Go check out http://www.buzme.com
Greg: lensch [at] bt [dot] com Brick: brickler [at] bt [dot] com
At 08:08 AM 14/12/99 -0600, you wrote:>Ian,
>How are things going? Where are you located these days? What the hell
>happened to the Stars?
>Seriously, I was wondering if you have Greg Lensch or Chris Brickler’s
>e-mail addresses. I was looking to get in touch with them before the
>Holidays. Keep in touch.
>From: Ian Andrew Bell [mailto:ian [at] buzme [dot] com]
>Sent: Tuesday, December 14, 1999 3:34 AM
>To: foib [at] egroups [dot] com
>Subject: @F: [Stock Market] The Great Humiliator Strikes Again.
>Adam’s always worth forwarding due to his useful but infrequent tirades
>about the impending burst of what shall heretofore be known as “The Bubble”
>But First! Here’s my unintentional tirade:
>Bill Joy’s article last month on the same subject said it best.. The stock
>market is merely an abstraction of a monetary system that has become merely
>an abstraction of wealth itself. Wealth “creation” has become simply a
>process of “creation”, and not redistribution.
>It feeds upon itself. The U.S. Treasury prints more money, which
>underwrites insane growth on the public exchanges, which spawns more
>companies, which create more wealth, which drives the GDP higher, which
>makes the money more valuable, which allows the U.S. Treasury to print more
>money. Can anyone see the flaw?
>Oh yeah… That’s right. Now Boeing couldn’t sell a 747 if their life
>depended upon it. Why would any airline buy domestically when they can
>take their AmeriBucks (make that AmeriDebt) and buy an A320 for
>$4.54?? Fuck it. Take all of those machinists and teach ’em to make web
>I think we should prepare for the US to return to another late 1970s market
>protectionist phase. As their wealth grows higher and the dollar grows
>stronger the WTO will self-destruct (WHOOPS, already happened) and the US
>will start to throw up translucent barriers in the form of subsidies which
>will, of course, raise the national debt.
>AND THEN, and only then, will a recession tighten the sphincters of Joe Q.
>Investor and cause a nice hefty crash in the market (by which time I will
>have sold my CSCO shares and retired to Anguilla). Should take another
>couple of years. Good thing there’s an election coming up in the US —
>that preserves the collective delusions for at least a year!
> >Date: Mon, 13 Dec 1999 22:05:09 -0800 (PST)
> >From: Adam Rifkin -4K
> >Subject: [Stock Market] The Great Humiliator Strikes Again.
> >I just wanted a sample of this newsletter pickled in space and time so
> >we can one day go back and grin about it as indicative of an era. I
> >wonder how many person-hours this year were wasted thinking about stock
> >prices (and, was it more or less than the amount of person-hours lost
> >due to Microsoft product-induced crashes and/or features?). It’s ironic
> >that technology has created productivity efficiencies and, since nature
> >abhors a vacuum, that extra free time is now spent figuring out ways to
> >make money off the very technology that gives us the extra free time.
> >Even Rohit is wasting brain cells following crummy stocks under the
> >assumption that a PE less than 6 is a good thing from an old dead white
> >guy (e.g., Fisher/Graham) viewpoint, rather than seeing that number for
> >what it really is: an indication that no Big Money wants to touch this
> >stock. Price to earnings ratios have shifted from a measure of a
> >company’s value to a gauge of a stock’s relative popularity. Kids
> >frantically buying and selling Pokemon cards on eBay are training for
> >life in a debt-driven consumption society, in which pieces of paper with
> >cool-sounding names on them have become consumer goods in and of
> >themselves. [One ongoing joke is that Amazon isn’t in the book business
> >or even the e-commerce business; rather, it is simply in the business of
> >selling stock, having perfected the business model that in turn launched
> >a thousand ships in search of the next great river through which the
> >money will flow. Vulture capitalists will turn down projects that seek
> >to change the world in favor of projects that endeavor to be
> >buzzword-compliant, to involve people who have played this shell game
> >before, and to go out of their way to tickle the fancies of the greater
> >Fools. The magic number that makes a VC’s eyes light up like a pinball
> >machine still seems to be Dr. Evil’s favorite: “one beeelyun dollars”. :]
> >I do wonder how many people expecting the market to do such-and-such
> >[remember a FoRKer’s prediction less than a year ago that after the Dow
> >hit 9600, it would then do an about-face and return to 6400?] will be
> >disappointed when it does precisely the opposite. Great Humiliator,
> >indeed! Here, I’ll let you know EXACTLY when the bubble is going to
> >burst: 364 days after *I* take a job with any company that is paying me
> >mainly in stock options [me to potential employer: “Err, can I get those
> >options as puts instead of calls, please?” :]. The reason of course
> >being that everyone BUT me (and possibly Rohit?) has profitted
> >handsomely from the stock compensation packages of the 1990’s, so in
> >essence we represent the absolute last ones into the pool. So the rest
> >of you can breathe easy that you’re safe for at least another year, give
> >or take the post-January liquidity dry-up and the potential havoc it may
> >or may not be planning to wreak on the otherwise slap-happy drunken orgy
> >that is 1999’s Nasdaq. [Talk about a self-recursive bubblehater’s worst
> >nightmare: the NYSE and Nasdaq taking THEMSELVES public next year?! Oh,
> >the humanity!] By the way, before you ask: yes, I am fully invested.
