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Technology Stocks : Winstar Comm. (WCII) -- Ignore unavailable to you. Want to Upgrade?

To: Steven Bowen who wrote (4944)	4/4/1998 9:28:00 AM
From: James Fink	Read Replies (1) \| Respond to of 12468

Steve, the fact that you didn't post your IQ score suggests that it was even worse than I had guessed it would be. Sorry about that! At least I commend you for being honest enough not to post a bogus IQ score. To all: The following article on the Year 2000 problem is very alarming and suggests that the stock market is going to go into a 50 percent decline over the next 18 months. Rest assured, WCII will fall by much more than the overall market, given its crushing $1 billion+ debt load. See below: Will Harrell, Stockbroker By W. Michael Fletcher Situation: February 29, 2000 Will Harrell was exhausted. No matter which way you looked at it, being a stockbroker was rarely a popular profession these days. Even though he made money whichever way his clients traded, the fact that so many of them had lost so much money meant that overall his business was down 60% over the previous year. And it looked like it wouldn't recover for at least the next couple of years. Will remembered two years previously. In the early summer of 1998, everything had seemed to be going so well. The Dow had passed the magic 9,000 level and some people said it was headed to break 10,000. Even at these record levels investors were bullish, unemployment was low, the economy was strong. What could possible make this go wrong. Only one little bug... Well one BIG bug as it turned out. The first real effects of the Year 2000 Problem started on April 1, 1998. Not many people paid attention then, but it was on that day that several of the major stock markets around the globe started requiring disclosure of what preparations companies were making to deal with the Millennium Bug, and what the impact of those plans would have on the financial results for the companies. And as the results started to trickle in, the markets started taking notice that profits would be down. In some cases WAY down. Share prices started to slide. But Will had told his clients that it was a temporary correction. Nothing to worry about in the long run. Then the first qualified audit came in for a Fortune 500 company. Qualified because, in the opinion of the auditors, it didn't have an adequate Y2K plan, and could not be guaranteed to be a going concern eighteen months from the time of the audit. That REALLY caught people's attention. After all, this wasn't a two-bit company. This company had been around for over 100 years, and had survived two world wars and depressions and recessions without number. And all of a sudden it wasn't going to be there in two years? Then the market really started to slide. Over the next eighteen months, the Dow lost 50%. It wasn't a straight drop by any means. There were several strong rallies. Some companies grew spectacularly at the expenses of their poorly prepared competitors. The bad news came in waves interspersed with brief periods of optimism. And there was always the news items about how finally some computer whiz had discovered the cure for Y2K that would lift the market for a couple of days until it was debunked as yet another unrealistic dream. Will did his best for his clients. Once he started to understand the impact of the Millennium Bug, he tried to understand what its impact would be on their investments. But many companies were not telling the truth about the effects on their operations. And economists themselves were split in their analyses. Some saw a collapsed economy, with devaluation and a return to the gold standard. Others saw hyperinflation, and soaring interest rates. And yet others forecast a severe recession, but a return to business as usual (albeit with some drastic shifts in trade) in another three years. And since his clients could be following any one of these philosophies, there was no way Will could be a winner for more than about 20% of them. And fewer and fewer of them had any money, as Y2K started to affect business operations, the real estate market, overpriced collectibles, luxury goods and everything else. Will sighed. His day couldn't get much worse. And then he saw the pink slip in his pay envelope. Causes The fact that even today (March 1998) the markets have not yet taken note of the Year 2000 problem shows the how unaware most people are of the existence of the problem as well as the lack of understanding as to how deeply it will affect the world's economies. But global stock exchanges ARE starting to demand that companies report their Y2K preparations, and day-by-day the reality of those results will start to sink in. And that's not just the small companies either. A recent survey of the Year 2000 Problem in Canada showed that 8% of large companies were doing little or nothing about the problem. That means 40 out of the Fortune 500 companies won't be around after the end of this decade. And even though economists differ as to what it may mean on a macro level (deflation or hyperinflation), an increasing number of economists ARE predicting a worldwide recession as a result of Y2K. Action plan prior to 2000 I am not a professional investment advisor on your strategy as it relates to how the Millennium Bug will affect your investments, and you should certainly seek professional advice. In his "Investment Insights" column on this site, Tony Keyes consistently provides pertinent and thoughtful advice, as does "Y2K Tip of the Week" author Jim Lord also has some more basic survival recommendations on a personal level. But DO make sure your financial advisor understands the base elements of the Year 2000 Problem. If he or she does not, how can they possibly make investment suggestions that are grounded in reality? Be more conservative in what you do with your money. The Dow has been on a long upward ride, and Y2K will be just one of a number of factors that will bring it to an end. Realize too that foreign countries are vastly less well prepared than the US, Canada, Australia, New Zealand and England (it's scary that the list is so short). Remember just a few months ago the wild ride we had from the internal troubles of Korea and Hong Kong? Now consider what could happen as Europe starts to hit its brick wall. Take care, take care.