Getting What You Need

You can’t always get what you want

You can’t always get what you want

You can’t always get what you want

But if you try sometime

You just might find

You get what you need

The Rolling Stones

Copywriters are hyper-sensitized to the difference between want and need. You can’t sell people what they need. A man buys what he needs reluctantly and at the lowest possible price – with no margin for an advertising budget.

Imagine walking into a restaurant. On the chalkboard at the entry you find this message:

“Today’s special: Nothing special, just a piece of dead cow, mistreated terribly before it was cut up…and some cooked plants…with enough calories and nutrients to keep you alive until tomorrow. $25. What more do you need anyway?

Sound appetizing?

After I completed Friday’s Daily Reckoning, I wandered down the street to my favorite luncheon spot – the Caf, St. Andre.

The owner and waiters greeted me as a regular.

“What’s the ‘plat du jour?'” I asked.

“Ah,” said the waiter, almost confidentially, “we have a delicious blanquette de vaux with carrots a huile d’olives.”

Even if you don’t know exactly what you’re eating, it sounds more appealing than the dead cow.

“Du vin?” the waiter inquired, nodding his head and pursing his lips as if to prompt the proper response. “Bien sur, un bordeau…”

As I was saying this, sitting against the plate glass window of the caf,, a woman walked by outside. ‘Walk’ does not do justice to the way she passed. She moved with such fulminating grace and such pullullating charm that the whole sidewalk seemed to undulate in time with her steps. The cold glass of the Caf, St. Andre caressed her as she went by.

All of a sudden the rest of the world was out of focus, only she could be seen clearly – a vision of such beauty that it remained imprinted on my retina, like a flash of light you see even after you close your eyes.

“Monsieur,” said the waiter, bringing me back to my senses “that is not on the menu.”

Oh the agonies I suffer on your behalf, dear reader. I had gone to the Caf, St. Andre for a relaxing lunch, with a copy of Gary North’s latest epistle, intending to find a few nuggets of insight and information I could pass along to you. But I had not reckoned on summer…

Summer seems to have struck Paris suddenly. It was like a woman who had suddenly looked in the mirror and discovered, for the first time in her life, that she was beautiful.

And then…her whole look changed. Her face. Her clothes. The way she walked. The way she talked. Even the way she smelled. Thus did the whole city seem to change the way she presented herself.

It was bad enough in the winter months. Every drug store window displayed ads for an anti-cellulite cream…making its point with the most perfect derriere you ever saw. This was neither the derriere you needed, nor were ever likely to have, but it was certainly the one you wanted. And Celio I don’t know what they are selling but their ads seem to celebrate the virtues of breast augmentation. And then…there are the Aubade underwear ads…so bad, so bad.

It was hard enough, even in midwinter to focus on the GDP growth rate, banking reserves, and hedonic measures. But on Friday, hedonic measures seem to have gotten out of hand altogether.

As you can see, today’s letter is about more than just the stock market. Maybe a parental warning is in order. Today’s, letter is about sex. No not the kind of tawdry, vulgar sex you see on TV. This is about something else…something much dirtier. Any connection to investing or economics is purely coincidental.

I am probing the living heart muscle – like a nurse searching for a collapsed vein…or maybe a doctor looking at an EKG…what do those little peaks and valleys mean?

A redhead in long white pants, and a pink tank top sauntered down the street. She was absolutely gorgeous, too. A model maybe. She walked fast, as if she were late for an assignment. Then, there was a woman who looked like Greta Garbo. And another one – a young Deneuve. Following her was a Brigitte Bardot-like woman with a waifish face and a figure that reminded me of someone. In fact, each one seemed to remind me of something – but I didn’t know quite what it was. It was like Proust’s lemon cakes – triggering a recollection so rich and inviting I could barely resist. But a recollection of what? I was like an aging writer, trying to recall love affairs I never had, and lovers I only imagined.

A woman in an extremely small, extremely tight blue skirt walked towards the caf,. As she approached, the feeling – whatever it was – increased, like the sound of an on- coming freight train. And then, there she was – right outside the window – all motion…voluptuous…irresistible.

I cannot describe her in detail. She was everything a woman should be. And as she passed, the wave washed over me, leaving me crumpled up, broken, collapsed on the beach.

