1. FOMC MARKETS
2. FASB & MERGER MANIA
3. QUOTES
4. AFUND CLIENT 12 PORTFOLIO
5. LETTERS
DJIA 100,000: PLANES FLY, CHILDREN DON'T
Last week my inner voice was screaming that the same forces that made
DJIA 10,000 an inexorable reality were chanting the 12,000 mantra. Assuming
DJIA 15,000 in 2001, DJIA 100,000 could come sooner than our initial forecast
of 2056. There would be three reasons for this:
1) Allowing Social Security money into the stock market,
2) Japanese housewives taking money out of their postal savings accounts
and pouring it into the stock market and
3) The universal application of the Yahoo yardstick to the broad market.
For those unfamiliar with the Yahoo yardstick, it is a P/E of 600+
vs. the current SP 37.
Take our favorite Dow stock IBM as an example. It is currently trading
at 120, although worth only $45! As soon as investors fully appreciate
the "I" in IBM stands for Internet, (just as Jack Welch informed us the
"E" in GE stood for electronic commerce), its stock should rise to 2,500
(P/E ~600). Then Japanese housewives, who are used to Sony trading
at 25,000 Yen, would buy it. Alternately, US brokers could demand
several stock splits. They prefer stocks to be under 200 so that long term
"buy and hold" small American investors, who are clueless, whoops, I mean
value-less, can afford to buy. Albania here we come!
Oil reached a 9 year post Gulf war high on the same day the US government claimed that we have the lowest inflation since Moses left Egypt. I wonder how long this Big lie will continue to be believed. Housing prices are soaring. This has always been the classic sign of inflation. I never forget that "those who do not study history are doomed to repeat it." Do you?
Key Dates: January 21
BONDS: P3 6.80
OIL:
P2 $28
2. While the press focuses on the FOMC, almost as important to today's manic markets is the FASB whose rules have facilitated many imprudent mergers. These rules will change later this year with the Jupiter/Pluto opposition.
Speaking of mergers, we happily recommended selling Time Warner last Monday. Potential antitrust considerations in addition to being a poor strategic fit will eventually make shareholders who did NOT sell TWX unhappy with this latest failed Time Warner technology venture. However, it was interesting to note that it did not utilize pooling even though the Financial Standards Accounting Board (FASB) still allows it. Even with purchase accounting, Wall Street analysts can find creative new ways to assess company performance rather than relying on earnings per share. Old fashioned concepts such as "profits" do not fit well into the new era stock model, do they?
3. "This inflation news is just amazing. Given all of the fear that
has been induced by strong growth, the fact that the core rate of inflation
continues to improve should convince many of the 'new era' doubters of
its reality."
Brian Wesbury, chief economist Griffin, Kubik, Stephens & Thompson
HW: Sorry, Charlie - I am from Missouri and my landlord keeps raising
my rent!
"The media have content. With all the new distribution channels like
the Internet, media shares are the first to benefit."
Filippo Lo Franco, media analyst BNP EQUITIES
HW: That is one reason they were recommended in our 2000
Market Forecasts.
"People are buying stocks for the wrong reasons. The IPO market is out
of control.''
Ricky Harrington, technical analyst Wachovia Securities
HW: But not for that much longer as Jupiter is conjoining Saturn in
May.
4. We are very pleased to announce 7 new public AFUND Corporate Clients. We will be tracking their stock prices monthly at AFUND 12 Client Portfolios. WSNW subscribers are strongly advised to (re)read our Las Vegas Investing before buying such high risk/high reward opportunities. Non-subscribers who are not experienced in micro and small cap investing are strongly advised to work with an experienced licensed professional or do serious due diligence and fully understand both the risks as well as the rewards.
We have begun our due diligence; when complete, it will be posted on
our web site. However, we are beginning to buy starter positions
for some clients in two of them:
1) Wamex (WAMX) which can be a STRONG challenge to the established
ECN's and online brokerages as well as enable the online investor in new
and exciting ways.
2) UN Dollars (UNDR) a most
ambitious 5 step utilization plan for world resources ranging from raw
materials to financial assets and then buying resort properties to enjoy
all this wealth. First impressions combine the flavor of multi-level marketing
and new age salesmanship. I believe the entertainment value alone fully
justifies the current price of $.10. If the stock appreciates to $1 to
$3, investors will more than earn a free vacation at a luxury UN Dollar
resort. Alternately, if a $250 investment (2500 shares), like the
price of a dinner at the Four seasons, disappears into memory, it will
have been memorable. Either way for a dime, investors should have fun watching
this story unfold.
READER: You mention NASDAQ in the range of 2000 to 10,000 in the future.
What is the basis for such a wild swing? You are too bearish for NASDAQ
at 2000 levels and extremely bullish at 10,000.
HW: 2000 is just as likely as 10,000 in my view. Obviously 5000 is
the Nasdaq Bull's 2000 target, but its reality is just as pie in the sky
as 10,000.
READER: DCHT!!! I just panicked when it dropped so much this am.
Also, when do you see stox.com going up again?
HW: You expect DCHT stock to rocket up 20 fold in four months without
any profit taking?
Stox.com looks to me like it is in the process of doubling again as
it did for us last year. My question is what then, but I will worry about
that next month.
READER: If you have the incorporation date for a company with no time
on it, what time do you use for the ascendant degree? Does Noon always
work, or does it vary by state? The state in this case is California.
HW: If there is no time stamp, I generally use 9am or the start of
the business day. However, each state is different. For California
companies I use midnight. For New York companies, I use 8:30 am,
although it depends on the year, as previously 9 am was the legal birth.
READER: Thanks for another great SELL signal.... I keep betting against
you and am getting rich.... Seriously...for a change...is this g d manipulated
circus EVER going to end???
HW: Glad to be helping you to become rich. Hopefully, soon you can
afford to become a platinum subscriber... Seriously it has ended, but it
may take until May for the public to realize it. Currently, we see more
than the usual sector rotation in addition to the new Nifty 50's Custer's
last stand.
May 2000 is "the ring past not" month for the US stock market just
as October 1999 was for gold.
READER: Please explain your matrix P1, P2, P3. Do these reflect
specific time frames from the review date?
HW: Yes. P1 is our first price target, P2 our second and P3 our
third.
Please see our Helpful
Hints for trading with WSNW Alerts for more information.
READER: Interesting article 'Greenspan Turns Up Heat on Wall Street'
- Fed chief warns of imbalances from equity wealth effect. Key astrological
words like limits (Saturn)... expansion (Jupiter) ... early February rate
hike (in orb of Jupiter entering the bull exact mid Feb.) Quite a confirmation
of your predictions.
HW: Or that Alan watches the stars as well! :)
READER: Other WSNW readers may like to see other prudent people are
starting to do what you have been warning - getting out. See Smarter Money
- Tech-Fund Closing Verifies the End by James J. Cramer:
"Say it ain't so -- my favorite fund is closing! Ever since my Dad
turned me on to the Janus Global Technology fund I have been recommending
this one to everybody and his brother. It is the quintessential hot-hand
fund and it has made many people wealthy. Last year I said to beware if
this fund were ever to close because when Janus Twenty closed, it marked
an important short-term peak in the market."
HW: James, it ain't so, it is different this time!
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