But first:

Chris Petersen: ‘If you’re going to fight electronic terrorism, it helps to know who the enemy is. Contrary to Dan Nachbar’s opinion, they are not ‘hackers‘ (see pcwebopaedia.com). Hackers are individuals that like to explore technology for the fun of it. Those who wish to perform criminal activities are called something else. The term has been subverted by those outside the hacker community. I would also disagree that the Internet is designed to withstand attacks. If that were true, people would not have to spend ‘many a sleepless night’ defending it.’

Randy Mahoney: ‘There is published, peer-reviewed evidence that Zicam DOES mitigate the effects of the common cold, especially in adults. But if it is sold as a HOMEOPATHIC remedy, it is not subject to the stringent, and very expensive, FDA approval process. The company just gives us the references, produces a great product, and claims ONLY that it works ‘homeopathically.”

Gray Chang: ‘For a balanced view of homeopathy, try this link.’ (Isn’t homeopathy where your foot falls asleep? With other feet of the same sex?)

Barry Basden: ‘Oscillococcinum, Schmillococcinum. Try Sambucol, an elderberry derivative, for flu symptoms. Available at vitaminshoppe.com and elsewhere, Sambucol was developed in Israel and has been found effective in clinical tests …you could look it up.’

L.J. Kutten: ‘Years ago when I was living in Coronado, CA, I rented a house with an OLD refrigerator. It was always cycling on and off. After about a year I went to the landlord to replace it with a new one. The electric bill was cut in HALF!!!!!!!’

And now:

When tragedy struck September 11, I believe it would have been unpatriotic to short stocks, hoping they’d go down (and adding selling pressure to their fall).

There are those who argue that, no, it’s not about patriotism . . . that, short-sellers or no, the market will find its level – like water – where greed (the hope of a gain) balances fear (of a loss) . . . and that most of those who shorted shares of stock would not long after be buying them back to cover their shorts and take their hoped-for profits (handing over 30% or 40% to Uncle Sam along the way – there’s no such thing as a long-term capital gain on a short sale) . . . so why not let people freely express, through their purchases and sales, their view of stocks’ value?

Still, at times of true crisis and potential panic, the very act of concerted, massive short selling could cause panic and disruption that could do actual economic damage on top of whatever damage threatened to cause panic in the first place.

But how now, down Dow? Now that the market’s moves no longer lead the Nightly News?

While it may not be smart to short stocks, I think patriotism goes back to being a non-issue. In all but the most extraordinary circumstances, there’s nothing unpatriotic about shorting stocks. Short-sellers augment the market’s liquidity (the more people placing bets, the more liquid the markets) and they can be a force for rationality, leaning against the market when they perceive it to have gotten too high, propping it up when, its having fallen, they buy back shares to cover their positions.

I’m not suggesting you do this. As I’ve written before, shorting stocks is a VERY dangerous game. Really, really, really. And as Peter Lynch has been pointing out in his sensible television ads for Fidelity Investments, over the long run, it’s never been a good idea to bet against America. Ever.

Still, the Dow is at 9300 and change. Even pre-September 11, you could make the argument it was very richly priced. When Treasury Secretary Rubin and Fed Chairman Greenspan were worrying it was dangerous overvalued five years ago – Greenspan made his ‘irrational exuberance’ remarks December 5, 1996 – the Dow was around 6500. As I have also written here before, we’ve worked really hard in those five years, done lots of smart productive things, laid zillions of miles of fiber-optic cable, become richer as a nation. So maybe, pre-September 11, we had grown into that 6500 valuation. But up nearly 50% more? Seemed awfully rich to me.

And then there was September 11. The market seems to be saying, ‘No biggie. Look what happened in the Gulf War. By the time the bombing started, the stock market recovery, anticipating our success, was underway. So here we go again . . . if you wait for victory, you’ll be too late.’

But this is not the Gulf War, and – while I would be very hesitant to say I know better than the market – I do wonder whether, whatever our projected productivity growth rate might have been on September 10, it is not know at least 1% a year lower for the foreseeable future, as we add security guards, slow down our mail delivery, beef up our inventories, hike our insurance costs . . . all prudent, sensible things to do, but not things that make us more productive or profitable. And isn’t there also more uncertainty in our economic forecasts than there was on September 10? And doesn’t uncertainty exact its toll from stocks?

So if one were to short synthetic ‘shares’ in the Dow (called ‘Diamonds’ – symbol DIA – and trading at one-hundredth of the Dow), one might be foolish to bet against America, foolish to place a bet where 30% or 40% of any winnings would be taxed away, foolish to pay a commission to make the bet, foolish to be on the hook to pay, rather than receive, dividends. But in my view, one would not be unpatriotic. Or crazy.

In the long run, such a bet would almost surely fail. Peter Lynch is right: we will come back. And there will be lots of new and profitable technologies developed to adapt to our new circumstances (who makes the machines that will read your identity from your iris?). What’s more, one can imagine this nightmare drawing us closer to Russia and China and others, opening their giant markets to further penetration by the Dow Jones blue chips. One can imagine its inspiring the First World to embark on a Marshall Plan for the Third World that could ultimately spark decades of economic growth.

But six months or a year from now? Maybe the Dow will be higher for reasons that elude me. (I am a master of elusion.) But it could also be lower for reasons that are all too clear. Or maybe the robust Dow is just signaling that big blue chips will benefit as weaker hands fold.

 

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