As I am on expensive Marriott Hotel telecom charge, I will respond to Edwin, Taikun and your goodself via this single note.
I still sit on my Furukawa. On Furukawa, messages from a fellow Softbank threader ?
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From Thursday:
0440 GMT - Furukawa Electric Co Ltd <5801.T> up 123 yen or 11.32 percent at 1,210.
The manufacturer of electric wires and cables announced strong earnings results for the past business year and said its group net profit would jump 88 percent in the current year.
More from the Wall Street Journal:
Furukawa electric reported group net profit of Y35.17 billion for the just-ended term, compared with Y2.79 billion a year earlier. The stock was also supported in the morning session by a report that the company has acquired U.S. optical communications start-up, Optigain Inc., traders said.
Morgan Stanley Dean Witter earlier in the day raised its rating on the stock to "outperform," setting its target price at Y1,940, traders said
We are calculating that the shares would have to double just to price in the value of its equity positions. Also, Furukawa Electric is selling at 35X current year reoccurring earnings. Cheap by that measure too when it is considered to be growing at a 50% plus rate.
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On the California growers of Japanese rice. They should have gotten in alliance with a large Japanese outfit rather than trying to enter the market on their own. They should have thought about the likelihood of success had a Japanese grape grower tried to enter the California wine market, without a California partner.
On Edwin?s query concerning kneepads and head cushions, you folks got a twisted mind. Kowtou is the act where by the supplicant kneels down and knocks his forehead against the ground as a sign of, well, supplication.
On Taikun?s wedding, welcome to the club. Now learn to keep your neck stiffly oriented forward when you walk down the street and rotate your eyeballs, independently of each other if possible, when confronted with smiling friendly girls that under other circumstances would trouble your heart. Further, now that you are married, you can spend more time with your buddies on this thread. All kidding aside, congratulations to the magical mystery tour. You thought you have arrived at a stop, while all you have done is getting on a train about to leave station. I again apologize for not making the event, as you now know I am stuck on a client CEO visit to a city very different from Honolulu.
Finally, I do recommend The Contrarian.htm on SI as a regular read to prevent hyperventilation due to carried away enthusiasm. Bill actually talked about Japanese golfcourses today ?
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June 5, 2000
All partied out
Our wild day last Friday precipitated a decent rally throughout Asia, but Europe did not cooperate. By the time New York opened this morning, most of Europe was trading down, and our futures opened down a small amount. That dip was naturally bought, and within an hour and a half we were hitting new highs, up about 1 1/2 percent in the Nasdaq 100, 1/2 percent in the S&P and a small amount in the Dow. The Sox was the lead sled dog, with the bank stock index down about 3 percent on the back of a downgrade by a large dead-fish house.
After the early dip-buying episode, we had a bit of a sell-off and the market kind of wiggled sideways for the rest of the day. There was nothing really memorable to report about today's action, other than to say that while the Dow was up 20 points, 74 Dow points were attributable to Hewlett-Packard and IBM. So today's advance was a little on the narrow side. The rest of the Dow indices were negative on the day -- utilities in particular got walloped. Just another day in the mania.
Volume was back to being on the lighter side, and even the mighty Sox (after having been up on the day) ultimately closed lower. Of course, the one stock that bucked the trend in the Sox was Micron, which managed to close up on the back of whatever passes for logic around buying that stock in the first place.
Away from stocks, things were pretty quiet, although the yellow dog was still barking (closing up $4), and dragged silver along with it. The fixed-income market was a touch higher, with the 10-years up about 1/4 point and the dollar marginally weaker.
20/20 foresight?. . . There was a lot to talk about in the news. This weekend I saw a very good article by Gretchen Morgenson in the Sunday New York Times. It touched on some of the acts of prestidigitation performed by that consummate magician, Lou Gerstner, at IBM, while Dell and Amazon got roughed up in Barron's. Merrill Lynch decided to trot out a couple of analysts to try to rescue Dell and IBM this morning. They were successful in jamming up the price of IBM on nothing but the most spurious of reasons. The cheerleader that follows IBM said he was comfortable with the fourth quarter. He didn't sound so comfortable with the second or third quarter, but by the fourth quarter everything apparently will be hunky-dory. I recommend the New York Times article to anyone who wants to see some of the things that are going on at IBM.
