The Ghost of Christmas Present

a DR Classique, first broadcast on December 24, 2000…

"Fezziwig, not Scrooge."

This was my mother’s advice when I began my business career.

Hard to imagine, but that was already more than two decades ago. We celebrated our 22nd annual Christmas party on Friday evening.

It seemed as though everyone had the same idea for Friday night.

On Mt. Vernon Square, people dressed in gowns and tuxedos, suits and jeans, often carrying shiny, wrapped presents under their arms, made their way to parties. The Engineer’s Club was lit up with holiday lights…so was the women’s club next door. We outdid them – we had so many Christmas lights strung up that the whole city of Baltimore seemed to go dim when we turned on the switch. And whatever power we didn’t consume in light was promptly converted to decibels – Thom’s blues band entertained us with holiday favorites like "Dead Blind Man’s Christmas Blues" and "Mean Mrs. Santa’s Got Her Clause All Over Me." It was not the kind of Christmas music I recalled from my childhood. But we have among our employees Muslims, Hindus, Jews, Kwanzaans, nail biters, skinheads, and vegetarians. The nice thing about Thom’s band is that it was equally offensive to everyone, which seemed to be in keeping with the spirit of Christmas. The music was so loud that we couldn’t hear ourselves talk, which was okay, inasmuch as we had nothing to say anyway. So we shouted out our holiday greetings and lip-read best wishes for the new year, neighbors a block away called the police to complain – and the party was a big success. When I began my business the bubble du jour was in the gold market, where the price of the yellow metal had just hit its zenith – reaching above $850 an ounce. Just as, today, we recall Lenin’s prediction of using gold for the floors of public lavatories, back then we spoke of using stock certificates to paper the walls of our storage closets. Stocks were beneath contempt.

People were less interested in getting rich than they were in avoiding poverty. They did not dream of becoming millionaires so much as they had nightmares about dying paupers.

In the 2nd year of Jimmy Carter’s presidency, America’s perch on top of the world seemed much more precarious than it does today. It was not at all obvious that the greatest bull market of all time was about to begin.

At that time, stocks yielded as much as bonds yield today – more than 6%. But investors wanted neither stocks nor bonds. They wanted hard assets and natural resources. Oil seemed like the investment of the future. Buying Exxon seemed like the "sure thing." Buying gold seemed like an even greater "sure thing", for even if the economy collapsed, as was widely predicted, the price of gold would rise as the dollar became worthless.

Stocks generally were viewed as a dying asset class in 1980…one that was given last rites by the classic Business Week cover of a couple years later…the very bottom of the market…"The Death of Equities."

It was hard not to recall these things as I saw many of my old friends at the party, many of whom you may know, if not in person, by reputation. Jim Davidson was there. So was Lynn Carpenter. I have known both of them from childhood. We all failed to grow up together. Jim has grown a little more distinguished looking, and a lot richer. But otherwise, I wondered how much had really changed.

Jim and I got together with Mark Hulbert to launch the Hulbert Financial Digest, back in 1978. That was the beginning of our publishing business. We were curious about what kind of investment advice really paid off. We thought investors would be too. Mark Hulbert, a student of philosophy whom Jim had met at Oxford, took up the project with enthusiasm and continues to do it even now.

In 1980, our contrarian instincts told us that gold and natural resources were probably overbought. Doug Casey predicted a bull market in stocks in the early 80s. Gary North even recommended buying Microsoft in 1986 – an investment that turned out to be the call of the decade. Still, we were all "gold bugs" – more or less. We were convinced that inflation would destroy the dollar, bonds and the stock market – it was just a matter of time! And maybe it still is. But in the 20 years since, gold did not rise. Not $100. Not $10. Not $1. Not even a penny. Instead, it fell – in real terms – by about 80%. The dollar did not move into Weimar-style hyperinflation. Inflation declined. The federal budget deficit did not fly out of control. It almost turned into a surplus. Stocks did not die. They enjoyed the greatest growth cycle ever…

And here we are – Christmas, Anno Dominus, 2000. Richer? Maybe. Wiser? We can hope. Older? Definitely.

"Mishter Bonner," said one young woman, in a red velvet dress, late in the evening, slurring her syllables a bit, "I’ve wanted to say this to you for a long time. I love this company. I mean it’s great."

