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To: Mark Bartlett who wrote (40436)	9/18/1999 3:39:00 PM
From: Alex	Read Replies (1) \| Respond to of 116762

Krash: How Y2K Could Sink the Stock Market and What Canadians Can Do About It Dateline: 09/18/99 To the passengers of the good ship Dowtanic it seems like clear sailing ahead, but, warn authors Jonathan Chevreau and Stephen Gadsden, there is an iceberg looming ahead and the iceberg is Y2K. Their new book, Krash: How Y2K Could Sink the Stock Market and What Canadians Can Do About It, is the latest in a series of Y2K books that have been flooding the market for the last year. But it is the first and only book that I've seen that covers the subject from a Canadian perspective. Although it may not seem like it when reading the book, Chevreau and Gadsden are actually long run stock market bulls. They believe in the traditional notion of "stocks for the long run". But as they note in their conclusion to the book, "not at any price and certainly not when the risk outweighs the reward". Both authors are well known in the Canadian investment community. Gadsden is a Toronto-based certified financial planner and the author of several books including Retire Rich. Chevreau is a popular financial columnist with the National Post and the author of The Wealthy Boomer and co-author of Smart Funds. The book is divided into two parts. The first section could well stand on its own as an excellent introduction to stock markets and investing. It gives a brief history of stock market variability, explains how stock markets work, and covers various investment styles including technical analysis and fundamental analysis. It goes over the pros and cons of passive investment management vs. proactive management. Although such a luminary as the Wizard of Omaha himself, Warren Buffett, promotes the passive or buy and hold style of investment, they show that, in theory at least, an active style can lead to greater returns. Even such a superior mutual fund as AIC Advantage has had volatile and severe drops in value. Getting into and out of that fund at the right times would have dramatically improved performance. The authors discuss various risk management methods including dollar cost averaging, options, segregated funds, and asset allocation. But it is the second section of the book that gets down to the nitty-gritty, the theme of the book, that the stock market today is greatly overvalued and that Y2K is the pin that will burst the balloon. The authors do not consider themselves to be apocalyptics who see Y2K as the end of the world as we know it. But they do consider the Y2K problem to be a serious one that is being inadequately addressed. They believe that the media is being negligent in not critically investigating reports from government and industry of Y2K compliance. They believe that spin doctors are painting an unjustifiably rosy picture of the situation. Using extensive evidence from Y2K pundits on the Internet, they argue that there is a good likelihood of disruptions, business failures, and a stock market crash. But here's the rub -even if Y2K turns out to be a non-event, they argue that investor perception of the possibility of these events will lead to a crash anyway. Although there are many arguments that market timing is a mug's game, they argue that this confluence of events - an over inflated market and the Y2K bug - raise the odds considerably that there will be a market collapse within the next six months. They present a number of alternatives for investors to cope with and perhaps even profit from the coming debacle they see ahead. These range from the simple expedient of converting all equities to cash, to riskier gambits such as short selling, put options and precious metals. Agree with them or not, this is a well-written, cogently argued book. Their arguments are not to be dismissed lightly. For my part, I have already converted some of my more problematic holdings into cash. And my investments include a couple of blue chip gold mining companies and an oil exploration company, all of which may do very well in a general market downturn. I'm keeping a close eye on the market, but for now I am still keeping a foot in. Jonathan Chevreau has kindly agreed to answer reader's questions on our bulletin boards. If we can work out a mutually convenient time, he'll also participate in a live chat at a later date. investingcanada.miningco.com