Market Review: Letters to the Editor

This weekend we dedicate to our readers…we’ve had some terrific e-mails recently, entertaining, witty, and far more insightful than your weekend editor could ever be…Enjoy!

*** An American and a Mexican discuss work ethos…a reader
sends us this fable:

Dear Sir:

An American man went down to Mexico on a vacation.  He noticed one of the natives came in about 10 a.m. every day. One day, he asked the man, ‘Why do you come in so early.’

The man replied, ‘I have enough fish for today.  I go to the market and sell the fish.  Then I go home and chat with my wife.  Then I take a siesta. Then I go to the tavern and have a few beers with my friends.  Then I come home to my wife and children and play with my children. Then I eat and go to bed.’

The man said, ‘If you stay out longer, you could catch more fish.  If you saved the money, you could buy another fishing boat.  Then you would have more money.  If you worked hard, you could soon have a fleet of fishing boats. You could use the profits to build a cannery, can your own fish, and sell them worldwide.  You could be incredibly rich.’

The native replied, ‘After that, then what.’

The American thought a minute, and said.  ‘Why then, you would have enough money to retire.  You could fish a few hours every day, come home and chat with your wife. Then take a siesta.  Then go to the tavern and have a few beers with your friends.  Then you could come home to your wife and children and play with your children.  Then you could eat and go to bed.  And, you could do that every day.’
*** Pass the doobie, man! A thoughtful reader:

Dear Mr. Bonner:

Thinking without recourse is masturbation. Face it! People have no recourse. What is the point in divining everything if what you have left is the horrible realization of the size and extent of your own hell? Survival equals denial equals ignorance. After all in the end, pure animal instinct must prevail.

Things are as they are not as we would have liked them to be. We ride on the waves of history, on the cusp of evolution of human society dictated by the laws of its existence – laws that are heartless and immutable.

You believe that we are in control of our existence. Yes, well to some extent, but that is a mere perturbation on the cosmic flux which dwarfs are efforts. All you say is true. But you are just giving a description of the human experiment. Step back, pretend you are from Mars, become detached and you will see much more clearly that in essence we are thinking ourselves into oblivion. We are like a baby who everyday gets hold of a bigger and more dangerous gun. One day it will shoot itself.

Best wishes,

One who thinks too much
*** An anarchist reader…

Dear Daily Reckoning,

Just wanted to let you know your Anarchist reader is still enjoying the Daily Reckoning. Your article on Leon Czolgosz of course caught my attention with its inaccuracies. Leon wasn’t a well know Anarchist, he probably wasn’t even an Anarchist, just a severely mentally ill individual. Of course capitalism does that to millions of people. His only real connection to Anarchism was that Emma Goldman spread her legs for him. Whether or not she pushed him to assassinate McKinley is debatable. Poor Mr. McKinley got what he deserved. How many lives did his little war with Spain cost? How many lives were disrupted? How about the Philippines?. His genocidal policies there, which were continued by Roosevelt, cost 250,000 to 1 million lives of Philippinos murdered by the U.S. army. Were any of our wars fought for our freedoms like the politicians say? They just were fought so the ruling class can further their wealth and power. We just want to be left alone. Murder of anyone should not be condoned, even the murder of dirty politicians like Mr. McKinley, but when our politicians go around killing people for no other reason than to further business interests they shouldn’t be surprised if those they deem as worthless strike back. I guess it is all part of doing business. How sad. Anyway for capitalists I think you guys are pretty cool. Keep on writing and speaking out, somebody might even be listening.

best regards,

bill
*** A comment on "Pricey Zip Codes," Tuesday’s issue of the
Rude Awakening…

Your newsletter is beginning to resemble the print newspaper ‘Pravda’ before the breakup of the Soviet Union…you may not realize it, but the real meaning of subtle irony as you are writing in this paragraph (and many others!) is totally lost on a lot of readers. [See paragraph below]

This is not a complaint. In fact, the style is humorous. But it has more sinister implications – what it presages is that in the not-so-distant future, people will be forced to write in such a style to get it past dimwitted government censors. It is the same black humor present in Bulgakov’s ‘Master and Margarita,’ written in the 30s in Russia. You are, in fact, very sensitive to the times in which we live, even if you are not consciously aware of it.

