The Daily Reckoning Weekend Edition
October 21-22, 2000
By Addison Wiggin
MARKET REVIEW: “Bargain Hunters” Deliver Investors A
Peaceful Weekend In The Autumn of Anxiety
Early in the week it looked like Mr. Bear was going to
have his way with Goldilocks… and anyone else that
happened by in the forest.
But the crime never took shape… in fact, for the first
time since the Autumn of Anxiety began on Labor Day –
seven weeks ago – the major indexes assembled back-to-back
Putting the lid on a tumultuous week that saw a 433-point
intra-day low on Wednesday, the Dow closed up 83 on Friday
at 10,226. Combined with Thursday’s gains the index
claimed 34 points of higher ground for the week.
The Nasdaq dallied up 64 on Friday to 3483, also giving
the high-tech investors a mid-autumn respite – and a boost
of 166 for the week. The S&P 500 closed 8 higher at 1396,
a weekly gain of 22. Benign CPI numbers released this week
barely registered a response from the chattering
classes… or the market.
Overseas markets echoed the US’ positive closes, Japan’s
Nikkei got a 2.62% boost. Britain’s FT-SE 100 rose 0.92%,
and France’s CAC-40 rose 1.37%. Alhtough, Germany’s DAX
index dropped slightly: 0.16%.
The Russell 2000 closed up 7 for the week to 487, the
Wilshire Smallcap rose 20… capping off the week at 817.
PRICES For The Week…
Gold: $272 down $6
Crude Oil: $33.75 down $1.24
Natural Gas: $4.93 down $.60
Platinum: $584 up $8
Palladium: $760 down $.60
CRB Index: 226 down 4
Dollar Index: 117 up 2
Yen: $.009 (yawn)
The sad, sad Euro: $.84 down a cent
British Pound: $1.45 up a penny
MARKET COMMENTS: The Month Of Truth… And Strong
“October is always the month for truth. During the awful
earnings news, Sara Lee led the charge back uphill. Not
really surprising since food and beverage stocks are
classic defensive plays and Sara Lee was badly oversold.
We got in for a song. We’ve already had a huge run-up with
defense contractor Northrop Grumman and seen the nation’s
#1 home builder Centex set new highs. That’s what a strong
defensive portfolio can do for you in a tough, volatile
What’s more, we’re proving that we can beat the Nasdaq and
the Dow in the bad times. And in good times, all boats
rise…everybody thinks he’s having fun in a bull market.”
Fleet Street Letter
AMEX Oil Index, Canadian TSE Enjoying Proceeds From Mid-
“The collapse of the Mid East peace talks underscores US
impotence in the region, and raises the specter that the
US economy is subject to forces are beyond the control of
the Federal Reserve. All of which creates an immense
amount of uncertainty in the economy and in the stock and
bond markets. And while this is generally bad for the
equity markets, certain sectors will benefit. For example
the American Stock Exchange Oil Index (XOI) stands at 534,
up 8.80 on Friday and up 114 points (more than 20%) since
last March. The Canadian TSE oil index also rose on
Friday, climbing 92 points to 7820. Unless events in the
Middle East come under control, both these energy indexes
will continue to climb.”
HOT STOCK PICK OF THE WEEK: Junior Oil on the Rise
“Good news also for KeyWest Energy, the junior oil company
we strongly recommended in Outstanding Investments.
KeyWest has been moving solidly forward, moving from
C$1.15 just two months ago to a close of C$1.50 yesterday.
This is definitely the kind of performance that attracts
attention from investors.
Third quarter results and strong energy prices have
allowed KeyWest to upgrade its forecasts for 2000 and
2001. Production grew from 857 barrels of oil equivalent
per day (boepd) in 3Q ’99 to 2,206 boepd in the third
quarter of this year – an increase of 157%.
The company now estimates cash flow for 2000 at $16.7
million ($0.35 per share), with earnings of $6.2 million
($0.13 per share). For the year 2001, KWE projects cash
flow of $21 million ($0.43 per share).
Revenue is estimated at $8 million ($0.16 per share)
compared to KWE reported earnings in 1999 of less than $2
million ($0.05 per share). KeyWest has absolutely no long-
FLOTSAM AND JETSAM: SALLY STRUTHERS BEGS YOU TO SAVE THE
– A letter from Sally Stuthers begging you to help dot.coms
in need, borrowed without permission from Satire Wire.com.
Share Your Love with an Internet Company in Need; Become a
Right now, all over the world, dot-coms are hurting. They
are suffering from faulty business plans and cash-flow
shortfalls. They lack earnings and even the most basic of
revenue models. In many countries, 4 out of 5 dot-coms will
die within the next two years.
All that is needed is someone who will look into the eyes
of a needy dot-com and say, ‘Yes, I will help.’
Someone like you.
With each passing day, dot-coms are finding it increasingly
difficult to stay alive. Cut off from further venture
funding or bank credit, without access to sufficient
revenues, many are forced to make choices about which
essentials they can afford: salaries or benefits, marketing
or product development, sales or office parties? Choices no
one should have to make. Despair takes the place of hope.
It doesn’t have to be this way. Right now, living,
breathing dot-coms need your help. Please, look deep into
your heart and make the decision to become a Save the Dot-
Coms sponsor, and for as little as 79 cents a day (or about
the cost of the average Internet stock today), you can help
stop the suffering and give deserving dot-coms a better
life today, and a chance for the future.
As a dot-com sponsor, you become a partner in bringing
renewed hope to a dot-com whose future is now in doubt. The
special relationship you can develop with your dot-com is
something you’ll cherish forever. It starts with a
photograph and corporate history of your dot-com. And it
continues as you enjoy opportunities to get to know your
sponsored dot-com (and for your dot-com to learn all about
Best of all, you’ll actually see the impact that your
sponsorship is having. You’ll receive regular earnings
reports and press releases from your dot-com, on your dot-
com’s own stationery. And thanks to your contribution, you
will keep your dot-com off the pages of DotComFailures or
The Industry Standard’s Dot-Com Layoff Tracker.
Your tax-deductible contribution can be sent directly to
the company, or to its creditors, or its lawyers, or to me,
Imagine the excitement when we tell a special dot-com that
someone wants to make a difference in its life! Still not
convinced? Read testimonials from participants. Or hear the
sad tale of a dot-com in need.
Please. There are so many precious dot-coms waiting to be
sponsored. You can even sponsor a dot-com from an area or
market that has special meaning to you or is close to your
heart. Please, won’t you fill out the sponsorship form
today? Right now? The life of a dot-com is all too short.
Extend a hand, and extend the hope.”
Have a fine autumnal weekend,
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CONTRARIAN GLOSSARY: Fin de Bubble
FIN DE BUBBLE – This is the term we use to describe the
spirit of our age. We live in a world which is waiting for
something to happen. In the meantime, people are all very
optimistic about the future – especially the financial
future. Like people during the “fin de siecle” period of
the Gay ’90s and pre-WWI, they are impressed by
technological progress and see few clouds on the horizon.
WWI ended the “fin de siecle” sentiment. What Archduke
waits to be assassinated so our fin de Bubble can be
entered in the history books?