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To: Prognosticator who wrote (41987)	3/13/2001 10:43:49 PM
From: David Howe	Read Replies (1) \| Respond to of 64865

P, At least Ken granted us this opinion << and the others (e.g. SUNW, CISCO, EMC, MSFT, ORCL etc.) may take three to five years or more to recover. >> Which I take as a remarkably bullish statement. I'd be exceptionally pleased if 3 - 5 years from now these stocks returned to their highs. If they even come close, buying now is certainly the correct thing to do. Maybe he was accidentally overly bullish in this lone statement, or maybe he thinks this is too long a time frame for the average investor to consider a worthy investment. Dave

To: Prognosticator who wrote (41987)	3/14/2001 6:15:51 AM
From: High-Tech East	Read Replies (3) \| Respond to of 64865

<<The sky is falling, Ken, the sky is falling. Why don't you catch a piece? ..... I hope you don't feel hurt, but I've wanted to say this for a long time now. There.>> ... a hurt for me would be if Abiomed's total-artificial-heart fails in clinical trials ... and I do not believe that will happen ... although I have been wrong many times before ... ... I sold my three S&P puts yesterday morning for not quite three times what I paid for them in late January ... Ken Wilson "those who can not remember the past are condemned to repeat it" - George Santayana

To: Prognosticator who wrote (41987)	3/14/2001 10:36:07 AM
From: High-Tech East	Read Replies (2) \| Respond to of 64865

<<what makes you think that your past performance is any guarantee of future success?>> I do not think that, and I hope I never said or implied that ... anyone who does is heading for problems in my opinion. <<I would claim that you haven't shown any ability to value stocks or predict the state of the economy, you merely guessed correctly what the unwashed masses were going to think. While this is an asset for politicians, it can be a serious liability for true investors.>> Think what you want, but I am up over 800% since August 1996. <<The sky is falling, Ken, the sky is falling. Why don't you catch a piece? Or just continue to sit on your cash while I, and others like me, buy the stocks that others will kick themselves for being too scared to hold through this tumultuous time.>> Speaking of fear, you have a very interesting profile. Are you afraid of telling us who you really are? <<I hope you don't feel hurt, but I've wanted to say this for a long time now. There.>> Do you have a problem interacting with successful people? Think about it. Ken Wilson Investors in denial are very good at playing "let's shoot the messenger" - welcome to my fan club

To: Prognosticator who wrote (41987)	3/14/2001 10:56:07 AM
From: High-Tech East	Read Replies (2) \| Respond to of 64865