The extract in question from the Rude Awakening:

Furthermore, the Brazilian coastline, for all of its splendor, lies well beyond of the U.S. border – far from the terrific American public school system, far from the protection of the U.S. military and far from all of the other American regulatory authorities that work so tirelessly to ensure our life, liberty and pursuit of happiness. Clearly, one does not forego – without careful consideration – the many protections conferred by the FBI, CIA, EPA, DEA, FDA, USDA and Alan Greenspan’s Federal Reserve.

*** Check out the link in this letter’s P.S…it’s a web page dedicated to Mogambo Guru Acronyms (MGA)…!

Dear Sir,

I’ve been a Daily Reckoning reader for about three years now. And to steal a line from Walt Whitman, ‘I simmered and simmered. Bonner brought me to a boil.

Also, since I strongly agree with Bonner’s writing about the ‘world improvers,’ I thought I’d offer this excerpt from Eric Hoffer’s The True Believer, a book I just picked up today:

A man is likely to mind his own business when it is worth minding. When it is not, he takes his mind off his own meaningless affairs by minding other people’s business.’

This minding of other people’s business expresses itself in gossip, snooping and meddling, and also in feverish interest in communal, national, and racial affairs. In running away from ourselves we either fall on our neighbor’s shoulder or fly at his throat. (p. 14)

Maybe fodder for one of Bonner’s future essays….

All the best,

R. H.

P.S. – Since I greatly enjoy reading The Mogambo Guru’s weekly column, and because I’m the owner of a site that indexes acronyms and abbreviations, I decided to add a page to my web site that is totally dedicated to the ridiculous acronyms The Mogambo Guru creates.
*** This reader forwards us a letter about energy
technology, from an expert…

Dear Sir:

This is an interesting comment on the energy situation. Received this today from our friend Bob Gibbs in Cleveland. Bob has his own company and sells transformers and switch gear to power companies and others who operate their own power plants.  I think he knows what he’s talking about.

Dick

[And Bob’s comment…]

Dick,

Nuclear Power is having a rebirth. The newer design does away with these cooling tower types of installation. It is called a PBMR (pebble bed modular reactor) which is smaller and cheaper, takes about 24 months to build and lasts about 40 years. They are much safer. Inside a PBMR, there is a bed of high temperature silicon graphite balls each about the size of a billiard ball. About 70 % of the balls have flecks of uranium. When they interact, the bed of graphite balls gets hot. The gas carries the heat to a turbine. If the core hits peak temperature of about 1600 deg. C, it starts to cool itself down automatically. There is no uncontained chain reaction to cause a meltdown as in the existing type of plants. Also they are built to store their own waste in the basement with storage space for forty years of operation. Of course, the Sierra Club and others will still find fault with this.

In the next 15 years, China will need to generate at least six times what it already generates or at least two of these nuclear reactors per year. India has the same expected growth. You hear a lot about the wind power being so clean, etc., but it is small potatoes. Four of these nuclear reactors could generate more than all of the existing wind power turbines in California and use very little real estate to do so.

Surprisingly enough, this rebirth of nuclear does not mean the demise of coal because there also is new coal technology. The world has about a 300-year coal supply.China now generates about 70% of their power with coal. Coal presents two problems: Transportation and dirty burning. Both of these are being solved by liquefying coal for cleaner burning and it will be a lot easier for the Chinese to get coal via a pipeline from the north of China to where the factories are in southern China. This technology is like turning coal into oil.

Uranium has been rising in costs because of the rebirth of nuclear. It is now about $20/lb. At that price, relative present fuel costs are:

Coal –  $1.25 per million BTU
Natural Gas – $3.5 per million BTU
Oil – $6.00 per million BTU
Uranium – $0.055 per million BTU

Let’s assume that Uranium increases to 50 times the current price as demand picks up again. The new PBMR nuclear plants would provide energy at the equivalent to buying gasoline at 1/2 cent per gallon.

