The Fickle Food of Fame
In my never-ending quest to connect all of life’s dots… I draw a line from Emily Dickinson’s poetry… to the distinction between political and personal… and to current investment opportunities:
"I’m Nobody!" one of her poems declared, "Who are you? Are you — Nobody — too? Then there’s a pair of us? Don’t tell! They’d advertise — you know!"
Ms. Dickinson was nobody but herself. Private, personal… poetically alone… until years after she died. Neither a Rotarian, Rosicrucian nor Republican. Then her poetry made her somebody she didn’t want to be…
"like a Frog — To tell one’s name — the livelong June — To an admiring Bog!"
Ms. Dickinson lived and died in the same Massachusetts that expelled Mr. Bewitt two centuries before. His fellow citizens simply ignored the curl of his hair and the swing of his step. They deconstructed him into an ideological stick figure… and banished him from the colony… just as my Marxist friend deconstructed his wife (and she left him!). Mr. Bewitt became political. Ms. Dickinson remained intensely private.
"Fame is a fickle food," said Emily Dickinson, from intuition, not experience. It sits "upon a shifting plate… Whose crumbs the crows inspect…"
I am noticing more and more enticing crumbs in the stock market. The famous bubble has not yet burst. But the crumbs are falling from the table anyway.
One of them is the extraordinary mining company, mentioned above, and recommended by Chris Weber. It gives you a yield of 10%. Not to mention the possibility of a capital gain.
The Bear has been at work for 19 months. There are a lot of stock bargains beginning to appear. That is not to say that they won’t be bigger bargains in the future. Most likely, the techs and Nets will crash… and bring the whole market down with them. But some of these stocks are solid enough, and cheap enough, that if you have a long-term perspective, you wouldn’t mind holding them through the coming debacle. Especially if they keep giving you a 10% yield.
"In this crazy market, there’s little interest in… small companies in boring businesses like home building," said the fund manager of Heartland Value, recorded in this week’s "Forbes." One of the crumbs that "Forbes" puts back on the plate is a company called Engle Homes. While Microsoft trades at 52 times Year 2000 earnings, Engle trades at 4.3. Like MSFT, Engle is growing rapidly… sales up 700% in seven years. Earnings are up nearly 300%. You can buy the whole business for less than 20% of annual sales.
I would bet that Engle has given few options to employees. There is no mention of a pack of lawyers angling for a settlement of a specious price gouging complaint. Nor are there competitors giving away houses for free via Internet. And neither is the government threatening to break up the company. Engle is a crumb… a forgotten company, knocked off the table by the bear market.
Or how about another home builder… Standard Pacific. It’s selling for 5.7 times earnings. And about one-third of sales. Or Commercial Intertech. It makes industrial machinery — that is, pre-digital tools and equipment. And the stock gives you a yield of 4.8%. The P/E is only 7.2. And it’s priced at about a third of sales.
Jim Grant notes that China.com… proposing to bring more than 1 billion Chinese into the wired world… is priced at 191 times sales. But a company that makes a profit in growing trees in China — Sino-Forest — is thought to be worth less than a single years’ sales. China.com, need I say it, has no earnings at all. But Sino-Forest does… about $25 million this year. And you can buy the whole company for just a little more than 4 times that amount.
These are the kinds of Nobody… Nowhere stocks that are now available — crumbs on the floor of the great stock table of Wall Street.
Most people will not touch them. Because most people prefer political thinking to private, personal thinking. Mobs provide courage. Mobs eliminate individual responsibility. That, also, is the hallmark of politics.
A girl can be attacked on the street by a vicious killer… or a bum can die of starvation in the middle of the city. People will say to themselves — "there must be some agency to take care of this problem. It’s not my responsibility." They will avert their eyes from the girl… and step over the bum.
Likewise, fund managers who go along with the herd of investors and buy Internet stocks at outrageous prices will feel the comfort and security of the crowd. If the stocks go down… it will not be their fault. It will be Greenspan’s fault. Or the short sellers. Or who knows what. But it will not be a personal failing.
But woe to the fund manager who buys the out-of-favor crumbs. If they go down… he’s an idiot. Personally. He is not protected by the ideology of group-think. He is on his own… like Emily Dickinson.
Not surprisingly, fund managers buy the Internets. The techs. Telecoms. The crumbs become more numerous… and bigger bargains.
But this "not-my-fault" feature of mob-thinking is easily exploited by demagogues. That was Hillary’s intention in trying to shift the focus of the discussion from her husband’s personal failings to the political agenda of the "right-wing conspiracy."
It was also what allowed Lenin’s putsch to succeed. Following one Bolshevik failure after another, Lenin shifted the blame away from himself and away from the lumpenproletariat whose support he sought.
