Trendless Market

November 4-5, 2000

Paris, France

By Addison Wiggin

MARKET REVIEW: “Trendless” Market – Tough To Make Money
Before The Election

Not much to report on this fine pre-election weekend.
Investors, cautious about any major stock market moves
before Election Day, did little trading Friday.
Consequently, the Dow posted a minor loss – down 62 –
Friday but ended the week strongly higher for the week at
10,817… 227 points higher than Monday’s opening.

The tech-weary Nasdaq held off earnings worries and rose 22
to 3451 Friday… posting 173 positive points for the week.
The S&P 500 barely moved Friday, closing off the week at
1426.69 for a overall gain of 47.

“The mood of the market seems to be somewhat trendless.
We’re in a challenging climate in which it is tough to make
money,” an analyst was quoted as saying in a Reuter’s
report. “Few players are putting money to work today ahead
of the election on Tuesday.”

The Labor Department released a report indicating the
number of new jobs created last month slowed up a bit to
137,000 – making investors sigh again with soft-landing
satisfaction. The new job numbers, however, were slightly
offset by a hike in wages… revealing very little helpful
information to the eternal list of Fed watchers.

Overseas markets were fairly listless as well: Japan’s
Nikkei fell 0.23%. Germany’s DAX index was up 0.56%,
Britain’s FT-SE 100 was down 0.10%, and France’s CAC-40
fell 0.02%.

The Russell 2000 507 up 28 for the week

PRICES FOR THE WEEK…

Gold: $265 down $1.50
Crude Oil: $32.71 up a penny
Natural Gas: $4.93 up $.40
Platinum: $594 up $25
Palladium: $714 down $41
CRB Index: 223 up 4 points
Dollar Index 116
The sad, sad Euro: $.85 up $.02
British Pound: $1.44 down a cent

And…108 Japanese Yen will still buy you a crisp US
dollar.

THIS WEEK in THE DAILY RECKONING
By Bill Bonner

11/03/00 THE FALL OF KING DOLLAR

“…with no direct experience nor any points of reference,
investors are caught up in the latest collective thinking.
The dollar is strong because of ‘technology in America’ or
because the U.S. economy is ‘more flexible,’ ‘dynamic’ and
so on. The fantasy du jour is that the euro must always go
down and the dollar must always go up. And yet, all it
would take would be a little hedging on the part of
investors and dollar-holding foreigners to send the dollar
plunging. ‘[T]he dollar’s stability depends on the
perseverance of capital inflows of preposterous
magnitude,’…”

11/02/00 TAKE ME TO YOUR LEADER

“…technology has been the stock market leader. Perhaps
some investors are emotionally attached to it and
disheartened by the setbacks it has received. More likely,
most investors have their eyes on a different leader: the
dream of getting rich in stocks. ‘Technology’ is merely a
conveniently vague rationalization for why it is possible.
Now that the Big Techs are getting under fire, investors
are beginning to get nervous. But so far, I’ve seen no one
question the fundamental belief that all New Era investors
share: that you can get rich on stocks just by being ‘in
the market’…”

11/01/00 ALL SAINTS’ DAY

“…Halloween is an example of what Philippe Muray calls
“Festivus.” Muray has noticed the way in which the genuine,
dark, primeval, wild and dangerous currents and
undercurrents in society have been tamed…and transformed
into harmless celebrations. This applies not merely to the
shift from All Saints’ to Halloween, but also the political
process, where genuinely revolutionary parties have been
replaced by a token opposition and emasculated rebels. Is
there any real opposition – of a sort that might be
described as dangerous to the government? No, we celebrate
the First Amendment now; we do not practice it…”

10/31/00 THE DESTRUCTION OF TECHNOLOGY

“…Doug Casey likes to compare the Tech Stock Boom to the
periodic booms in junior mining companies. He reminds us
that almost every boom in the junior mining stocks was
capped with the discovery of a huge fraud. “Net stocks,” he
says “lend themselves to this activity quite as well as
mining stocks.” Mark Twain described a gold mine as a hole
in the ground with a liar standing next to it. Investors
have no way of knowing what’s in the hole. Nor do they have
any way of knowing whether a new tech company is an Iridium
or a Microsoft. So, fraud flourishes like worms in a manure
pile…”
10/30/00 DERACINATION

“…as the division of labor expands, fewer and fewer
people have the time or inclination to hunt for their own
mushrooms. We are all deracinated, cut off from direct
knowledge of the things that really matter to us. We don’t
know what’s in the food we eat…nor how it is prepared. We
don’t know who writes our software programs, nor do we have
any idea how they actually do it. Mass investors don’t know
what the companies they buy actually do, and have way of
measuring the value of the stocks, except for recent price
trends…”

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HEADLINES, NEWS and INSIGHT: Kodak Up 20% Since Coverage
Began – Last Week… Collusion In The Gold Market?… What
Went Wrong On Wall Street?

It’s A Kodak Moment – Snap It Up!
by Lynn Carpenter

You can hardly have $6 billion in assets and $14 billion in
revenues – and do worse than Eastman Kodak has lately. I
doubt there’s anyone left to give the old venerable a pan.
It’s a “don’t touch it with a 10-foot pole” stock.
Naturally that piques our contrarian interest.

Celestial Qualms
by Eric J. Fry

Put the cork back into the champagne bottle. Celestica’s
whoop-de-do quarterly reception conveniently overlooks less
pleasing inventory, accounts receivable and gross margin
results.

When Will Investors’ Psychology Change?
by Dr. Marc Faber

To many market observers, the continued bullish stance of
investors – even after the sharp Nasdaq decline in March
and April, the collapse of Internet companies, and recent
earnings disappointments – has come as a surprise. Up to
the end of August, US equity mutual funds attracted $255.5
billion, more than twice the comparable year-earlier total
of $112 billion. When will the crowd change its mind.