Most of the world’s untapped coal reserves are in the U.S., northern China, Australia and Canada.

The U.S., Canada and Australia have the greatest part of the world’s uranium.

The best news of all is that there is one place in the world that does not have much of these reserves and that is the Middle East. Wouldn’t it be nice to be around when we don’t need them anymore and they have to fend for themselves.

Jimmy Carter is a wonderful person, but I considered him about the dumbest president ever. At the time of his energy comments and decisions, I said that there was no such thing as an energy shortage. There was only a shortage of energy knowledge.

Lawyers and environmentalists create energy problems. Scientists and engineers resolve them.

[Ed. Note: We always read every email you send to us, although sometimes we don’t have time to respond. Please keep ’em coming!

Tom Dyson
The Daily Reckoning

P.S. We’d normally be skeptical about the opportunity to make 10,000% in a small stock, because in real life, it never actually happens. But this is exactly the bold claim Jonathan Kolber, editor of Vantage Point Investment Advisory, is making about a small company he’s discovered
in Iceland.

— Daily Reckoning Book Of The Week —

The New Market Wizards: Conversations with America’s Top Traders REPRINT Edition

By Jack Schwager

This is definitely one of the three most essential books on trading. Schwager interviews institutional big-hitters, guys who trade millions of dollars every day, guys who control the markets, guys who have ticker tapes running by their beds and showers, guys like Sperandeo, Druckenmiller, Eckhardt, and the Turtles.

THIS WEEK in THE DAILY RECKONING: Hmmm…great stuff this week. For instance, did you realize quite how funny Warren Buffett and Charlie Munger can be? Our colleague Sala Kannan went to Omaha and watched their comedy…it’s all in Tuesday’s DR guest essay, below…

THE WALL ST FANDANGO  05/06/05
By Bill Bonner

"Investors look up to their Wall Street stockbroker with adoring eyes…they see him as the kind family doctor… Bill Bonner points out, however, the only purpose they serve is to separate a fool from his money…"

BILLIONAIRE ECONOMISTS          05/05/05
By Mark Skousen

We all know that most economists are ivory tower academics whose ideas hold no practical value…but, as Mark Skousen recently pointed out in a speech – like it or not, they have made their mark…and are here to stay.Readon…

ASSASSINS, ANARCHISTS AND THE MARKET  05/04/05
By James Boric

"When the market turns ugly, instead of panicking, investors should go with the flow. Easier said than done, but as James Boric shows us, if you can adapt your trading strategies, you will always come out on top…"

THE ORALCE OF OMAHA   05/03/05
By Sala Kannan

"Those who went to Berkshire Hathaway’s shareholder’s meeting expecting a straight-laced event full of serious people would have been in for a surprise. Sala Kannan describes the funniest lesson in economics she has ever had…"

AMERICA’S GET-RICH-QUICK-SCHEME  05/02/05
By The Mogambo Guru

"In 2004, the Maryland Lottery did almost $1.4 billion dollars in sales – and that’s only one state. This could just mean one thing – not only are Americans desperate to get rich – they wish to do so without lifting a finger…"

FLOTSAM AND JETSAM: Did you ever turn down the chance to invest in a small-cap biotech company for literally pennies on the dollar and then watch the stock price soar to the stratosphere? That’s what happened to James Boric’s Dad…

THE A-WORD
By James Boric

In the weeks to come you will be hearing a lot about a small biotech company from Iceland. It has a heart attack drug in the late stages of FDA approval. And if it makes it to market, this tiny company could quickly become as well known as Merck and Roche. In fact…

Both Merck and Roche have already established partnerships with the Icelandic company. And that’s just the beginning…

The National Institute of Health recently signed a $24 million contract with this company to learn more about allergies and infectious diseases. And well known institutions like Merrill Lynch and T. Rowe Price are holding shares of its stock right now.

Even Forbes.com recently said this company could rake in up to $1 billion if this ONE drug is approved. (And they still have dozens more in the pipeline after that).