She was standing near the fireplace in the front room, with the Christmas lights adding a glow to her cheeks. I had just finished my annual ritualized humiliation. Thom had invited me to join the band. I sang the lead to that Christmas morning classic, "You Can’t Always Get What You Want." I couldn’t quite remember the words…or the music. But other than that I’m sure my performance was smashing.

Holding a drink in her hand, the young woman looked like someone I had seen in a liquor ad. Who was she? I didn’t know. Someone’s wife? Someone’s girlfriend? An employee in the accounting department?

"But y’know something…there’s just one problem…"she went on.

"Oh?" I replied, Fezziwigishly.

"C’mon…" she continued, "I mean, no offence, but this business sucks. Newsletters are gonna be out of business soon. Everybody’s giving away information on the Internet. Like, you can get, I mean, like all you want."

"Oh no," I reminded her, "you can’t always get what you want. And you definitely can’t get all you want of it."

Then, worried that I had placed an obstacle in her path…a puddle of repartee she couldn’t cross gracefully…I laid down my cape:

"Tell me more…" I said, honestly. I wanted her to go on talking. She was talking nonsense, but a man never tires of nonsense from a beautiful woman.

* * *

While this was happening, Ebenezer was being set upon too. But his was no earthly beauty. No beauty at all, in fact.

"Come with me," said the spirit. "I am the ghost of Christmas Present. Look upon me. Touch my garment."

Ebenezer did so and instantly found himself flying through the streets of Baltimore. Even from what seemed like hundreds of feet up in the air, he could hear the music blaring on Mt. Vernon Square. "What a strange time for a rock concert," he muttered to himself.

Christmas lights were run up the tower of the monument to George Washington and caused the whole square to glisten festively.

But the ghost did not pause. He continued his flight across Charles Street and over to East Baltimore. Finally, he stopped in front of a modest row house.

"What is this?" asked Ebenezer of his guide.

"This is a house."

"Yes, I can see that," Ebenezer pursued the issue, "but why are we here?"

"That is for you to answer," replied the phantom.

Ebenezer looked in the window. It was a very modest house, of the sort you could have bought with a few shares of Cisco a year ago. Now it would take twice as many shares.

And there was a family…and yes…he recognized now where they were. This was the house of his old trading partner, Bob. He had not seen Bob in 15 years – not since the two of them split up after their hedge fund went bust.

Poor Bob, he had given up investing altogether and got a job at a mining company. Silly bugger, thought Ebenezer, he saved his few pennies and bought gold coins. He probably has hundreds of them buried in the yard. Not worth the trouble of digging them up.

And he could have bought growth stocks…!

Bob’s wife and three daughters were talking in the front room. How pretty the girls were. And so full of life.

"Martha," said Bob’s wife, "Dad will be so glad to see you. We have so much to do to get ready for Christmas. But sit down in front of the fire. It will be so nice…now that you’re here."

"Oh…there’s Dad’s car," said another of the girls, with red, curly hair like that of a doll, "Hide, Martha! Let’s surprise him."

So Martha hid herself, and in came Bob. And there upon his shoulder was Tiny Tim. Alas, he bore a little crutch, and had limbs supported by an iron frame.

"Now, where’s our Martha?," asked Bob, looking round.

"Not coming," said his wife.

"Not coming," said Bob, with a sudden deflation of his high spirits, "not coming for Christmas?"

Martha didn’t like to see him disappointed, even if only in jest; so she came out from behind the closet door and ran into his open arms. "Oh there you are! I knew you wouldn’t disappoint us. It wouldn’t be Christmas without you and all the children."

"And how did little Tim behave in church?," asked Bob’s wife.

"As good as gold," said Bob, "and better. Somehow he gets thoughtful, sitting by himself so much, and thinks the strangest things you ever heard. He told me, coming home, that he hoped the people saw him in the church, because he was ‘disadvantaged’ and it might be pleasant to them to remember upon Christmas Day, who make lame beggars walk, and blind men see."

Ebenezer could barely suppress a "humbug." For he knew there were advances coming in the biotech and microtechnical sectors that would cure cripples and blind people. He had seen the IPOs go up by 10 times. It was just a matter of time until all of life’s inconveniences were done away with. And anyone who cared to could be rich too – they just had to stop being so stupid and stubborn, like Bob. Get with the program, for Pete’s sake.

The evening dinner progressed, with Ebenezer and the ghost watching. The table was set, the whole family seemed in motion. Everybody had something to do…and something to say, well, about everything!

