-Caveat Lector-
COMRADES: cory hamasaki's
DC Weather Report
September 30, 2000 - Y2K plus 272 days.
- WRP140
http://www.kiyoinc.com/current.html - Final - $5.00 Cover Price.
(c) 1999, 2000 Cory Hamasaki - I grant permission to distribute and
reproduce this newsletter as long as this entire document is reproduced in
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tearline or provide a link to the header. I do not grant permission to a
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media. This entire document is a Year 2000 Information Disclosure as defined
in the Year 2000 Information and Readiness Disclosure Act, S2392.
--------------------tearline -----------------
In this issue:
0. WRP information
1. The Bully of the Bay
2. Winter's Here
3. Intel
4. So what's the deal with the market
5. CCCC
--WRP Information--
Most of the WRP material is now flowing through our listserv. It's still
open to all and subsidized by the members. I'm cutting back
on the web WRPs and concentrating on the listserv.
Join the open Weather Report mailing list,
Click to subscribe to dc-y2k-WRP When you get there, you should select the
digest option. At some point, we might close the list but for now it's
still open.
--The Bully of the Bay--
There's a major threat to the ecology of the Chesapeake Bay. This living
disaster is ripping the eco system, digging the sea grass,
and beating up on the ducks and other birds. What is this horrible savage
beast, an alligator? A giant rodent? A toothy sea going
gar? No. The name of this monster is the Mute Swan.
The Mute Swan, graceful, silent, poetry in motion but not a native to the
Chesapeake, it's crowding its way into the ecology, eating
everything in sight, pushing aside smaller sea birds, and they're all
smaller than the Swan.
Two local environmental groups have gone public about the Mute Swan, kill
it, KILL THE BEAST, get rid of it, we don't want its
kind in our neighborhood.
The solution is simple. I have pals who'll hunt anything that moves,
autoloading shotguns, radio controlled dogs, jet propelled boats,
just declare open season on the Mute Swan and the ecology will be saved.
They'll want a BIG deep fryer and what, three pounds of
corn meal and five gallons of peanut oil?
Things are not always what they appear to be.
--Winter's Here--
Winter's starting right on schedule. Massive snow drifts out west, rain
where it's warmer. We've got night time temps in the 40's in
DeeCee. The TeeVee news reported upper 30's in September! Meanwhile,
Prince Albert trying to get out of the can, begged
Maximum-Bill to release the emergency oil from the Strategic Reserves.
And amazingly, he's doing it.
Makes sense to me. No problems with oil, gas was plentiful all year, no
inflation but as the election gets closer, the possibility that you
might be inconvenienced slightly becomes a National Emergency! You mean, I
might have to pay an extra 20 cents! Shocking.
Did you have trouble buying oil or gas? I didn't. Well, I did goggle at
the pump numbers. For a few weeks, I drove a truckasaurus,
a Dodge Ram 1500 4X4, 4 door, Magnum V-8. I drove it down to Paul Milne's
place, it was fun. The truckasaurus took $38 to fill
up and I was using the cheapest regular that I could find.
Big difference between the truckasaurus and the cory-mobile, an economical 4
cylinder sedan with a 5 speed transaxle. The
cory-mobile gets 30+ mpg and it takes about $18.00 to fill the 13 gallon
tank. The Baron's Jetta TDI gets 45 mpg on Diesel.
But winter's here. If this is a half-way exceptional winter, I'll see my
monthly heating bill triple and so will everyone else. Our
Yuppie pals with their 5 bedroom tract mansions and inefficient all electric
heat will drop into "resistive back-up mode" when the air
temps fall. They'll see their bills quadruple, quintuple, or n-tuple as we
say in the computer science business.
Some of them could see one month's heating bill exceed one thousand dollars.
Here's the reason. DeeCee in recent times has had fairly warm winters. In
the 1970's, I saw the Potomac River freeze solid and that
winter, a pal with a gas heated mega-size townhouse had a $600 heating bill.
In historic times, DeeCee was much colder. There's an
ice house under Monticello, Jefferson's mansion south of here in Virginia.
Where did he get the ice from? He got it from ponds. It
used to be colder.
If the temperatures stay above 40, a heat pump is a pretty good compromise
heating system. Our winters have been above 40 for
decades, there were one or two exceptions but they were brief.
The indications are that this coming winter will be colder than normal.
This is not scientific. This is just my weather sense. It's little
clues like, August temps in the 50's, September temps in the upper 30's,
the snowstorm out West. I call this a clue. A religious
person might see 7 scrawny cattle. Since the ground isn't heat-soaked, it
will give up the little warmth that it has by the end of
October and we'll be in full winter by November.