I’ll explain how you can easily make between 5,000% and 10,000% investing in this company before anyone else finds out about it. . But first I want to tell you about a similar situation that happened in the 1980s…

Every time I go home to Cincinnati to see my dad we end up talking about the stock market. And every time he brings up the "A-word."

It kills him to this day. You see…

In the mid 1980s, my dad had the chance to invest in a small-cap biotech company for literally pennies on the dollar. Split-adjusted, he could have bought in for about 40 cents a share. And it certainly seemed like a promising opportunity.

The company had a couple drugs in the pipeline that could treat kidney and cancer patients alike. Problem was, my dad didn’t understand what the heck things like recombinant DNA and molecular biology were. So he opted not to invest.

If I’m not mistaken, he put his money in Janus instead. Too bad.

The small, unknown company he passed up on was Amgen. And as we all know now (none more so than my dad), Amgen stock went from 40 cents a pop in 1986 to $59 today. That’s a mere 14,650% gain. And the stock actually went as high as $80 in July of 2000.

Of course, hindsight is always 20-20. My dad knows this. Truth be told, he made the right decision not investing in a company he didn’t understand. And that’s why I am writing to you today. I don’t want you to miss a chance like Amgen simply because you don’t understand the opportunity.

Last July I hired an emerging technology expert to edit a letter we call Vantage Point Investment Advisory. The expert’s name is Jonathan Kolber. And for over 20 years he has been a pioneer in the technology and biotechnology fields.

Jonathan started a company that developed and patented the technology behind those limited-use Disney DVDs that national chains like 7-Eleven and Papa John’s are selling. He co-founded a company that went on to invent the world’s toughest lock – which the Federal Reserve and Alan Greenspan use to guard their most prized possessions. And he’s personally made 20 times his money investing in some of the most promising upstart technology companies on earth…companies like Amgen and this latest little biotech gem…

About two months ago, Jonathan told me about this Icelandic biotech company that has already landed contracts with Roche and Merck…received a $24 million contract from the National Institute of Health…and Forbes.com recently predicted it will make up to $1 billion in sales from its new heart drug.

To put that in perspective, the company’s entire market cap is barely over $300 million right now. So he’s talking about a huge rise in the coming years – 10,000% or more when it’s all said and done with.

It’s not hard to see why when you look at the facts.

As of right now, this company has a half dozen drugs waiting in the pipeline that could treat everything from heart disease, diabetes, obesity, arteriosclerosis, asthma, strokes and schizophrenia. We’re talking about hundreds of BILLIONS of dollars in sales if just a few of these drugs make it big. And the first big break could come very soon…

This small, unknown Icelandic company already has heart attack drug that is in the later stages of FDA approval. And if it makes it to market (and Jonathan thinks it will), Forbes.com predicts this company well sell up to a billion a year in the drug. But the kicker is…

It still has a dozen other candidates in the works – all of which could be worth untold billions.

Of course, we’ve all heard these pie-in-the-sky stories before. But there’s something unique about this company – which is why the big boys (Merck and Roche) in the industry are lining up to partner with it.

This company has pioneered a one-of-a-kind method for pinpointing genetic factors involved in a person’s predisposition to disease. Basically, it’s cracked the codes in the human genome that make people more likely to develop 50 of the most common diseases in Earth.

Think of it like this…

Every other biotech and pharma company uses a shotgun approach to treating disease. They attack just as many healthy tissues and cell in hopes of also ridding you of the sick cells. Not this company. It targets the disease head on – actually treating the genetic defect that causes a disease. And the results are staggering…

Using this novel approach, patients can experience vastly fewer side effects than current treatments. And early investors have the opportunity to walk away with 10,000% profits or more.

Jonathan believes you could invest $5,000 in this company now and watch it turn into a quarter of a million or more when everyone discovers it. And unlike my dad in the 1980s, Jonathan knows what he is talking about.

Best regards,

James Boric
for The Daily Reckoning

May 08, 2005 — Baltimore, Maryland