I was going to run more on Y2K today, but I have noticed some activity in the market of late. (Truth to tell, I generally write these things a few days in advance, which is why if, say, an earthquake destroys Los Angeles, my comment the next day might be on the travesty of breakfast cereal serving sizes. [Have you noticed that it basically takes three or four “servings” of cereal to equal one actual, genuine, human-size serving?])

As best I can scope it out, the trend in the market these last few days has been: down. And volume Monday was 2 billion shares, when you combine the NYSE and NASDAQ numbers. Of course, it is Tuesday morning as I write this, and by the time you read this Wednesday, the market could have gone up or down 1,000 points. But right now, I’d have to say: down.

But that is about all I am certain of.

I do think this drop is long overdue — I thought Greenspan was no fool, and certainly no Cassandra, when he mentioned “irrational exuberance” a year and a half ago, when the Dow was 6,000 … so for it to have given up this year’s gains is no astonishment.

I also note that the decline is both typically overplayed and underplayed on the evening news. There is much talk of a 1364 point drop in August, “the largest monthly drop in history,” but of course points mean nothing. It’s like people who talk about how the New York City subway used to be 15 cents, cluck, cluck, without also noting that corporate V.P.’s back then were thrilled to earn $20,000. It’s the percentage drop, not the point drop, that is the only relevant measure.

But if the newscasts tend to exaggerate the decline in the Dow by clinging to points (gotta make it dramatic, after all), they underplay the decline by clinging to the Dow. The Dow is down about 20% from its all-time high of 9300 earlier this summer, but the average little stock is probably down 50% from its high of the year. And 50% begins to smart.

So is this a great time to buy?


It’s a great time, as always, to begin or continue a lifetime program of steady periodic investments in the market. For youngsters, a decline like this is great news — the worse it gets, the better the bargains.

But just because American Express is down from 101 to 78 last I looked (not a small one- or two-day drop for a blue chip), it’s still up from 26 a few years ago, and it’s still possible that in a bad economy, some Amex card holders might not be able to pay their bills or take as many vacations as they used to, etc.

The fact is — as always — one can make a strong case for how great the future could be (and why, thus, this is a great time to invest in it) or a strong case for how awful things could get (so run for the hills and wait a while).

The fact also is — as always — no one can tell you with any assurance which will be right. Something will happen, so at some point some people will look very prescient. And, to be sure, some of the rest of us will be wrong for very much more sophisticated reasons than others. (One of the most brilliant, eloquent, wise and gracious men on Wall Street, Jim Grant, has been spectacularly wrong for about a decade now — but maybe Vindication Now Looms.) But the future is too complex to guess with any assurance how it will play out here or abroad, especially in the relatively short term. (In the long term, being an optimist, I say it will turn out well.)

Hence — as always — you should have no money in the stock market that you will need to spend in the next few years. For truly long-term money, now is a much better time to be in the market than a few months ago (i.e., better to buy Citicorp at 101 than at 175; better to buy Golden Books Family Entertainment at 1-and-change than at 11-5/8). But by no means should you be complacent. Citibank could just as easily go to 50 as to 200, if you ask me; Golden Books seems hell bent on zero, though I hope not. (The lawyers have already begun to sue.)

It is now, I think, time for a joke. I worry about this joke, because it is vaguely (very vaguely) sex-related. I don’t want to offend anyone. But dicey times call for dicey jokes.

From around Dave Davis’s water cooler: A man with a winking problem is applying for a position as a sales representative for a large firm. The interviewer looks over his papers and says, “This is phenomenal. You’ve graduated from the best schools; your recommendations are wonderful; and your experience is unparalleled. Normally, we’d hire you without a second thought. However, a sales representative has a highly visible position, and we’re afraid that your constant winking would scare off potential customers. I’m sorry … we can’t hire you.”

“But wait,” the man says, “If I take two aspirin, I’ll stop winking!”

“Really? Great! Show me!”

So the applicant reaches into his jacket pocket and begins pulling out all sorts of condoms: red ones, blue ones, ribbed ones, flavored ones … finally, at the bottom, he finds a packet of aspirin. He tears it open, swallows the pills, and instantly stops winking.

“Well,” said the interviewer, “That’s all well and good; but this is a respectable company, and we will not have our sales people womanizing all over the country!”

“Womanizing? What do you mean? I’m a happily married man!”

“Well, then, how do you explain all these condoms?”

“Oh, that,” he sighed. “Have you ever walked into a pharmacy winking and asked for aspirin?”

Tomorrow: Y2K — How Real Is It?

Is it one more reason to be concerned about the market?

And one other thought. I just walked outside and saw a monarch butterfly. Where I am, they begin to come out in force for the next couple of weeks. The air is fresh, the hurricanes, thus far, have missed, the market is a mess, as are some of the world’s economies. But the monarch butterfly is so awesome. All the more so if you believe those crazy stories about their coming from caterpillars (yeah, right, like buses that turn into Learjets). Don’t get so deep into the market, either financially or psychologically, that you fail to notice the butterflies.



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