Francis Galton, Darwin’s cousin, was so fascinated by some of the women he saw in Africa, he could scarcely believe they were real. He got out his calipers and other measuring devices and went to work, moved no doubt by the spirit of scientific curiosity.

But it was not science that moved me on Friday.

Just as one wave subsided another wave built up – a woman in a yellow dress, a stunning woman with hair nearly the same color as her dress…riding a bicycle. Could a woman in a dress that short be really be riding a bicycle, I asked myself as she drew alongside the caf, window. And then, she passed, and I felt as though my surf board had slipped out from under me and I crashed down onto the beach. Oh my…the rocks!

It is summer. Not technically yet. But it sure looks like summer. The streets of Paris are full of attractions and distractions. Enticing, enchanting, absolutely intoxicating…

Of course, not all the people passing the Caf, St. Andre on Friday were beautiful young women. There were also a few handsome young men. (Do women feel the same way way when a handsome man passes? I don’t know…)

Then, too, there were quite a few tourists – many of the recognizably American. One couple was typical. The woman looked bright and chipper, like she had invested in Microsoft back in 1987 and gotten a good night’s sleep on the plane from New York. The man was a different story. He looked as though he had waited until December of ’99 to buy Microsoft and hadn’t slept a wink. His jaw was slack and looked as though he could use a good drink.

“Back in 1897,” Gary North tells us, “economist- sociologist Vilfredo Pareto’s study of income distribution appeared. He surveyed the larger countries of Europe and found that there was a strange income distribution curve in all nations that he studied. Something in the range of 20% of the population received about 70% to 80% of the income.”

The 80/20 rule became known as Pareto’s Law. As recently as 1998, it was tested in a study of the U.S. and Canada. Again, it was discovered that little had changed. In 1997, the top 20% of the population owned 84.3% of the wealth.

Gary concludes that “Getting rich is simply not possible for 80% of the population. Anything that offers the hope of riches to the middle-class majority is a delusion.” It may be a delusion, but it is certainly a popular one. People want to get rich. They do not need to get rich. I remind myself that beauty is only skin deep. And like money, it is superficial. But superficial seems plenty deep enough. Money can’t buy love. But it can buy those Russian women in the Bois de Boulogne. And what would be nicer – a 30 minutes of cheap, imitation love with the woman on the bicycle…or a lifetime of the real thing with Janet Reno?

Hmmm…maybe I’m thinking too small. Or too American. Why settle for 30 minutes? French men often have mistresses they keep for decades. President Mitterand’s mistress shocked society in France by showing up, with his illegitimate daughter, at his funeral. It was not the revelation that he had a mistress that was shocking. Everyone knew that. But that she would attend the funeral – – that just wasn’t done.

Radical feminists, bless their hearts, (if they have hearts), say that there’s no difference between traditional marriage and prostitution anyway. In both cases, the woman is kept (at great expense, I might add) in order to give the man what he wants.

But the radicals don’t understand the difference between want and need. What you want is what you don’t have – even if what you have is better.

Finishing my blanquette de vaux, the waiter returned. “Dessert” he asked, “can I recommend a cherry tart?”

“Oh yes…”

Your correspondent, hard at work…

Bill Bonner

Ouzilly, France August 23, 2000

P.S. I am glad I am happily married. Otherwise, I might be tempted. I might buy a tech stock at 200 times sales. Or try to meet a redhead. Either way, I’m sure I would regret it.

*** We had ‘No Expectations’ of a rate rise…and ‘Surprise, Surprise’ – got none. “Ruby Tuesday’ came and went, and though the Fed fretted and worried …there is little likelihood of a rate hike for a ‘Long Long While.’

*** Because an election is coming up. Greenspan is not about to ‘Play with Fire.’ The Fed is ‘Out of Time’ for raising rates.

*** The stock market celebrated – lamely, as I thought it might. The Dow was up 59 points. The Nasdaq could only make it forward a measly 5 points.

*** Defense stocks rose – also as I thought they might… in the wake of George W. Bush’s suggestion that the government might be willing to send some money their way if he wins the November popularity contest.

*** And Yahoo fell almost $3 after Henry Blodget said it faced a “challenging” 3rd quarter. Why anyone would care what Blodget thinks is a mystery. But this is a mystery market in a lot of ways..