And such merriment!

"A wonderful dinner," said Bob to his wife. "And the pudding was sensational."

His wife confessed that she had doubts about the pudding. Even in a low-inflation world, Christmas puddings can be expensive. And, in truth, it was a rather humble pudding, Ebenezer thought, for such a large family. He had seen that much left on the used plates at the Deutsche Bank/Alex Brown party the day before.

But no one said a word to suggest that it was a small pudding. Any member of the family would have blushed to hint at such a thing.

And when it was over, the cider was brought out and passed around. Bob proposed a toast: "A merry Christmas to us all, my dears. God bless us."

Close by his side sat his son, Tim. Bob held the withered hand in his, as if he feared the boy might be taken from him.

"Spirit," said Ebenezer, with an interest he had never before felt, "tell me if the boy will live." Even with all the advances of medical science, Ebenezer somehow sensed the answer was by no means certain.

"I see a vacant seat," replied the Ghost, "in the poor chimney-corner, and a crutch without an owner. If these shadows remain unaltered by the Future, the child will die."

* * *

By the time the ghost of Christmas Present left Ebenezer, our own Christmas party was coming to a close. The guests were leaving, one by one, and in small groups. Arm in arm, many of them made their way up to the top floor of the nearby Belvedere Hotel where they continued to enjoy a night of good cheer – until the good cheer was gone and the night itself was used up.

But I was worn out and retired to my small apartment around midnight. In less than 10 minutes, I was asleep in my bed, with visions, perhaps not of sugar plums but maybe of some kind of plums, dancing in my head.

Around about 4 AM – I looked at the clock – my sleep was disturbed. There was a tremendous racket on the steps. What ghosts were these, I wondered?

Bill Bonner
December 24, 2002

P.S. I will conclude this story on Wednesday – Christmas Day.


Find out what you can do to protect your family …

I’m sure you’ve read the headlines. The next major terrorist attacks may well hit our country by Christmas.

Unfortunately, the vast majority of Americans are woefully unprepared to survive such attacks. Worse, the U.S. government has told us ABSOLUTELY NOTHING about what we can do to protect ourselves. (And make no mistake about it, there’s plenty we can do.)

We don’t have to be sitting ducks! To find out what you can do to protect yourself from the coming attacks, visit:

Surviving Terrorism


"Mortgage financing helps economy stay out of abyss," says a headline from an Oregon paper. The article quotes economist Mark Zandi who calculates that the $2.5 trillion in refinancings in the last 2 years has added 20% to GDP growth. GDP rose at a 4% rate in the 3rd quarter of this year – thanks largely to mortgage money, he says.

Homeowners are still refinancing and still taking the money and spending it, with consumption rising almost twice as fast as incomes over the period. Spending actually increased recently. Even so, retail sales look week for the holiday season.

"This could be the worst Christmas ever," said an analyst with W.R. Hambrecht, perhaps forgetting 1943, 1942, 1941…and so forth.

But that is the problem with us humans. We tend to forget how lucky we are. In this Christmas season, even the poorest people in America have enough to eat…and enough televisions. In fact, our problem (since it is Christmas Eve, we permit ourselves a gratuitous reflection…) is not too little, but too much.

But thank God people are still interested in getting and spending! Here at the Daily Reckoning, we view it with the same cynical amusement with which a farmer enjoys watching his hogs eat. And what would we do without it? (More on hogs…and more gratuitous reflections, too, below…)



Eric Fry, reporting from Manhattan…

– The former World Heavyweight Champion of the global equity markets came away with a split decision yesterday. The Dow dropped 18 points to 8,493, while the Nasdaq gained 18 points to 1,382. Gold, the new reigning heavyweight in the commodity pits, advanced $1.10 to $346.70 an ounce.

– Fed Chairman Alan Greenspan assured the nation last week that the economy is emerging from its "soft patch." So what’s next? A hard patch? A rough patch? A nicotine patch? Whatever warm, fuzzy feelings the Chairman might be feeling about the economy, hopeful economic auguries remain scarce these days.

– "It’s just not there," a livery car driver told me yesterday as we motored down Park Avenue. "The business just isn’t there. One of our biggest accounts is Merrill Lynch and they’ve cut way back on their car service…It used to be that the holidays were a great time of year for us. There were so many office parties and people going shopping. It was great. But not any more. The big companies aren’t throwing Christmas parties like they used to. Business is bad all around."