If this happens, all the yuppie, heat pumped mansions will kick in their
back up resistance heat. This is the costliest form of heat
there is. Factor in the fuel adjustment charge as well as normal utility
greed and we'll see yuppies crying like never before.
Boo-hoo-hoo, by the way, where's my $3.00 cup of Starbucks coffee?
Newsweek reports that sales of woodstoves are running twice as high as last
year, selling at a panic rate as the sheeple realize that oil
is in short supply and expensive.
--Intel--
We saw a 22% fall in the price of Intel on Friday, September 22. It fell
another 5% on Monday, September 25. It's still falling and it
can't seem to get up. "Help me up."
Big deal, it's still well above the 12 month low and doing better than my
meager savings which are parked in money markets, CD's,
and passbook savings accounts.
Another way of looking at it is that Intel has a lot more to fall. So does
Cisco, Microsoft, Dell, Amazon.com, and lots of others.
The market has been going up, down, sidewards with great speed, this is a
thrill ride.
Goodness gracious. On Tuesday, September 26, Kodak took an even bigger fall.
The market always goes up, it's a sure thing, you
gotta play to win. The Kodak executives and the financial talking heads
were on CNN screaming in terror, "We didn't know we
were in trouble. All the numbers were good, up until this month's report.
No one could have predicted this."
Why should a company lose track of their bottom line 6-9 months after Y2K?
Only a hysterical alarmist would have expected
problems like this.
After reading John Kenneth Galbraith's book "1929", this looks like a stock
market out of control and a bubble about to burst.
I'm typing this on a computer powered by a 200 mHz IBM-Cyrix Pentium clone.
I paid about $40 for the CPU a few years ago.
This machine is plenty fast. I have the parts to upgrade this, I have a
couple 350 mHz AMD CPUs on the shelf. I just don't feel that I
need the speed increase.
Intel and AMD don't make a CPU anywhere near as slow as the 350, much less
the 200. I think the slowest parts coming off their
lines are about 850 mHz. I'm a power computer user. In 1983, I bought an
IBM PC for $2,000. In 1984, I upgraded to a $5,000
XT. I build software for a living. Somehow, the technology has shot past
what anyone needs to get a job done. I have another
P200 that I use as a Fax machine and a P150 Internet terminal that gets a
few hours use a week. A lot of the time I use my IBM
701C laptop, it has a 486 CPU and it works well.
I suppose someone will buy all those 850, 900, 1.2 parts but it won't be me.
I have three 1 gig disks on the shelf that I bought last year for $21. I
still haven't filled up the ones in my systems so I won't be
buying disks for a while either.
We're in a Post-PC era now. I don't need or want a faster computer. I
will get one when the price is, oh, 35 dollars for a 950 mHz
CPU. If enough people have this attitude, the market value of Intel, Dell,
etc. will hesitate, fall suddenly, bounce back up for a short
while, and fall again and again until their share price accurately reflects
their revenue potential. Instead of $500 parts and $2,000
computers, their market is $5 and $10 parts and $200 computers. Instead of
a $60 share valuation, make it $6 or less. Maybe even
60 cents.
This is neither good nor bad, it's just economics and the cycle of business.
No one needs a $2,000 computer, few demand 1.2 gHz
power. A $200 computer on the other hand, has a terrific market. We're
following the decay curve of micro-electronics. The first
scientific hand-held calculator the HP-35 was $400. I'm not counting the
Bowmar Brain as a scientific calculator. I just bought an
HP-6Solar for $9 and it does more than the HP-35. Graphing calculators are
$80. Few need the power of a graphing calculator. I
bought the HP-6Solar because for $9, I couldn't pass it up. It has
transcendentals, statistics and even does hex, octal and binary.
Where does this business cycle touch you? It's this. If we're seeing the
tech companies on a glide path, get out of their way and out
of their stock now. This also means, moving your mutual fund money to more
conservative investments.
On the other hand, if you see a hot market for $600 CPU chips, $2,000
computers, and an ever increasing demand for more
powerful computers than 950 mHz, or maybe higher bandwidth, then certainly,
keep your money in tech and growth funds. It can
only go up, guarenteed.
What feels right to you? What are you buying? Have you got your eye on a
$2,000 Dell powered by a $600 Intel Pentium III 950
mHz? Or is a 9 dollar calculator or a wireless Internet email terminal more
your speed?
-- So What's the Deal with the Market? --
These are guesses. Unless Maximum-Bill and Prince Albert manage to divert
Social Security money to the stock market, the rate of
increase is not enough to drive the market up.
Here's why. A couple of my boomer-buddies have retired. The leading edge
of the baby boom is bailing out of the workforce.
Sure, these are the exception, they have a million or two in stock and think
they're rich, "Why cory, that's more money than I'll ever
need."
Well, no. Two of them were recently squeezed by specific stocks tanking.
