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<DIV><FONT color=#0000ff size=2><SPAN class=650135304-08032000>Very good
write-up! </SPAN></FONT></DIV>
<DIV><FONT color=#0000ff size=2><SPAN
class=650135304-08032000></SPAN></FONT> </DIV>
<DIV><FONT color=#0000ff size=2><SPAN class=650135304-08032000>Whatever happened
to "irrational exuberance" anyway? It's hard to believe that anyone,
not just AG, doesn't see where this will all lead. History and the
business cycle have not been repealed! Those in power during good times
always seem to think that the economy is like a car analogy, where you can
feather the gas pedal to fine tune the speed of the car, gradually slowing down
or speeding up as necessary. But has the FED at any time ever
actually managed a "soft landing" and restart? </SPAN></FONT></DIV>
<DIV><FONT color=#0000ff size=2><SPAN
class=650135304-08032000></SPAN></FONT> </DIV>
<DIV><FONT color=#0000ff size=2><SPAN class=650135304-08032000>Yes,
many say they are making money in this mania (at least on paper) but how
many will actually cash out before the inevitable decline? Most people
that I know who claim they are making gobs of money remain fully invested,
afraid to miss the seemingly endless gains. The markets giveth but
also taketh away.</SPAN></FONT></DIV>
<DIV><FONT color=#0000ff size=2><SPAN
class=650135304-08032000></SPAN></FONT> </DIV>
<DIV><FONT color=#0000ff size=2><SPAN class=650135304-08032000>Given the
evidence below, methinks that AG is merely proving the old adage that 90% of
success in life is just showing up. In other words, doesn't much matter
what he did, the end results (good economic performance) probably would have
been pretty much the same...</SPAN></FONT></DIV>
<P><FONT size=2>JW<FONT color=#0000ff><SPAN
class=650135304-08032000> </SPAN></FONT></FONT></P>
<P><FONT size=2><FONT color=#0000ff><SPAN
class=650135304-08032000> </SPAN></FONT><FONT face=Tahoma></FONT><FONT
size=2>-----Original Message-----<BR><B>From:</B> listmanager@xxxxxxxxxxxxxxx
[mailto:listmanager@xxxxxxxxxxxxxxx]<B>On Behalf Of </B>James
Taylor<BR><B>Sent:</B> Tuesday, March 07, 2000 8:01 PM<BR><B>To:</B>
realtraders@xxxxxxxxxxxxxxx<BR><B>Subject:</B> [RT] Alan Greenscam, Public ENEMY
Number ONE<BR><BR></P></FONT>
<BLOCKQUOTE style="MARGIN-RIGHT: 0px"></FONT>
<DIV><FONT face=Arial><FONT size=1>March 7, 2000<BR><B>Alan Greenspan: friend
or foe?</B> </FONT></FONT></DIV>
<DIV><FONT face=Arial><FONT size=1>Author, William Fleckenstein</FONT></DIV>
<P>
<P><FONT size=1>Alan Greenspan outdid himself in his speech Monday in Boston.
He entitled it, "The Revolution in Information Technology," although I call it
"An Ode to Technology." Quite frankly, in my opinion, it completely embraced
the new era and what wonderful things technology could do for us. I found
myself disagreeing with many different points that he made, and agreeing with
very few, other than the obvious that technology is wonderful and it's made
our lives better. </FONT>
<P><FONT size=1>In my opinion, in his speech Greenspan has confused technology
with the bubble, the very same bubble that he has created. He has in essence
been reading the stock prices and doesn't realize what he has wrought. In a
Rap <A
href="http://www.siliconinvestor.com/insight/contrarian/index.gsp?date=2000/01/03";>I
wrote in early January</A>, I had a piece about Alan Greenspan inventing the
Internet. I noted that since the fall of 1998 he printed copious amounts of
money, and then last year when he should have been tightening, he panicked and
printed even more money because of Y2K concerns. </FONT>
<P><FONT size=1>This fomented a bubble and money naturally flowed to the
stocks with the most imagination. That centered on the Internet and other
Internet-oriented ideas, as there was a lot of imagination potential and few
facts. Those stocks did the best and the leaders of those companies were
deemed to be visionaries, and whatever they proclaimed was therefore to be the
future. What Greenspan has basically done is believe the action on the tape
and the proclamations by the companies, and has decided that the Internet and
technology have truly revolutionized everything in the most unique way.
</FONT>
<P><FONT size=1>The flaw in this analysis is that technology has been
revolutionizing the world for a very long time, and that does not allow one to
pay absolutely stupendous prices to sales ratios, price-to-earnings ratios,
etc. The Fed has fomented a bubble, and now the Fed has used the results of
that bubble to justify the fact that things are more or less on course.