– Business is bad out on the golf links as well. This month’s Washington Golf Monthly examines America’s Japan- style golf course glut. The magazine quotes an executive at the United States’ largest builder of golf courses who says bluntly, "It sucks everywhere. That’s pretty much our bottom line right now." Conditions in the golf industry could probably "suck worse," but the latest statistics show plummeting prices for existing courses, flatlining numbers of golfers and reductions in rounds played per year. Despite these sluggish demand trends, 285 brand new golf courses opened for business this year. – "We’re still dumping hundreds of new courses on the market each year," another golf industry exec tells Golf Monthly, "when the numbers say we should be adding zero."

– Reduced demand for rounds of golf and for rides across town in a chauffeured Lincoln are but two signs of a spreading white collar retrenchment – a phenomenon formerly known as "thrift." This hot new "thrift craze" is catching on throughout the entire macroeconomic strata – from McMansion dwellers to double-wide dwellers.

– It turns out that nervous, indebted consumers do not consume with the same abandon that confident, indebted consumers do. The anxiety-inducing effect of rising unemployment, a dicey stock market and the prospect of intensifying conflict in the Middle East are finally starting to take their toll on consumer spending, as evidenced by the worst holiday-season sales growth in 12 years. Greenspan can cut rates until there’s nothing left to cut. But that’s no guarantee that Americans will keep flocking to malls to buy their third and fourth redundant VCR players.

– In fact, the Christmas retailing season this year is decidedly lacking in good tidings. Bellwether Wal-Mart has already announced disappointing same-store sales for December – it’s "Sam’s Club" division reported and honest- to-goodness DECLINE in sales! Meanwhile Federated Department Stores and Target both chimed in with discordant sales forecasts for the holiday season.

– Not to worry; the economy is just in a soft patch… The stock market, meanwhile, has been stuck in a little soft patch of its own – but he stock market’s soft patch has seemed more like a Bermuda Triangle, into which about $7 trillion has disappeared…and the money is still disappearing.

– Greg Weldon, of Weldon’s Money Monitor, points out that the world’s largest actively managed equity fund, Fidelity Magellan, has fallen more than 23% year-to-date. By contrast, the world’s largest bond fund, PIMCO Total Return is up 9.64% for the year, while the Fidelity Select Gold Fund has chalked up "a massive" 59.9% gain year-to-date.

– Past performance does not guarantee future results, Weldon readily admits. "But in this case, we believe that…this year’s overall performance provides a `guide’ to future results." In other words, says Weldon, shun stocks and cozy up to commodities. "Reverend" Weldon is preaching to the choir.


Back in Ouzilly…

*** Ah, Christmas in the country…

*** "Dad, I can’t believe it," Maria came running into the kitchen this morning, nearly in tears, and looking as though she had just seen the ghost of Christmas Past…"I can’t believe you put a dead pig in the laundry room!"

Indignation is the 16-year-old’s favorite sentiment, and she does it well.

"I was going to wash some clothes…and I go into the laundry room…and you and the gardener have hung up a dead pig right in front of the washing machine."

Her facts were correct. But the emotion seemed misplaced.

"What’s the problem," your editor replied, "what’s wrong with pigs?"

The pig in question happily inhabited one of the sties on the farm – until yesterday. But Christmas is coming and the local tradition is to kill a pig a few days before so that you can eat the blood sausage on Christmas morning.

So, with their usual incompetence, the gardener and his boss went about their work. After a few blows of the sledge hammer, and some quick work with a sharp knife, the living pig was turned into meat…

"You have to cut off the testicles, right away," said Pierre, who had come over to offer advice. "Otherwise, the meat won’t taste good."

And so the deed was done…and the carcass hung up in the laundry room for further attention today.

Animal rights partisans and health department officials would have been appalled. Your editor was a bit appalled, too – but he is getting used to the rituals of the French countryside, and rather likes them. Like average P/Es and the Ten Commandments, traditions are ignored at your peril, he believes.

*** Today marks the anniversary of the famous "Christmas Eve truce" during WWI. Spontaneously, British, French and German soldiers began singing ‘Silent Night.’ They lay down their weapons, walked across no-man’s land and exchanged cigarettes and tins of canned meat. Senior officers could barely get them back at their work – trying to kill each other.

The Daily Reckoning