> >But no, it’s not enough money to make a lick of difference one way or
> >t’other. — A.
> > > The Option Investor Newsletter Monday 12-13-99
> > > Posted online for subscribers at http://www.optioninvestor.com
> > > Also provided as a service to The Online Investor Advantage
> > > Published three times weekly, Sunday, Tuesday, Thursday evenings
> > > ************************************************************
> > > MARKET WRAP (view in courier font for table alignment)
> > > ************************************************************
> > > 12-13-99 High Low Volume Advance Decline
> > > DOW 11192.59 – 32.11 11250.39 11162.31 977,610k 1,230 1,847
> > > Nasdaq 3658.41 + 37.93 3668.16 3597.98 1,584,533k 2,038 2,163
> > > S&P-100 763.13 – 0.36 767.21 759.00 Totals 3,268 4,010
> > > S&P-500 1415.22 – 1.82 1421.58 1410.10 44.9% 55.1%
> > > $RUT 470.39 + 3.67 470.39 466.33
> > > $TRAN 2895.98 + 21.04 2912.53 2873.67
> > > VIX 23.60 + 0.71 23.85 22.16
> > > Put/Call Ratio .40
> > > *************************************************************
> > > The Great Humiliator strikes again!
> > > What is The Great Humiliator? It’s a nickname for the markets
> > > coined by Ken Fisher, one of the longest running columnists in
> > > Forbes Magazine, and son of the legendary investor, Phil Fisher.
> > > Here it is in his own words from an issue of Forbes Magazine:
> > > “Well, the market’s prime goal is always to embarrass as many
> > > people as possible. It can probably best do that now by rising
> > > smartly for several years, surprising and convincing everyone
> > > that we really are in a new era and stocks can never again fall
> > > big. For the Great Humiliator to fulfill its goal, it must
> > > simply move in ways that surprise. A 1998 bear market won’t
> > > surprise half the forecasters. A modest rise won’t surprise many
> > > folks either. But three more years of up market is inconceivable
> > > to almost everyone I hear or read. So, to me, it’s most likely.
> > > Folks forget, and I’ve used this many times over the years: The
> > > stock market simply does not fall in the third year of a
> > > President’s term. The third year is 1999. The fourth year of a
> > > President’s term is almost as consistent historically. So, if,
> > > as I suspect, 1998 rewards, the Great Humiliator is set for a
> > > three-year run that will surprise everyone.”
> > > Prescient? You bet, since he penned these words nearly two years
> > > ago in the January 12, 1998 issue. Even now, nobody expects this
> > > market to go higher. You can’t open a trade publication or turn
> > > on airwaves without hearing someone say how “overbought” the
> > > “inflated” “bubble” is getting. Compared to what?
> > > Briefing.com notes in a recent article that stocks have already
> > > gone through three phases. In the first phase from 1760-1960’s,
> > > we actually bought stock for appreciation based on increasing
> > > dividends. In the second phase from the 1960’s to the 1990’s, we
> > > turned to earnings growth as the key to appreciation. From 1995
> > > to October 1999, revenue growth was the key to picking a winner.
