful – about the way they appeared in public, the words they used, the way they used their knives and forks, the paintings they hung on their walls, the houses they lived in, the music they listened to and the stocks they bought.

Over the last century, the modernists have had their way in art and literature, the Descriptivists have triumphed in the grammar wars, Positivism, Relativism and Existentialism have walloped Fundamentalism and Essentialism in the world’s philosophy departments, and Democratic socialism has replaced 19th century Liberalism (now known as laissez faire conservatism or libertarianism) in the capitals.

In a world where nothing really matters, people worry about everything – no matter how shallow or excrementitious. In a world where no one stands for anything, is it a surprise that people fall for everything?

Words can mean anything you want – unless you want to communicate with them. You can pay any price you want for a stock, too, unless you hope to make a profit. And you can take off your clothes in public – unless you want to maintain your dignity.

But, just wait. Time corrects everybody and everything. If you wait long enough, the stains on silence, the blemishes on the good taste, the graffiti on canvas, the absurd vanities and bad judgments, the hubris and pride, television, the Nixon Administration, the Wall Street bubble, the New Deal and the New Era, the Information Age – all are corrected.

The stock market is already correcting. Could America’s ‘anything goes’ culture be at the beginning of a correction too?

Am I really just a hopeless optimist, dear reader? Is it too much to expect…that, in time, people will once again reach down into their own hearts to rediscover the few, essential principles that really matter? Howard Stern is already ridiculing Jackson Pollack on TV. Harpers is attacking Descriptivism. Is it vain to hope that Andy Warhol, rap music, Hillary Clinton, Relativism, and New Dealism will be corrected too?

Time sends us to our graves. But we can go with smiles on our faces – like a man on Death Row for shooting a tort lawyer or poisoning a psychologist. The penalty is death. But maybe it’s worth it.

Your essentialist correspondent, always looking on the bright side.

Bill Bonner
Paris, France
April 6, 2001

P.S. I am sitting in the waiting lounge for Air France in Miami. A young couple – probably newlyweds – sit across from me. The woman could be a model. She is certainly a model newlywed – her head against her husband’s shoulder, kissing his neck from time to time as he watches the television in the corner. Go ahead, kiss him. Kisses are like fresh strawberries – you gain nothing by holding them in inventory.

And so, the week ends as it began – with a happy couple setting off in life. I wish them well.

P.P.S. This poem from my friend, Francois:

“Le temps d’apprendre a vivre, il est deja trop tard,

Que pleurent dans la nuit, nos coeurs a l’unisson.

Ce qu’il faut de regrets pour la moindre chanson,

Ce qu’il faut de sanglots pour un air de guitare.


“It’s all been said before,” he notes.

*** I flew from Miami to Paris last night…and my plane was late – so today’s message will be short.

*** But it’s good to be back in Paris. The rainy, gray weather is a relief from all that sun.

*** Rally! Yes, rally. The Dow staged its 2nd biggest rally ever yesterday – with the index moving up 402 points. 29 out of 30 Dow stocks rose. The Nasdaq also shot up – nearly 150 points.

*** It’s about time. The rally should surprise no one. Investors have been watching, waiting, hoping for a chance to get even. Yesterday, they thought they saw an opportunity.

*** “The stock market, we’re now told, behaves more like an encounter group than a primal financial nerve center,” writes Eric Fry. “It celebrates our joys and shares our sorrows. And so it was when consumer confidence numbers bounced a bit early this week. And – we’re all in this together, aren’t we? – so did the stock market. Finally, joy triumphed over sorrow.” So what if Nasdaq 100 still sells for
14,708 times earnings… (see: href=”http://www.dailyreckoning.com/body_headline.cfm?id=1037″>How Lucky We Are!)

*** What’s surprising is that it took Mr. Bear so long to back off. Markets do not go straight down or straight up. They need to take a breather from time to time…give people a chance to adjust their portfolios and their thinking. But Mr. Bear has been relentless.

*** “Every time I look at my portfolio,” says a 24- year-old Chicago investor, “it’s worth less. I keep thinking, this has to be the end. It can’t go any lower. Each time it drops, I keep hoping that this is finally the bottom.”

*** “We’re afraid to look,” says 33-year-old Dawn Pieczko to reporters from U.S. News & World Report. Asked what she would do with a $20,000 severance check, Ms. Pieczcko replied: “It’s definitely not going into the market.”

*** “The recovery we were promised in the second half is not coming,” said the chief investmentofficer at First Albany Corp.

*** Mr. Bear does not like to hear such gloom and doom. He’d rather have investors feel more bullish – and pump more money into the market. He probably should have backed off earlier – but he couldn’t help himself; there were too many targets of opportunity.

*** But at last – he’s giving investors a break. For how long? We will see.

*** The rally could be impressive, but don’t count on a new bull market. Investors are still too bullish. “Whether it’s your first bear market or your last,” comments U.S. News& World Report, “many veteran observers say this one is nearing an end.”

*** Only 32% of investment advisors are bearish. The figure typically rises to near 50% before a new bull market can begin.

*** S&P 500 P/Es are down from 34 to 23 – but still 3 times what they are at a major bottom.

*** “With P/E’s, it’s not about relativism, it’s absolutism,” says Jack Brennan, “They’re down from 400 to 150 [on the Nasdaq]. But 150 is still high compared with 50 over the long term.”

*** Big Bottom? Probably not yet.

*** “Yesterday’s rally proves the fear of missing a turn is still greater than losing money,” writes Bill King. “We’ve already had many such rallies over the past year, with the same result. No one knows the extent of economic damage that lurks. The financial and economic nadir for companies and consumers cannot yet be discerned. Time and math must inexorably erode balance sheets and the economy. Major companies will follow minor ones into bankruptcy, or be resurrected via system-necessary bailout.” Time wounds all heels, more below.

*** “Given all the negative news about the economy,” said Robert Parry, president of the San Fran Fed, “I may need to remind you that the data so far seems to indicate that the U.S. economy is still expanding, if only very slowly.”

*** Does it really matter if we’re heading into a recession? Well, yes, says Kevin Klombies. He writes: “overheated markets can collapse back to trend during an economic cycle, but MAJOR trend changes usually come out of recessions. In other words, if the economy simply slows, then accelerates, then the old themes should still prove to be the areas to invest. If, however, this dives into a recession…we should exit with a whole new brand of leadership.”

*** “The consumer is truly amazing,” adds Stephen Roach of Morgan Stanley Dean Witter. But, “employment is the last thing to go and we are very close to that now.”

*** The Boston Globe reports the results of an interesting study. In 1993, had you invested $10,000 in the 10 companies with the top executive pay levels, today you’d have only $3,585. If, instead, you’d just bought the S&P 500, you’d now have $32,301. The top earning CEOs back then were people such as Charles Wang of Computer Associates and Henry Schacht of Lucent. They laid off workers, ruined investors, but treated themselves very well.