</FONT>
<P><FONT size=1><B>Al's less-than-perfect predictions...</B> Rather than try
to refute point by point all of the claims that he made, I thought it might be
more instructive to illuminate for readers the fact that poor Alan Greenspan
has been no better and in fact quite a bit worse than many other
prognosticators over the past 20-25 years. Let me first say that we all make
mistakes, being human, and the future is never quite as clear as the past. But
having said that, I think it's important for folks to know that Greenspan has
missed many inflection points. This is especially important since so many
people have placed their faith - not to mention their net worth and a good
deal of borrowed money - on the fact that a) he's going to pick the right
interest rate to make everything work just spectacularly and b) he's going to
know exactly what to do when we have a problem in the stock market. </FONT>
<P><FONT size=1>So the question really is, should folks let everything ride on
his ability to divine the future and to always do the right thing? Does his
track record suggest that he is the man to bet on and is he the national
treasure that so many congressman have said that he is? I say no. His record
is littered with absolutely terrible calls at different inflection points, so
I'd like to reprise a few of his past predictions and even some of his
revisionist history of his past calls. </FONT>
<P><FONT size=1>My purpose is not to be mean or vindictive. I'm sure that
folks could have fun with some of the things that I've said in the past.
However, I am not the Fed chairman, nor do I believe that I know the future
and know how to control the outcome of things as well as the Fed appears to
think it does. Furthermore, folks do not believe that I can, which is not the
case with Greenspan. </FONT>
<P><FONT size=1><B>On the 1973 recession...</B> I'd like to start off with a
quote from Jan. 7, 1973. <STRONG><FONT color=#ff0000>"It is very rare that you
can be unqualifiedly bullish as you can be now," </FONT></STRONG>Greenspan
commented to the New York Times when he was president of Townsend Greenspan.
That was two days after the 1973 stock market peak, when the market was on its
way to declining 50 percent over two years, and we endured the worst recession
since the Great Depression. </FONT>
<P><FONT size=1><B>On the S&L industry...</B> The last thing that Alan
Greenspan did before he left Townsend Greenspan to become Fed Chairman, was to
opine on the S&L industry, and more precisely Charlie Keating's S&L.
What follows is a vignette from the book "Inside Job," written by Steven
Pizzo, about an encounter in 1984 between Greenspan and Ed Gray, who was the
Federal Home Loan Bank board chairman. </FONT>
<P><FONT size=1>"Gray received a letter from respected economist Alan
Greenspan telling him he should stop worrying so much. Greenspan wrote that
deregulation was working just as planned, and he named 17 thrifts that had
reported record profits and were prospering under the new rules. Greenspan
wrote the letter while he was a paid consultant for Lincoln Savings & Loan
of Irvine, CA, owned by a Charles Keating, Jr., company. Four years after
Greenspan wrote the letter to Gray, <FONT color=#ff0000><STRONG>15 of the 17
thrifts he'd cited would be out of business and would cost the FSLIC $3
billion in losses." </STRONG></FONT></FONT>
<P><FONT size=1>In addition, in 1985, Greenspan pronounced specifically that
the management of the Keating thrift enterprise was "seasoned and expert" with
a "record of outstanding success in making sound and profitable direct
investments." For that quote I'm indebted to Jim Grant's terrific book, "The
Trouble with Prosperity," which we will quote from again later. </FONT>
<P><FONT size=1>So those quotes provide a peek into the thinking of Alan
Greenspan while he was still in the private sector. By the time the 1990
economic downturn rolled around, largely as a result of unsound banking
practices and most especially the S&Ls, he was the Fed chairman. And I
think it is most instructive to look at what he thought as we entered that
recession and what he later claims to have thought about that. </FONT>
<P><FONT size=1><B>On the 1990 recession...</B> For that bit of insight, I
would like to quote extensively from Jim Grant's book, because he did a superb
job of capturing what Greenspan said at the time and his later recollection of
what he said. </FONT>
<P><FONT size=1><B><I>His 1994 version...</I></B> "In testimony before the
Senate Banking Committee in May 1994, Alan Greenspan all but claimed that the
Fed had acted alone. `In the spring of 1989,' Greenspan led off, `we began to
ease monetary conditions as we observed the consequence of balance-sheet
strains resulting from increased debt. Households and businesses became much
more reluctant to borrow and spend, and lenders to extend credit - a
phenomenon often referred to as the `credit crunch.' In an endeavor to defuse
these financial strains, we moved short-term rates lower in a long series of
steps through the summer of 1992, and we held them at unusually low levels
through the end of 1993 - both absolutely, and, importantly, relative to
inflation. These actions, together with those to reduce budget deficits,
facilitated a significant decline in long-term rates as well.' </FONT>
<P><FONT size=1>"Students of the Greenspan record, listening to the chairman
claim credit for the restoration of American solvency, were left to wonder
what they had missed. Interest rates had fallen, of course, and the broken
financial economy had knitted. However, it was the first they had heard of
this commendable and forehanded course of action by the Federal Reserve.