> > > Now, there appears to be a new “paradigm” (tongue and cheek, of
> > > course) that dictates we should buy because the price is rising!
> > > Dividends, earnings, and revenue have all been replaced by simply
> > > price. Need evidence? Briefing.com also notes, “after all, 289
> > > stocks have doubled in the last four weeks. Nearly half, 128 of
> > > them, have negative revenue growth rates! But they have rising
> > > stock prices.” (!!!)
> > > Lots of investors have hit that wall of amazement too. For the
> > > last two months, they (us too) have been waiting for the elusive
> > > pullback to bring things back into kilter (relatively speaking).
> > > What’s the reason for “waiting”? Not to hunker down and wait out
> > > the impending gloomy storm to come, but so we can buy into the
> > > rally on a dip! Therein lies the key. The waiting pre-supposes
> > > we all have cash to put to work; not just us, but the money
> > > managers and institutions as well. That is in fact the case.
> > > Plenty of money is still looking for a home thanks to the robust
> > > economy. This two-month rally is all about liquidity! As long
> > > as we keep seeing the “buy the dip” mentality, upward progress
> > > should continue in the indices, especially the tech heavy NASDAQ.
> > > Now don’t take this the wrong way. We are not saying to mortgage
> > > the estate, back up the truck, and buy all you can. There will
> > > be corrections along the way since nothing goes up (or down) in a
> > > straight line. The market internals certainly tell a negative
> > > story. While a rising tide may float all boats, some recent
> > > floaters were taking on lots of water. Here’s a list of today’s
> > > big point losers. Red Hat (-26.56); Whittman Hart (on merger
> > > news with USWB, -24.75); VA Linux (-19.06); Andover Net (-15.50);
> > > Akamai (-15); Juniper (-14.38); i2 technologies (-13.69);
> > > Commerce One (-12.38); JDS Uniphase (-10.19); Brocade (-6.38).
> > > Big point gainers were led by none other than Qualcomm (+26.06)
> > > on a spectacular breakout with volume (5.9 mln shares) that
> > > finally (after three anemic weeks) exceeded the ADV (5.7 mln
> > > shares) and Foundry Networks (+26.25). They were closely
> > > followed by Broadvision (+22.63), Internet Capital Group
> > > (+22.50), E.piphany (+19.88), CMGI (+17.56 – earnings Wednesday),
> > > Inktomi (+10.50), and Sycamore Networks (+10.38). You can see,
> > > there’s a lot of volatility in backing up the truck for high
> > > flyers. We must still pick our plays carefully since the rallies
> > > are relegated to the top tier in a few select categories, the
> > > categories of which are under rotation almost weekly. Based on
> > > the above, looks like the Linux crowd moved to Internet backbone
> > > issues – a fickle bunch we are.
> > > And so it appears that the humiliation will continue.
> > > So what exactly happened today? Lets start with the DJIA. Xerox
> > > warned investors after the close last Friday that they would miss
> > > $0.67 estimated earnings by 40%, citing product mix, currency
> > > exchange loss, Brazilian weakness, and other company specific
> > > items. XRX actually closed up today at $21.13 from a low on
> > > Friday of $19, but their problems are far from over and will
> > > likely continue into the next two quarters. Thankfully, the
> > > problems were just company specific and didn’t rub off on the
> > > rest of the markets. Retailers though came to life on news that
> > > last week’s sales (brick’s and mortar and e-tailers) were
> > > substantially ahead of sales at the same time last year. You
> > > might have already guessed that Wal-Mart (+4.62, 67.88) and Home
> > > Depot (+3.75, 92.75) went on to set new all time highs today.
> > > The whole index didn’t fare as well. The DJIA closed down 32
> > > points at 11,192. If it weren’t for a bunch of “sell on close”
> > > orders hitting the floor in the last 7 minutes of trading, the
> > > DJIA would have closed in the “plus” column. Pharmaceuticals is
> > > one of the sectors losing the most ground today on fears that
> > > their pipelines would come up a bit empty. About those negative
> > > internals we spoke of earlier? Decliners outpaced advancers 3:2,
> > > with 472 new lows stomping on 87 new highs. 551 mln shares
> > > traded down, while just 389 mln traded up. Volume was a hefty
> > > 977 mln shares, which tells us there was still a whole lotta
> > > buyin’ goin’ on, despite the loss.
