The Stock Market

It will be years before true containment.  Health risks still posed by the situation there and what individuals should do (including those on the US west coast) if it worsens.

The ‘I’s’ of the Illuminati – Invent, Infiltrate, Illiterate, Intoxicate, Incarcerate, Institutionalize, Impoverish, Immigrate, Indebt, Enslave. As each day passes, it becomes more clear that there is a plan to what we see unfolding both socially and economically. The illuminati are not the only 'enlightened' group. If investors know their plan, we can counter-attack. This is their plan.

When I sat down to write "Train, Planes & Dot Coms" on January 2nd of this year, I felt the stock market was approaching a peak. With twenty years in the business, I had never witnessed stock market gains of that magnitude. The Nasdaq had risen over 85 percent in 1999 – a benchmark no other index had accomplished in the entire century.

In life, all of us have a vocation. For “rest” from our vocation, many of us choose an avocation. Some of us play golf, others play tennis. I enjoy reading and sailing. Like most, I have found that my work and hobbies often color my perspective of the world at large. What happens in my vocation may carry over into my avocation and vice versa. All of us tend to view the world we live in through the prism of work and play.

In economic terms things have never looked better. Most Americans have jobs. Wages are rising. The stock market is booming and the world is at peace. As far as economic recoveries go, we are enjoying the longest running expansion in the nation's history. As the graph below indicates, the economic recovery that began in March of 1991 continues to barrel along. Yet, recently in Washington the Fed Chairman, Alan Greenspan, warned that the prosperity we now enjoy is in danger. The problem is there are forces at play that may fuel a return of inflation. There are severe imbalances within the economy that, if left alone, could jeopardize the nation’s prosperity.

It is the best of times or the worst of times -- depending on which economic neighborhood you live in. For politicians it is a good time to be in office. The economy is growing at rates not seen since the 50's and 60's. Everyone who wants to work can find a job. Wages and personal income are rising. Consumer confidence is high. The stock market has risen for 17 straight years. Corporate profits are up. The world is at peace. As the President declared in his "State of the Union" speech, "We are fortunate to be alive at this moment in history. Never before has our nation enjoyed, at once, so much prosperity..."

It's the men's day out. Overall, it's been a pleasant day. This is what retirement is all about. You and the rest of your foursome just completed a leisurely 18 holes of golf. It's time to head to the 19th hole [the men's grill] where great and not-so-great shots are replayed. Your game has never been better, and so you're looking forward to rehashing the drives and putts that made you the day's champion. Bragging rights were about to be served. But as the drinks are poured, the bravado increases and the conversation suddenly turns to the topic du jour: the stock market.

As I sat down to write this edition of Perspectives on January 2, 2000, I thought about how much technology transformed the twentieth century. It is hard to believe that less than one hundred years ago, the landscape of America was rural. In the nineteenth century, America was unified by the technology of transportation. Railroads criss-crossed our continent, making travel between the east and west coasts a reality. The infrastructure was being laid, along with the tracks, for the U.S. to begin the twentieth century as an emerging industrial giant. The railroad, the steam engine and the telegraph were setting the stage for transforming the country from an agrarian society to an industrial powerhouse.

It's unstoppable. Year after year the market has risen relentlessly, confounding even the experts. Each and every year since 1982 the Dow Industrials has ended the year at a higher level than where it began in January. During the 1990s and especially since 1995, that rise has been at double-digit levels. The experts make predictions at the beginning of the year only to become bewildered as the market smashes through their targets to much higher levels. Politicians point to the stock market's rise as confirmation of the wisdom of their policies. On Wall Street, economists and analysts are left with the task of explaining the gold rush in the financial markets.

For Wall Street it just doesn't get any better than this. As of this writing, the new Dow Jones Industrial Average has risen 20%, the S&P 500 is up over 15% and the Nasdaq has achieved a parabolic rise of over 53%. On Wall Street, they will be handing out more than just million dollar bonuses. It will be time to break open a bottle of Dom Perignon and light up a Macanudo. For the fifth consecutive year, if things hold up, the U. S. stock market will have achieved gains in the double-digits. Even better for Wall Street, it has been another record year for IPOs and mergers. For investment bankers, this is as good as it gets. Yet all is not well for fund managers and investors.

It has become the main topic of conversation around the country from the evening dinner table to idle chatter at cocktail parties. It has become the conversation-du-jour of the media ... from the evening news to talk radio to full time financial networks ... all devoted to the same topic. I'm referring to the American stock market and its meteoric rise this year—more than any other year in memory.