*** Why, for example, should investors be willing to pay 51 times earnings for Intel? What do they think is going to happen? Intel’s earning forecast was just raised 4 cents a share. Big deal. Will the company face no competition? Does it have some kind of magic that allows it to grow bigger and bigger forever?

*** And what about JDS Uniphase – another Big Tech. It has earnings per share of minus $1.26. But investors seem to think it is worth $97 billion – or about 60 times sales. Good luck to them.

*** “The only reason why New Economy stocks are selling for 100 to 200 times earnings,” wrote Gary North recently, “is that investors figure that the New Economy is governed by Old Economy competition: [that is,] slow. It isn’t. The New Economy companies are far more vulnerable, for the barriers to entry are minimal. New Economy firm’s streams of income will disappear faster than Old Economy firms’ stream of income.” Should you pay more for a dollar’s worth of earnings from a New Economy company – or less?

*** Competition is a fact of life. Even in the New Economy. Digital Man believes he lives in a different world – where things just get better and better, as knowledge steadily stacks up like blocks of a pyramid. But it doesn’t work that way… competition, painful lessons learned over and over, sturm und drang, the business cycle, and messy, confusing, mysterious things always happen: ‘You can’t always get what you want.’

*** We see at this Internet Conference that I’m hosting here in Ouzilly – the Europeans are moving fast. They have the Second – or Third-mover advantage. That is, they have the wind of someone else’s expensive mistakes at their backs. They can avoid the costly blunders made by Internet pioneers in the U.S. and move directly to profitable models.

*** Doug Casey referred to Europe as a “living museum” in a recent letter. But I don’t see it that way: Europe is booming. The Paris-based International Herald Tribune reports, for example, that the number of on-line trading accounts has doubled in the last 6 months. And entrepreneurs who had left Europe for America are coming back.

*** Speaking of entrepreneurs, our gardener, Mr. DesHais, has a son who is 21 years old and who wants to start a So, I invited him to sit in on the conference. He’s very bright and seems determined to get something going on the Internet.

*** “Your son is very impressive,” I said to Mr. DesHais as he was wheeling in a load of potatoes and stacking them in a huge pile in the stables. “Well,” he replied, “children are like vegetables. You plant them; you water them; you make sure they have enough nutrients – and then you let nature take its course.”

*** Gold fell $1.70. Platinum lost 3 bucks. And oil slid $1.25. There was a rumor that Clinton had written a letter to the Saudi Crown Prince asking for help in keeping oil prices down. High oil prices are bad for Gore’s campaign. But the Clinton letter was just a rumor until it was confirmed in the current issue of the reputable Middle Eastern Economic Review.

*** Following a disastrous quarter, got an additional $20 million in financing yesterday. This extends the company’s life expectancy by a few months. Koop’s shares came out at $9 last June (1999)… and rose to $46 a month later. But now you can buy all you want for just about $1 each. To make matters worse, the SEC is investigating the company. And rumor has it that Dr. Koop has taken up smoking to settle his nerves.

*** Another mystery: The NYSE composite index is at an all-time high. The S&P Financial Index is also at an all time him. But the number of new highs – which hit 631 when the market hit a new high in 1997 – is only 90. What gives? Is this the beginning of a new bull phase? Or, just more confusing signals sent out by Mr. Bear – still enjoying himself at the beach? We will see.

*** But I wouldn’t want to hold a portfolio of JDS Uniphase, Cisco and Intel shares while I was waiting for the answer. These stocks are ‘2000 Light Years from Home.’ The market is entertaining. But you want to make sure it is a comedy – not a tragedy. And the best way to make sure of that is to invest in things of real value, when they’re cheap. So what if they don’t go up right away? If they’re good investments, you don’t mind holding them anyway…

*** Japan’s Nikkei index rose 3% overnight. And the dollar rose against the euro – again. The euro fell through the 90 cent barrier… but still remains above its low of May. This happened despite a small rate increase by the European Central Bank.

*** Our Ouzilly band, led by Thom “Bomb” Hickling, gave a decent performance to a small crowd of conference attendees last night. Our best number – Sympathy for the Devil. Whoo whooo! Of course, our only neighbor, Francois, had already moved out – following our practice sessions.

The Daily Reckoning