> > > All gloom and doom? Cheer up! Even the all encompassing Russell
> > > 2000 was up today (+3.67 to 470.39). That indicator represents a
> > > composite of 2000 stocks indicating the even some of the small-
> > > caps are moving. The good news is that the NASDAQ did even
> > > better.
> > > With the NASDAQ 100 undergoing revision on December 20, there
> > > will be some new winners added to the index, while others will
> > > get the boot. Wouldn’t it be great to know who the additions are
> > > and maybe plan some plays around them? You are in luck! The
> > > following are the new additions: MEDI, DISH, MFNX, PMCS, ADLAC,
> > > ITWO, BVSN, NTAP, LGTO, NXLK, SDLI, AMCC, NSOL, and QLGC. Those
> > > to be de-listed are ANDW, ADSK, CBRL, CATP, EFII, FAST, FHCC,
> > > LNCR, MUEI, RTRSY, RXSD, ROST, STEI, TECO, and WTHG. Before you
> > > execute a trade, do your homework. They may not all go up due to
> > > their size or further revision to the list. In a strange twist,
> > > though not unexpected in a market where only price seems to
> > > matter, most of those to be de-listed moved up today.
> > > In addition to the proposed NASDAQ 100 revisions, INTC showed up
> > > on the radar today because Prudential downgraded the issue to an
> > > Accumulate from a Strong Buy and moved the price target down from
> > > $90 to $84. You think Intel got a major haircut on the news?
> > > Nope, it was up today by $1.81 and also (fortunately) didn’t rub
> > > off on the rest of the market. In the continuing saga of “Tale
> > > of Two Markets”, 11 issues finished up compared to 10 down. New
> > > highs beat new lows 301 to 143, while up volume was nearly twice
> > > the down volume with almost 1.6 bln shares traded.
> > > What happens for the rest of the week? The CPI figures will be
> > > released tomorrow, wherein the expectation is for a .2% rise.
> > > Retail sales will also be posted tomorrow. The expectation is
> > > for a .5% increase, and only .4% excluding autos. Perhaps the
> > > fear of what these numbers will contain drove some into the “sell
> > > on close” mode on the NYSE. We think the figures will be benign
> > > and a real non-event. Nonetheless, we need to pay attention to
> > > them for indications of the market’s reaction. One hiccup could
> > > be the catalyst for a downdraft. Wednesday, we have the Business
> > > Inventories and Industrial Production figures, followed on
> > > Thursday by initial jobless claims. Oracle and Best Buy report
> > > earnings tomorrow, followed by CMGI (split candidate) on
> > > Wednesday. Be aware of sympathy plays in either direction. The
> > > big message? Based on previous valuations, the market is itching
> > > for a correction. However, based on current liquidity, as long
> > > as you choose your plays carefully, the winners should continue
> > > to be met with buying activity on any dips. Yes, a reversal will
> > > happen sometime, but we don’t know when, and intend to take
> > > advantage of the opportunity this narrow market has given us.
> > > Use volume, coupled with support and resistance as your guide,
> > > and remember to sell too soon. (Whew! We got through this
> > > without saying “new record for the NASDAQ”.)
> > > Buzz Lynn
> > > Research Analyst
> > > ***********
> > > STOCK NEWS
> > > ***********
> > > The Fabulous Fabs
> > > By S.P. Brown
> > > Focusing on core competencies and outsourcing everything else
> > > seems to be the rage in business management these days. More
> > > and more companies are taking a critical look at their business
> > > operations and coming to the conclusion that not everything has
> > > to be done in-house.
> > > The semiconductor sector, in particular, has embraced this
> > > growing trend towards outsourcing non-core activities. Some of
> > > the more well-known names in the semiconductor sector, names
> > > like PMC-Sierra (PMCS) and Rambus (RMBS), operate today under
> > > what is known as a “fabless business model.” In other words,
> > > they outsource their chip fabrication operations to third party
> > > vendors and focus on product design and marketing instead.