</FONT>
<P><FONT size=1>"It was not until October 1991 that the phrase `economic
headwinds' entered the Greenspan repertory. He used the metaphor to describe
the unprosperous gusts that were buffeting the aircraft GNP, the source of
which he identified as the debt predicament. However, it was a <U>historic</U>
observation rather than a <U>predictive </U>one. Bank stocks had reached low
ebb fully one year before Greenspan favored a Rhode Island audience with this
apercu; the stock market-assisted recapitalization of the banking system was
already long under way. In the midst of the overbuilding of real estate and
the overleveraging of corporate balance sheets in 1988-90, Greenspan had been
inclined not to dwell on the issue of credit, possibly because it had not yet,
to him, become an issue. In remarks titled `Innovation and Regulation of Banks
in the 1990s' before the American Bankers Association in October 1988, for
example, he did not mention the excessive lending against real estate that was
being carried out by members of his audience even as he spoke to them, and
that would be featured as one of the great regulatory issues in the decade
under examination. </FONT>
<P>
<P><FONT size=1><B><I>His 1990 version...</I></B> "In testimony before the
Joint Economic Committee in January 1990, on the eve of the failure of Drexel
Burnham Lambert, a signal event in the credit contraction of 1989-92,
Greenspan did not dwell on junk bonds, junk loans, failing banks, or in
general on `the consequence of balance-sheet strains resulting from increased
debt,' as he would put it in 1994. Although he did mention commercial real
estate, among other macroeconomic trouble spots, he did not let on that
interest rates would be progressively lowered to reduce the `financial
strains' he would see so clearly four years later, while looking backward:
<B>`But such imbalances and dislocations as we see in the economy today
probably do not suggest anything more than a temporary hesitation in the
continuing expansion of the economy,' he wound up in that 1990 appearance.</B>
The messy default by Washington Bancorp on its unrated commercial paper came
only one week after a pronouncement by the Federal Reserve Board, also based
in Washington, D.C., that no generalized credit contraction was under way."
</FONT>
<P><FONT size=1>The purpose of this exercise is to point out that Greenspan
has historically NOT had a strong grasp of the banking system or the financial
markets. (For the sake of brevity, I have not used rosy scenario quotes from
him just prior to the LTCM debacle.) He has, however, been willing to ease,
and ease aggressively, thereby creating the right financial conditions for a
mania. For this he is revered, but yet printing money should not be confused
with knowing what you are doing. Greenspan is no Paul Volcker.
<BR><BR><BR></FONT></P></BLOCKQUOTE></FONT></BODY></HTML>
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Date: Wed, 8 Mar 2000 07:15:10 EST
Subject: [RT] S&P500 Near Term
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Status:
S&P500 Near Term Perspecitve from Jim Pilliod....
For what it's worth,..I am constructive near term on the US
Indexes,...and got long the close Tuesday. I view the S&P500
having good support about 1% lower,...and view drop of Mon and Tues
as a likely Wave 2 with a potential Wave 3 (upside) to follow.
Perhaps the S&P500 bullish declining flag pattern off the
late December high is a valid perspective,...as upside breakout would
surely fool the greatest number of people at this point. Also we have seen
this pattern work well with the S&P500 in previous years,..most recently in
1999,...as in the 07-19-99 high to 10-18-99 low declining flag last year...
<A HREF="http://www.decisionpoint.com/members/DailyCharts/SPX.html";>Decision
Point (tm): Daily S&P 500 Chart</A> .
The Rydex Ratio of Nova to Ursa fund assets fell below 1.0 yesterday,..
coming in at the 0.96 level. While this ratio can drop as low as .25
level,...
usually good suppport in trading range "dips' can be foud whith ratio below
the 1.0 level.
Time- wise,..the next key timeframe after the 03-08 (today...should be
upside move) is the 03-12 date. in my notes,...I have the 03-17 as likely
high,..and 03-21 as likely Key Low. I have no idea how things will work
out over the next few weeks. Also the VIX has been a good trading range
guide recently with SELL signals coming close to 30 (29.50,..etc) and
BUY signals coming in close to 21.5,...etc.
I see the site with Nature's Pulse dates through September is updated,...at
<A HREF="http://home.golden.net/~laird/TimeSPX.htm";>Time Chart for S&P500
Nature's Time Elliott Wave Fibonacci R N Elliott Technical Analysis Stock
Market</A> or... http://home.golden.net/~laird/TimeSPX.htm
This is worthwhile for anyone interested in the Nature's Pulse type
projections.
Also,...one thing that has been bothering me is the weak P/C ratio,...
complacency. As I go over this in my mind,..I am becoming
more complacent myself with the weak or low P/C readings. My
thought has been that players would be very reluctant to buy Puts
with the NASDAQ making higher highs...and indeed it took tech stock
weakness on Monday to get the Index P/C ratio to firm up on Monday.
Steve Shobin (Lehman Bros) on Bloomberg notes that complacency is
not a problem as long as market keeps making higher highs,..as the
NASDAQ is doing,..and complacency makes sense. Also he sees
NASDAQ as being in good shape (Growth stocks vs. Value,.etc) and
key support for the OTC100 as 3850 level. I tend to agree,..this is uptrend
support for rising wedge on OTC100. Shobin also noted that CISCO and
Russell 2000 are Bell Weathers to watch here. Makes sense.
My near term strategy will be the same,..remain in US Indexes until upside
overseas follow through is indicated as highly likely,..then go after that.
Just
wanted to share these thoughts,...any feedback is much appreciated.
Regards, JIM
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