The latest views of Morgan Stanley Dean Witter Economists, March 12, 2001 Global: Synchronous Global Recession? by Stephen Roach (New York) This time it’s different. As dangerous as those words always are, I continue to be impressed by the sharp contrast between the downside of this global business cycle and those of the past. We are in uncharted territory in many key respects: This is the first recession of the Information Age and the first modern-day contraction in an era of globalization. As a result, both the speed and cross-border implications of cyclical adjustments are uncertain. Moreover, this is a recession that has nothing to do with inflation and the traditional anti-inflation resolve of central banks. All these differences are profound enough, in my view, to warrant careful consideration in assessing the future on the basis of what we have learned about the recent past. This circumstance underscores an important disconnect in the financial market debate. Investors and policy makers are trained to believe in business-cycle models and policy responses that, for the most part, have worked with great regularity over the past 50 years. Central banks are typically the lead actors in this drama -- they lean against inflation when expansions get too hot and they reflate when the cycle gets too cold. And the medicine always seems to work the same old way -- it’s just a matter of when the lags kick in. The key risk, in my view, is that this cycle breaks that mold -- that the policies of global reflation could well fail trigger the classic V-shaped recoveries that are always presumed to lie on the other side of recessionary valleys. If this view is right, much of what we think we know about the world economy and its financial market underpinnings is about to get turned inside out. The earnings recession in Corporate America provides the clearest indication that this cycle is different. Dick Berner was early in making this call, and it may be his most prescient. It depicts with painful clarity what happens when a high-growth economy transitions to slow growth. Everything in America -- from stock-market valuations and productivity to consumer saving (or dissaving) and IT spending -- had been predicated on the rapid and unstoppable momentum of a high-performance US economy. The same can be said of the global linkages to the US growth miracle. But now that those days of rapid growth are over, we are finding out how difficult it is to keep the magic alive. In a slow-growth climate, long-simmering cost pressures have been unmasked, and profit margins are under acute pressure as a result. It’s not enough to dismiss this as just a "company thing" -- to insist that because consumers are doing "fine," that’s all that really matters. America’s shareholder-value culture leaves managers with little choice but to slash costs in response to the emerging earnings carnage. And that cost cutting is just the beginning of a chain of macro responses that should eventually entail a pruning of both capital and labor. With IT accounting for fully 53% of total capital equipment outlays, it should not be surprising that this segment of business spending would be hit hardest. At the same time, layoffs are mounting steadily in the manufacturing sector and, in my view, it’s only a matter of time before they spread to services. As cuts in both capital and labor intensify, income generation and consumer demand will eventually be hit. And then the American consumer will no longer be on the outside looking in at a gathering recession. Courtesy of increasingly globalized supply chains, the US earnings recession -- and its impact on both the IT cycle and the world’s consumer of last resort -- has important implications for the global economy as a whole. In Europe, it’s only now beginning to sink in. I spent a couple of days there late last week with a broad cross-section of investors, policy makers, and businessmen. Relative to the complacency I detected when last on the Continent in early January, I sensed that the denial finally is starting to crack. The gathering slowdown in Germany -- the nation with the greatest exposure to the US -- is a clear warning shot in this regard. Europeans are starting to concede that there’s probably more to come. After all, fully 15% of Euroland GDP goes to exports, a greater external exposure than that of either the US or Japan. Consequently, in light of the record deceleration we are estimating in global trade -- down from 12.4% growth in 2000 to 5.9% in 2001 -- I agree with Eric Chaney that Euroland will be hard pressed to avoid the harsh winds of the global slowdown. The European financial community was actually quite concerned over the recent turn of events in Japan. They were quick to concede that the combination of difficulties in both the US and Japan -- collectively accounting for about 30 % of world GDP and over 50% of output among major industrial countries -- would be an especially bitter pill to swallow. I got the distinct sense that rapidly emerging difficulties in Japan made it all the harder for Europeans to deny that there were problems in the broader global village. It was as if ominous developments in Japan added credibility to the story of US weakness. European policy makers voiced great concern over the lack of any credible plan to restore financial balance to the Japanese economy. I couldn’t agree more. Our own team’s take on the latest installment of emergency measures introduced in Japan late last week would tend to support the conclusions in Europe. The crisis in Japan simply needs to be more devastating before the authorities bite the bullet and consider more radical structural initiatives. That day is not yet at hand, in my opinion. Meanwhile, yen weakness continues to be the principal means by which self-correcting market forces react to renewed faltering in the Japanese economy. And I stand by my view that further weakness in the yen looms as major source of instability in the broader global economy -- especially for non-Japan Asia (see my 9 March dispatch, "A New Source of Global Instability"). What comes out of all this are increased odds of an increasingly synchronous global recession. In retrospect, it wasn’t just that US financial markets were levered to a high-performance US economy. The world economy itself appears to have been overly dependent on the American growth miracle of the past five years. However, now that the US growth cycle has turned, the rest of the cards are starting to tumble. Non-Japan Asia’s export machine was the first to feel the heat. America’s NAFTA partners were next in line. Japan is back in crisis, and early signs of weakness are now evident in Europe. Reflationary policy initiatives can only intensify in this climate -- and they are likely to be global in scope. But this cycle is different. I continue to believe that structural headwinds will intensify, making the world economy surprisingly unresponsive to traditional efforts at policy stimulus. Unfortunately, for financial markets still banking on the time-honored V-shaped recovery, that leaves plenty of room for further disappointment. msdw.com