From the sure thing department, today's sure thing is said to be stocks. In Friday's New York Times, there was an article I didn't have time to talk about that discussed some of the problems in Japanese real estate, and golf courses in particular. I'd like to share a quote from a woman in the article who lost a significant amount of money in a membership:
"I listened to the promoters who told me that if you buy something in Japan that is tied to the price of land, its value will never go down."
In the late 1980s, nothing seemed more certain than Japanese land prices going up forever -- that is, unless one used an ounce of common sense to think about how crazy the prices were and what the ultimate outcome would be. That is exactly the same belief that people now have about stock prices. We have all the well-worn arguments of where else can you put your money, everyone's got to save for retirement, stocks win in the long term, all those rationalizations, but the fact of the matter is that when you overpay dramatically for businesses, you just don't do well as an investor. That should come as no surprise now, should it?
One other interesting story crossed the news wires today. A company called APBNews.com ran out of money and fired the entire staff of 140. I think we should expect to see more of that down the road as these dot-coms start to auger in.
A child could pull it off. . . Joanie was absolutely on fire this morning describing Friday's unemployment report. I mentioned in Friday's Rap that there were some questions about the accuracy of the report. Joanie went one step further:
"From an Administration that brought us Waco, Filegate, Travelgate, Monica Lewinsky, the Lincoln Bedroom, indictments, an impeachment, friends in the slammer, the total denigration of the Justice Department and the latest -- the Elian Gonzalez fiasco -- just to name a few, er, a few highlights, what would possess you to raise your eyebrows at the suggestion that the BLS cooks the books? I mean lawlessness is a way of life with this crew. So a little help from the Labor Department? No problem.
"Therefore, if you had to wait until you read the papers over the weekend to learn that Friday's Non-Farm threw up some red flags, you are way behind the eight ball. As a matter of fact, the story made the rounds so quickly after the release was scrutinized, that by mid-morning, the BLS was forced to make an official statement, denying that there was any "glitch" in the numbers. (The lady doth protest too much, right?)
"Glitch? Oh, that's just French for political pressure applied to a government agency whereby they would manufacture a benign number in order to put public pressure on Mr. Greenspan to chill out in the rate hike department lest we slow down so much that Mr. Gore takes a recession rap and therefore blows his shot at the presidency. Got that? And just how could the BLS soften the number in the month of May? Easy. By taking the survey early, blaming it on the calendar and thereby very conveniently avoiding the seasonal expansion we traditionally see in the month of May. Child's play."
Bird watching. . . It just seems that between the massaging of the government data and the tape painting on Wall Street, more and more the U.S. stock market is starting to resemble a giant rig job. I know that may sound a little silly or extremely pejorative, but I think if typical readers had the chance to check the opinion of a lot of professionals, they'd be surprised how many level-headed people take this idea seriously. Which is not to say that makes it the right conclusion, or that there is some sort of government conspiracy going on. But if it looks like a duck, walks like a duck and acts like a duck. . .
Devil in disguise. . . In a very humorous story that passed on Bloomberg Friday, which I also didn't get a chance to talk about, someone who lost about $300 million in trading currencies because he'd relied on the advice of Wayne Angell recently won a lawsuit against Bear Stearns. For those who don't know, Angell is a former Fed governor and the chief economist at Bear Stearns (and anyone who listens to him for advice on making currency moves deserves to lose his money).
At any rate, the interesting part of the story was that the CEO of Bear Stearns, Jimmy Cayne, was quoted as saying that Wayne Angell "is an entertainer." Cayne went on to speak of economists, apparently in general, saying, "They don't really have a good record as far as predicting the future. I think that it is entertainment, but he [Angell] probably doesn't think it is." I thought this was a particularly apt description of Angell, and that folks would get a kick out of reading it.
Home of the Fleck-O-Meter. . . Last week I published a satirical take on CNBC's programming schedule that was forwarded to me by a reader. At the time, I didn't know where it had first appeared, but that information has been provided and I want to pass it along. The post was written by a regular contributor to the message boards at BearForum, which is a financial discussion site started last January. I thought the spoof was hilarious, so give the folks over there credit.
Please be sure you've read "What is the Market Rap?" before you send me e-mail. As highlighted in this outline, there are certain questions to which I am unable to respond.
William A. Fleckenstein, special to Silicon Investor.
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