Hitler actually learned from Lenin’s example. The Germans felt beaten, betrayed, humiliated, ruined. Hitler told them it wasn’t their fault. It was the fault of the moderates, the communists, the bankers, the Jews.
Politics releases individuals from responsibility for their own situation and actions. Released from responsibility… they act irresponsibly. Would the average investor buy an unproven company that was bringing the Internet to China… if he were alone in doing so? Of course not.
Likewise, only a career criminal or psychopathic slave trader would think of taking half a man’s income for his entire life…if he could not do so under cover of a ballot box.
But such is politics that a man who might do so is not only tolerated…but given a certain, fickle fame.
December 10, 1999
P.S. As they say in French, Bon Weekend.
In Today’s Daily Reckoning:
* Yeltsin rattles
* Internets soar
* The Contrarian’s dream
*** The spike in techs and Nets is all that is left. And it is turning into a needle. The Nasdaq, stalled on Wednesday, managed a minor gain yesterday.
*** Yeltsin reminded Wall Street that he could blow up the entire world if he wanted… and still the Dow gained 66 points.
*** And the Internets just kept blasting into space… following the path of the Mars Polar Lander.
*** "Eureka!" I’m not making this up — that is not only an exclamation at VA Linux headquarters… it’s the handle of the woman who answers the phone at the press office.
*** They’re celebrating because VA Linux has just become the most successful IPO of all time… rising from $30 to over $300…before closing at $239.
*** The company’s products, by the way, are based on software that you can get for free on the Internet. Linux worries Microsoft… as it should. Even we use a Linux server to distribute the "Daily Reckoning," I am told.
*** The Big River of No Return… Amazon.com… rose $15 yesterday.
*** And, according to the sign on the Eiffel Tower, there are only 21 days until the end of the world… I mean the end of the millennium.
*** Volume was huge… 1.1 billion shares on NYSE… 1.75 billion on Nasdaq. My guess is that a lot of people are buying… reasoning that the Y2K scare will disappear… the Y2K cash will flood into the market… and stocks will soar after Jan. 1. Possible. Heck… why not!
*** The bear continues his work. He’s a stout, reliable worker. Punches in at 8… and out at 5. Yesterday, 1,221 stocks avoided him and advanced on the NYSE… but he tagged 1,859 with declines. And there were only 108 new highs… against 407 new lows! Richard Russell points out that this means more than 1 out of 10 stocks on the Big Board hit a new high yesterday.
*** Gold was down, too… to $280. I’m sticking with the formula I announced a few weeks ago. Buy the dips in gold. Sell the rallies in stocks.
*** How do you invest in gold? Chris Weber suggests you buy Austrian Coronas… "the lowest premium gold coin," he says, selling at only 1.8% over bullion.
*** Chris is also recommending a stock he believes is a "contrarian’s dream." It’s a stock that has been battered down for years. It has huge operations in a country that is as out-of-favor as a child molester. And its main product is metal — both precious and base. Plus, it’s paying a 10% yield. "So you can be wrong on gold [and the country] and still collect a 10% yield," says Chris — who tells all in the current issue of "Fleet Street Letter." (Have you subscribed yet? Hope you don’t mind the pitches for "FSL" this week. But subscribing is a way to make this pay off for you… and me!) https://www.agora- inc.com/secure!/form1.cfm?pubcode=fsus
*** The euro fell below $1.02. My guess is that it will test the $1 barrier once again… but that it will then rise again. Neither Europe nor Japan are increasing money supply at anything like the rate of the United States. The Fed’s assets have been growing at 12% over the last 12 months… and 24% over the last three months. By contrast, the European Central bank is growing at only .5% over the last three months (it has not been around for 12 months). And the Bank of Japan’s growth rate over the 12-month period is negative! As Jim Grant puts it, "Evidently, Y2K is happening only in America."
*** Bill King cites a report in the "Seattle Times" saying that Boeing’s lawyers are claiming that the crash of Flight 800 was not because of a problem with the plane. The most likely cause, they say, was a missile fired by the government.
*** Not everyone agrees with the selection of Jimi Hendrix as Guitarist of the Century. Andres Segovia, a great classical guitarist, once remarked of Hendrix, "Would that I could manage what he seems to manage with his instrument. And then, of course, I would never do it again."
*** "We didn’t read Emily Dickinson at Ole Miss," said Beirne, on this, the anniversary of the spinster’s birth. "Don’t you have to sit in a bubble bath to read that stuff?" he asked.
*** Beirne also informed me that today is the anniversary of Mississippi’s entry into the USA and the first radio broadcast from the Grand Ole Opry in Nashville.