FYI
Private Use Only
(c) Bill Fleckenstein
"The end is near... From time to time, I've quoted a friend of mine, Gerry Stanewick. He's a very knowledgeable participant in the bond market and occasionally writes a morning piece. Today's comments, while somewhat strident, are particularly interesting:
"Since the beginning of the year, the bond market has been creamed. The old bulwarks of low inflation and a strong dollar have not been sufficient to halt the journey into the abyss. I have not and will not vary my argument that overpriced equities and unwise online buyers are the cause of the money transfer out of debt into stocks. But I think that is over or nearing an end.
"I do believe that the equity miracle that has made cab drivers rich and arrogant, and IPO fools home builders all over the East Hampton beaches, is coming to a sad and ugly end. The tax revenue bonanza that the stock market has wrought will also end, as will the market's love affair with Slick Clinton. Rubin is gone because he knows the game is over. As margin calls went out last night, the stage is being set for what I believe to be a major devastation of national wealth. The smart companies like Proctor and Gamble have started to lighten the load of people. It is only the beginning. Merrill Lynch takes a foray into the world of low commission online trading. Do we need a road map?
"To expect a crash is different than hoping for one. The insanity that has become almost accepted in equities is unparalleled in its foolishness. Amazon.com will never make money in its present form, even if it starts selling drugs. How many eBay frauds are going to disappear in the next year or so and take with them thousands of hoodwinked investors who are maxed out on MasterCard? When Dell Computer loses 40 percent of its capitalization in three months, no one out there is downing Maalox and praying for a miracle?
"Contrary to what you read, Japan is still sickly. The only people touting their improvement are the folks long Japan waiting for the sheep to enter. China is deflating at a much more serious rate than you are being told. The skylines of Singapore and Indonesia are empty glass office buildings looking for help.
"LTCM, derivatives, Soros and a whole bunch of other economic grenades are rolling around with their pins out. Seek safety and don't give up the lower interest rate ghost yet. I am one who believes we are close.
His point that "to expect a crash is different than hoping for one," is a very important one to note. Just because people are bearish doesn't mean they want things to happen. It's that they expect trouble based on events that are taking place and because they have knowledge about history, prices and other factors. So rather than ignore these signs, the bears have chosen to get prepared. It seems to me like a pretty sensible strategy, but I think people miss that point and believe it's fun to be bearish. It's not fun - being bullish is far more fun, but you've got to call them like you see them".
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