From WSJ Interactive:
interactive.wsj.com
<<October 25, 1999
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Greenspan's Valuation Remarks
Incite Exuberant Cyberbashing
By GREG IP
Staff Reporter of THE WALL STREET JOURNAL
The chairman of the Federal Reserve Board is used to being second-guessed by bond traders and economists around the world.
But ever since Alan Greenspan started questioning stock-market valuations, he has been getting a stream of often vitriolic advice from small investors across the country. Indeed, Mr. Greenspan seems to arouse as much passion on the Internet message boards as the stock of Amazon.com or Microsoft.
"Keep your grubby paws off the stock market," Steve Johnson, a retired financial planner in Houston, advised Mr. Greenspan on an online forum moderated by The Wall Street Journal Interactive Edition. "It's more than capable of screwing up by itself without bureaucratic intervention."
Two days after Mr. Greenspan warned investors against underestimating the riskiness of stocks two weeks ago, a discussion group appeared on the Web site Silicon Investor called "Unofficial Call for Alan Greenspan to Back Off."
"What right do they have to try to set the market?" asked Jerry Perelman, a New York middle-school teacher, in one posting. "This is sort of sounding very Big Brother."
Mr. Perelman said in an interview that he thinks Mr. Greenspan has done a good job, but his comments on stocks are causing investors unnecessary distress. "Antacids are a good investment when he makes a speech," Mr. Perelman said.
By contrast, most professional economy watchers give the Fed chairman high marks for his handling of the economy and the markets.
Even when Mr. Greenspan makes comments on the market, they are heavily couched in caveats and rhetorical questions. Two weeks ago, he didn't address stock levels but rather warned investors and bankers about being complacent on risk.
Still, stocks dived after those comments, with the help of a troubling wholesale-price report. Last week, those factors faded. An unthreatening consumer-price report, a spate of solid earnings announcements, and a deal in Washington on tearing down financial-industry barriers sent the Dow Jones Industrial Average up 450.54 points, or 4.5% last week, including 172.56 points, or 1.7%, on Friday, to 10470.25. It was the average's best weekly gain since July-snapping back from the industrials' week-earlier worst drop in a decade of 5.9%.
Mr. Greenspan is hardly without defenders. Alan Kessner, a network administrator in Clearwater, Fla., was aghast at the presumption of some of the investors criticizing the chairman. "The audacity!" he exclaimed in an e-mail interview. "Just who exactly do they think they are, that the Fed chairman ought to be more concerned with how his comment might affect their 1,000 shares of Lucent or Cisco rather than ... the forces at work which ultimately affect the health of the global economy."
He added, "All those little Rambo equity tykes who think they're the next J.P. Morgan are, in actuality, little maggots" to professional Fed watchers, like bond and currency traders.
But generally, critics of Mr. Greenspan tend to substantially outnumber his fans in cyberspace, said David Zgodzinski, who writes ThreadTalk, a weekly feature based on Silicon Investor message boards. Ever since Mr. Greenspan associated stock valuations with "irrational exuberance" in December 1996, "there seems to be a feeling among some investors that he's got it in for them."
That goes not just for bulls, but for bears who accuse him of feeding a stock-market bubble. "When the market is on the death bed, Greenspan supplied the easy-credit narcotic," Mohan xxxx, an engineer in xxx, S.C., said on a Silicon Investor message board he started in January called Greenspan, Rubin & Co.-the Most Irresponsible Team Ever? "The narcotics spilled in to the real economy." [Quoted from: #reply-10043729]
Mr. Zgodzinkski said, "There are very few people that like him. I'd assume some think he's doing an outstanding job, but nobody that's passionate."
Actually, Mr. Zgodzinkski, a Montreal columnist, counts himself an admirer of Mr. Greenspan, in part based on his own memories as a stock broker in 1987 when quick action by the newly appointed Fed chairman contained the damage of the stock-market crash. But he couldn't resist posting a poem on the anniversary of the crash last Tuesday called "Mean Mr. Green" which reads, in part, "He talks real soft/He kinda mumbles/But watch out for your stocks/'Cause when he talks, they tumble."
Mr. Greenspan's stock-market comments regularly provoke a rash of letters and phone calls to the Fed's Washington headquarters. Before the chairman's speech two weeks ago, public-affairs officials braced for a burst of calls the next morning. In fact, only a couple dozen were logged, said an official. Feedback may pick up once the Fed's Web site is equipped to receive e-mail comments, which is scheduled for the first quarter of next year.
Mr. Greenspan's reputation tends to run much higher among the general public than the dedicated band of investors who voice their opinions on the Internet. In a December 1998 Wall Street Journal/NBC poll, 47% of respondents voiced "very" or "somewhat" positive feelings toward him, against 6% "very" or "somewhat" negative feelings.
But then maybe people feel more passionate when they have money on the line. "They should get rid of Greenspan now," said one posting on Yahoo. "I have a friend who lost 10 grand on [Micron Technology] options when he made his irrational exuberance comments."
But a more conciliatory investor in entertainment-software maker THQ Inc. (whose ticker is THQI) claimed, "As an ardent fan of Alan Greenspan and the market-moderation jawboning he brings us, I must categorically state that he would find no fault with THQI Longs." (A "long" is an investment position that bets a stock is going up.)
For many people like Mr. Johnson, who has been actively investing for only three years, slamming Mr. Greenspan isn't a matter of how his own portfolio suffers as of principle. "I'm more or less a great believer in the invisible hand, and I'd just as soon [Greenspan] keep his mouth shut about the economy in general," he said.
Credit the Internet for making the opinions of people like Mr. Johnson heard. He doesn't typically join in on message boards but happened to stumble on one "when Greenspan had made another of his attacks on the stock market. I was annoyed. It just caught me at the right time."
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