> > > These fabless operators have garnered a lot of Wall Street
> > > attention this year. So much so, that many of these lean-
> > > running fabless semiconductor companies are trading near their
> > > all-time highs.
> > > But while many people have focused on the advantages of those
> > > companies that outsource their semiconductor manufacturing,
> > > fewer have focused on the companies that actually do the
> > > fabricating. After all, someone still has to put the chips
> > > together.
> > > That’s quickly changing. The fabs, those companies that
> > > actually manufacture the chips, are emerging as a very strong
> > > growth industry within the semiconductor sector. The market
> > > leaders in this industry are Taiwan Semiconductor (TSM), United
> > > Microelectronics, and Chartered Semiconductor (CHRT). All are
> > > located in Southeast Asia, which should come as no surprise
> > > given the regions comparative labor-cost advantage to the rest
> > > of the world.
> > > It’s easy to see why demand for the fab companies’ services are
> > > growing strong. For a new semiconductor company, the option of
> > > purchasing or building a multi-billion dollar fabrication
> > > facility usually isn’t an option at all; the cost is too
> > > prohibitive.
> > > What’s more, with the growth in specialized applications on a
> > > chip, no single semiconductor company can provide an all-
> > > encompassing product line. For example, integrated circuits
> > > for digital handsets, the DSPs, are enormously different than
> > > those used in a personal computer.
> > > This is were the fabs step in. With their manufacturing
> > > expertise, these companies have emerged as a reliable and cost
> > > effective alternative to in-house manufacturing.
> > > There services are limited to the fabless companies, either.
> > > Motorola (MOT) announced that while they are currently
> > > outsourcing about 5 percent of semiconductor production, they
> > > expect to increase that number to 50 percent over the next few
> > > years. MOT has realized that their core strength is in design
> > > and marketing rather than manufacturing. So rather than spend
> > > the money required to upgrade their existing facilities, they
> > > would rather spend that money on research and development.
> > > Of course, a good thing rarely goes unnoticed for long by Wall
> > > Street’s omniscient glare. The stocks for the two leading
> > > publicly-traded fabs, TSM and CHRT, have outperformed the
> > > broader market this year. TSM is up 230 percent year-to-date
> > > versus the S&P 500’s relatively languid year-to-date run of 15
> > > percent, while CHRT, which began trading on 10/29/99, is up 60
> > > percent.
> > > With overall market growth forecasts being as bullish as they
> > > are – the semiconductor market is expected to grow at a 20
> > > percent annual clip through 2001 – companies like TSM and CHRT
> > > stand to benefit tremendously from the growing trend towards
> > > fabrication outsourcing.
> > > ****************
> > > PLAY OF THE DAY
> > > ****************
> > > GE – General Electric $148.81 +1.81 (+1.81 this wk.)(+11.69)
> > > One of the most profitable companies in the world, General
> > > Electric has been able to make money in all kinds of different
> > > industries. The company is engaged in developing, marketing
> > > and manufacturing of a wide variety of products involved in
> > > generation, transmission, distribution and utilization of
> > > electricity and other goods. It produces aircraft engines,
> > > transportation equipment such as locomotives, appliances (both
> > > kitchen and laundry equipment), lighting, generators and
> > > turbines, nuclear reactors, medical imaging equipment, and
> > > plastics. GE is also a large player in the financial services
> > > field as well as information services. With ownership of NBC,
> > > General Electric is one of the largest broadcasters in the
> > > world. With this diversity and reach, it is no wonder
> > > they count their profits in the billions.
> > > GE is the largest capitalized stock on the U.S. exchanges.