Collusion In The Gold Market? Impossible
by Harry Schultz

Despite wide press coverage of the price fixing scandal at
Sotheby’s and Christie’s, anti-trust charges levied at Visa
and Mastercard, and the ubiquitous central bank euro
intervention – the mainstream press won’t even consider the
possibility of meddling with gold prices. Yet, there hasn’t
been a free market in this precious metal for years.

What Went Wrong With Wall Street
by Daniel Denning

The capital markets have been generous; moving record sums
of money into new businesses – profitable or otherwise.
What’s been forgotten in the liquidity surge is the actual
cost of running a business – electricity needed to run a
computer server farm, or the affect high oil prices has on
transportation of goods. Earnings reports of late are
reflecting these skyrocketing costs. And driving the market
down…

FLOTSAM AND JETSAM: The First Great Event of the 21st
Century

“A tremendous boom resounded through central Jerusalem as
black plumes curled into the sky,” began an article in
Friday’s International Herald Tribune.

“The mangled remains of the car lay on the narrow one-way
street where the explosion took place; in a nearby alley
two sheets covered two bodies… `Barak should see this
with his own two eyes.'” Another chapter in the long saga
of Arab-Israeli conflict.

And the chances for Mid-East peace? Called off by violence.
Again.

This latest instability is being blamed for high oil
prices-as high as $36 a barrel in recent months. But is it
true?

We don’t think so. While tension in the region will
certainly give traders pause – and may temporarily
interrupt supply chains-” high oil prices” are part of a
much bigger trend… a trend so important and widespread it
could make you one of the wealthiest investors in the next
five years…

Two Hidden Observations and One Gigantic Opportunity to
Make Money

Big Oil Trend #1: Oil Is CHEAP!

Despite what you read every day in the popular press, oil
is actually selling for less than half its 1980 high, in
real terms. In 1980 it cost you 25 barrels of oil to buy a
single share of the Dow. By 1985, when oil prices fell to
$12 a barrel you needed 125 barrels to buy a single
share… oil was getting cheaper relative to stocks.

And today? At $32 a barrel you need 353 barrels to buy just
one share of the Dow. For example, to reach its 1980 price
in real terms, oil would have to trade at $70 a barrel-more
than twice its current price. It’s not just that stocks are
overvalued. It’s that in real terms, oil is astonishingly
cheap. And today’s cheap oil prices don’t even include a
virtually unheard of fact.

Big Oil Trend #2: Domestic Supplies Have Already Peaked…

In 1956, a geologist named M. King Hubbert predicted that
oil production in the lower 48 U.S. states would rise for
13 more years, peak in approximately 1969, and then fall
off.

He was right. Oil production in the United States reached
its peak in 1970. It’s been falling steadily ever since.

But that’s only the beginning. When you apply Hubbert’s
techniques to world oil, you find out we’re just a few
years from peak production. The world has produced roughly
800 billion barrels of oil. There’s about another 850
billion barrels in proven reserves, and an estimated 150
billion barrels yet to be discovered. We’ve already
produced nearly half the world’s supply of oil.

Two facts.

One: Oil is cheaper now by half than it was in 1980.

Two: Worldwide oil production has already peaked and
can only decline.

Combine them and you can see there is immense opportunity
for a price explosion to the upside.oil at $40, $50, even
$60 a barrel??

Keep in mind, this does not include short-term volatility
caused by Mid-East violence. It’s just straight-up supply-
and-demand analysis. Oil prices will rise, and those
companies with the reserves and the know-how to bring it to
market will make a fortune.

The Best in the Business

Recognizing the investment opportunity for readers, we’d
like to introduce you to one of the most connected analysts
and stock-pickers in the oil business. He’ll bring you the
companies and opportunities that will bring in large
profits in the next 10 year oil rush.

Let me introduce you to John Myers. John – the son of the
great goldbug C.V. Myers – has spent over 20 years
delivering outstanding investments in natural resources to
both Canadian and U.S. investors. His experience, judgment,
and advice are unmatched in the industry.

By way of introduction, John has penned an exclusive report
called The First Great Event of the 21st Century, where he
outlines how these price trends are already underway… and
how most investors and Wall Street have simply mis-read the
signs. They’ve focused too heavily on politics and the big
tech revolution.

John has not. And his report details the specific nature of
the investment opportunity in oil, and how ambitious
investors can profit. I’ve included an express copy of the
report with this e-mail, for your review.

One company, for example-our favorite-has 8.8 years of
proven and probable reserves – well above the industry
average. If you give it a $8 per barrel valuation on oil
reserves alone… they’re sitting on nearly $74 million in
assets – excluding $4 million in land and another $1.3
million in working capital. Yet the stock is only selling
at $1.16, with a market cap of $54 million, which means you
can pick this sure winner up at a 45% discount!

Simply click here (http://www.agora-
inc.com/reports/RASS/secretinvesting)to view your express
copy of The First Great Event of the 21st Century. You’ll
also enjoy the opportunity to join John Myers and exploit
the emerging energy trends of the 21st century for great
personal gain.

Hope you’re having a great weekend,

Addison Wiggin

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CONTRARIAN GLOSSARY: Festivus

FESTIVUS – Festivus is the name given by Philippe Muray to
the latest phase in European (including American)
civilization. The gods are all dead. So are the
politicians. Who would die for his religion today? Who
would die for his politics? Or for matters of principle?
Serious ideas, holidays, ideologies, virtues, religions,
cultures and convictions have all been hollowed out. They
are no longer honored. They are merely celebrated.