One lost twenty grand in Intel. Another lost a couple
hundred grand in another firm over the last 6 months.
B-b-b-but that's just a paper loss.
Paper, shmaper, for Boomers who quicken their accounts every weekend, that
loss is as real as losing a twenty dollar bill.
Out of my small pool of pals, I know two who are retired and not only are
NOT contributing to social security and their 401(k) but
they're also drawing down on their investments for gas, food, clothes,
Depends, Ensure, Viagra, Rogain, etc.
If someone, a typical boomer, has a couple hundred thousand dollars in their
401(k), the additional 5,000 that they pitch in is not
enough to drive the market to higher levels.
Here's the rational.
$5,000 of $200,000 is 2.5%. This is close to the "load" on a fund, the cost
of operating the fund, renting the office space, printing the
prospectuses, running a few odd ads on TeeVee, buying drinks for the office.
There is no such thing as a no-load fund. All funds have a cost of
operation. Some have an overt load or fee, others hide the load in
the details of the accounting and the transaction engineering.
The other part of growth is an increase in productivity. Not so much market
share but actual increases in productivity such as:
"goodness, that factory is making cars using garbage as raw materials."
I haven't seen a real, accross the board, productivity increase. I have
seen computers get cheap, cell phones get cheap, consumer
electronics get cheap but other things, cars, raw materials, oil, energy,
living space, have gotten more expensive.
Some of the increase in productivity comes from exporting jobs to third
world countries. The last cory-mobile was built in Mexico.
There are negative as well as positive productivity factors.
As for the run up in the market just at Y2K, I'd guess that cheap oil
contributed to that, like a nice jolt of speed for a nag in a horse
race.
Unfortunately, this race goes on and on and on and our nag is in oxygen
debt, spitting foam, and rolling its eyes.
If this horse stumbles, we go down with it.
So what will happen?
Energy costs are a big hit, we are yet to feel that impact in the stock
market. The yappers on TeeVee are yapping about the new
economy being impervious to such trivia as the cost of fuel and electricity.
In some cities, electricity tripled in cost. Tens, maybe hundreds of
billions of dollars are being sucked out of our economy.
Factor in the amount needed to drive the market up, add in the few leading
edge Boomers who are drawing down, and we're looking
at a side-ways market at best and possibly a deflating bubble.
Then there's the real hit.
In the late 1990's I used to hear stories about "making it big" in the
market. Yups and Booms used to drop comments in
conversation about option plays, Microsoft, Cisco, and other sure things.
It's been about a year since I've heard such stories.
I knew a guy who rode Microsoft up using options and margin accounts. I
haven't heard boo from him recently. No surprise.
Imagine that he put $5,000 into Microsoft in the early 1990's. Leveraged
using options and margin, he might have turned that into
$50,000 in a couple years. In another few years, he might have had a
quarter million. By the end of the 1990's he could possibly
have had a million dollars in a margin account.
If so, the deflation of Microsoft in the last year takes his investment back
to... $5,000. Such is the power of options and margin. The
fall is much faster than the rise.
It takes lots of doublings to go from $5,000 to a million dollars but only
one half'ing to go from a million to $5,000. Do you feel
lucky today? Well. Do you?
The real hit is psychological. They've stopped yapping and are looking over
their shoulders
Late update, Thursday, September 28, both the NAZ and the Dow are up a
bunch. Happy daze are here again.
Summary -
In the 1980's, IRAs, 401(k)'s, as well as state and federal pension plans
pumped money into the market. Unfortunately, like a Ponzi
scheme, it takes an ever increasing cash input to keep the price up, to pay
for the TeeVee ads and the fancy stock brokers and their
girlfriends. These ads, brokers, and what-not bleed off money like a slow
leak in a tire.
At some combination of dynamics, the inputs will not be able to keep the
bubble fully expanded, much less expand it further. It's a
leaky bubble at best. The more inflated the bubble, the harder it is to
expand it further.
The signs of the end times are irrational rises and falls, high volume but
no increase in price, a market that goes sidewards. Dow up,
NAZ down. Dow down, NAZ up. Both up one day, way down the next. Can't you
make up your mind.
The retirement of the Boomers draws money out of the market. For each
Boomer who takes $50,000 out to live on, ten Gen-X'ers
must put $5,000 into the market, plus a little more for the broker's
girlfriend.
--Lucky World--
Lucky World was an Korean supermarket in Falls Church. I stopped by to buy
a couple sacks of rice and some snacks but they've
closed.
Stores come and go, nothing is permanent.
I'm building up my "preps" because if the weather gets bad, if we have a
"DeeCee is shut down by the ice storm", I want to stay at
home, slip on my socks and make some chili and rice.
SNIP
SIG HEIL!
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