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Commentary: Well today the joke was on anyone who hung around. The shocks
from the ChiPurch yesterday and the NatlPurch today seem to confirm that we
are in the early stages of an economic recovery. What? You thought we were
already booming? Not large chunks of the industrial economy (or the stock
market). We've had false dawns before.... maybe this will be another. Indeed
the last good time to own industrials was last Easter.....exactly one year
ago (on some calendar). "They" thought the early cyclicals were a buy
then...and we bought 'em and made money. It's been tough to own papers and
steels and chemicals since then. I will guess that cyclicals have been buys
in no more than 13 of the last 52 weeks. In the interim the world has
changed.
To be specific here are some facts. The market cap of YHOO is 19 times
larger than the entire U.S. transportation industry and MSFT's market cap is
as big as the combined market cap of all the companies on the NYSE beginning
in the letters DEF and G. On the other hand, the daily average revenue for
XCIT is less than the average daily sales of a typical McDonald's franchise
in the Arizona. Last year, Bill Gates' wealth increased at a absolute rate
faster than the French GDP. The average Internet IPO yields returns to
Venture Capital investors of 13,000%. Interestingly, the cumulative drop in
head count caused by major mergers in 1998 (such as BAC-NB and AN-BP) is
twice as large as the total number of employees in the "New Media" industry.
The average age of CEOs on the NASDAQ is 32: on the NYSE, 56. There is an
inverse relation between wealth and age for CEOs. CEOs below 40 are
approximately 17 time richer than those over 40 (if you kick out big names
like Bill Gates). The stock market (S&P 500) has risen plus 20% four years
in a row only twice before in US history: 1869-77 and 1899-1904.
Interestingly both periods were followed by extreme drought conditions in
the Pacific Northwest. Mark Cuban's BCST is worth over $5 billion in YHOO
stock; Drew Robertson's ABSlive is probably worth almost $1 Billion in YHOO
stock. Don't you think?
So you can see the world has changed since last Easter when we started
filling up your email box with these BRS reports. Hope you find them useful.
We'll see you after Easter and we can resume our dialog about Kosovo etc.
JW
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