> > > Because of this fact it is a very widely held stock. This fact
> > > is important to understanding why GE’s stock might be a strong
> > > performer in the next couple of weeks. The biggest news item
> > > influencing our decision to profile GE has not been announced
> > > yet. The Board of Directors are meeting on December 17th. It
> > > is widely anticipated that GE executives will spread a little
> > > holiday cheer by announcing the first split of the company’s
> > > stock over two years. GE shareholders have had an excellent
> > > year. A stock split would be the star on top of the Christmas
> > > tree. The main question that remains is whether the Board will
> > > decide to split 2:1 or 3:1. GE typically has announced good
> > > news in December. The shares of GE have done very well this
> > > year, trading over 50 points higher than last January’s low of
> > > $94. Because of this we anticipate very little selling pressure
> > > on the stock for the rest of December. Why take a profit and
> > > pay tax on it in April when you can wait till next year to take
> > > a profit and delay paying taxes until April of 2001? Technically,
> > > GE had an excellent week. Since July, GE’s stock has broken
> > > above six double tops. The stock is in a very strong up trend,
> > > and on Thursday it broke into new high ground again. With the
> > > lack of overhead resistance and possible good news coming we
> > > feel GE has a chance to continue rising. Support is at the
> > > recent breakout point of $141. A more cautious investor may
> > > try and wait to see if there is any market weakness next week
> > > and attempt to add a call position at the support point. More
> > > aggressive investors can buy calls on any strength.
> > > From the NBC news desk, well actually from many sources, GE
> > > announced that it had received a $1.98 billion Air Force engine
> > > contract on Tuesday. Also in the news, GE was named the world’s
> > > most respected company for the second straight year in a
> > > worldwide survey of chief executive officers conducted for the
> > > Financial Times. GE Chief Executive Officer Jack Welch, who
> > > probably voted for himself and his company, was selected as the
> > > world’s most respected business leader in the survey. Further
> > > proof that GE is perhaps the most ubiquitous company in the
> > > world, last week the National Christmas tree was lit up with
> > > 70,000 GE lights.
> > >
> > > BUY CALL JAN-140 GE-AH OIV64 at $12.13 SL= 9.50
> > > BUY CALL JAN-145*GE-AI OIY25 at $ 8.88 SL= 6.75
> > > BUY CALL JAN-150 GE-AU OIf05 at $ 6.38 SL= 4.25
> > > SELL PUT DEC-140 GE-XH OI349 at $ 0.54 SL= 0.00
> > > (See risks of selling puts in play legend)
> > > Picked on Dec 9th at $143.56 P/E = 47
> > > Change since picked +5.25 52-week high=$149.25
> > > Analysts Ratings 9-10-1-0-0 52-week low =$ 86.19
> > > Last earnings 10/99 est= 0.79 actual= 0.80
> > > Next earnings 01-20 est= 0.92 versus= 0.80
> > > Average Daily Volume = 4.99 mln
> > > Chart = http://quote.yahoo.com/q?s=GE&d=3m
> > > *******************
> > > FREE TRIAL READERS
> > > *******************
> > > If you like the results you have been receiving we
> > > would welcome you as a permanent subscriber.
> > > The monthly subscription price is 39.95. The quarterly
> > > price is 99.95 which is $20 off the monthly rate.
> > > We would like to have you as a subscriber. You may
> > > subscribe at any time but your subscription will not
> > > start until your free trial is over.
> > > To subscribe you may go to our website at
> > > www.optioninvestor.com
> > > and click on “subscribe” to use our secure credit
> > > card server or you may simply send an email to
> > > “subscribe [at] optioninvestor [dot] com”
> > > with your credit card information,(number, exp date, name)
> > > or you may call us at 303-797-0200 and give us the
> > > information over the phone.
> > > You may also fax the information to: 303-797-1333
> > > ***********
> > > DISCLAIMER
> > > ***********
> > > This newsletter is a publication dedicated to the education
> > > of options traders. The newsletter is an information service
> > > only. The information provided herein is not to be construed
> > > as an offer to buy or sell securities of any kind. The
> > > newsletter picks are not to be considered a recommendation
> > > of any stock or option but an information resource to aid the
> > > investor in making an informed decision regarding trading in
> > > options. It is possible at this or some subsequent date, the
> > > editor and staff of The Option Investor Newsletter may own,
> > > buy or sell securities presented. All investors should consult
> > > a qualified professional before trading in any security. The
> > > information provided has been obtained from sources deemed
> > > reliable but is not guaranteed as to accuracy or completeness.
> > > The newsletter staff makes every effort to provide timely
> > > information to its subscribers but cannot guarantee specific
> > > delivery times due to factors beyond our control.
> >adam [at] 4k-associates [dot] com
> >My friend says we’re like the dinosaurs, and here we are doing ourselves
> >in faster than they ever did.
> > — Porno for Pyros, “Pets”