From William Richmond: “Tell Walt Lamphere that I fail to see how getting my money out of the markets now is going to help me after 2000. If the financial meltdown is going to be so severe that our economy and government collapse, the dollar won’t be worth anything anyway. And as for buying gold and silver . . . Let’s just say that I think people will scoff at the idea of using heavy metals as a means of exchange after the so-called financial apocalypse. It’d be too inconvenient.”

From Thorsten Kril: “If there are enough people like Walt, it may indeed make sense to buy silver now. And then sell it in December 1999, just in time before the big crash of a couple of ATMs and VCRs. Wouldn’t be too surprised if Warren would do just that.”

From Wayne Arczynski: “If the world’s banking system were to collapse due to the year 2000 problem, do you actually believe the governments would allow Warren Buffett or anyone else to take their silver? Perhaps you should be looking at the true hard currency for the year 2000, Satellite Bandwidth.”

A.T.: And here I thought frequent flier miles were the true hard currency. (And no, I don’t think the banking system will collapse, but I do think there could be — could be — a recession, lower profits, lower stock prices.)

From Dan Nachbar: “I can’t resist adding my 2 cents. The Y2K problem has been well known within the computer business for decades. I first heard of the Y2K problem when I was an undergraduate computer science student in 1981. My database teacher, a chap named Mike Stonebraker, predicted in lecture that at least one Fortune 500 company will go out of business because of a Y2K problem. Today, I think his assessment is probably right. I do not believe that broad economic chaos will result. Most healthy companies will figure out a way to fix the problem or limp along until they get it fixed. But there will be some companies that simply don’t have the cash or credit on hand to rewrite all of their software from scratch. Their management will be like deer in the headlights. To their credit, the SEC realized that these cash poor companies will prefer to keep quiet about their troubles. So, the SEC recently issued new disclosure guidelines for publicly traded companies with regard to Y2K (see So watch those annual reports for a whole new set of red flags.”

From Dennis Peterson: “Just read your column about that ‘tongue-in-cheek leap year computer problem.’ Actually, the whole leap year issue is causing some concern in Y2K circles. The problem is, most programmers knew that every 100 years it’s not a leap year — but many of them didn’t know that every 400 years it IS a leap year. So on Feb 29, 2000, we may get another round of failures.”

From Iowa: “I forwarded your column to a friend who works programming computers for banks, and here is his reply: ‘Yes, there will be some problems, but the rest of the hype is hogwash. We functioned without computers before and some businesses may have to until they fix their problems. The gov’t is probably going to be in the worst shape. This is going to be survival of the fittest. The businesses that solve their Y2K problems now will survive. Those that don’t will die off. Where I work, we installed our Y2K upgrade last September. The bank-side will be installing soon. If people are worried about losing their money, make sure they go to a financial institution that uses M&I software. If the general public is smart, they will have all of their finances clearly documented by 12/31/99. This way they can prove what’s in the bank should something go wrong. Why else would we get a bank statement? People with more assets will have to do more work, but it is a bitch to be wealthy! I had to reply, because I am tired of hearing about it. If the Y2K brings us to the end of the human race, then we didn’t deserve to be around.'”

A.T.: Why do I not find this more comforting?

From Howard, who works for a company that’s in the Year 2000 business: “There was recently a request to make Dec. 31, 1999 (a Friday) a trading holiday so that companies could run the programs to close the 1999 books while still in 1999. Apparently, the request has been denied. Well, the financial industries are ahead on fixing the problem, but this decision seems like a lot of hubris. If there are still problems in the computer systems, there is a much greater chance that running the year end closing programs while the current date is still in 1999 will succeed than waiting until the year 2000 to run them. It will be interesting to see.

“If you read the various computer press you regularly see things that indicate that even now somewhere between 50-75% of companies have NOT yet begun to fix their code. Conservative estimates easily have 20% of the companies not completing their conversions by 2000. So, here is a question, what would happen if a random 5% (random because we will not really know who fixed their Y2k problem until we roll into 2000) of publicly traded companies (and non publicly traded companies) cannot do business coming into 2000? This is not a doomsday scenario, but a fairly conservative possibility based on people just not having stepped up to do the work. GM has trouble when one of its suppliers is on strike, what happens if 5% of its suppliers cannot ship. Seems like we could be in for deep trouble.

“Personally, I think I am going to ‘time’ this market as we head from 1999 to 2000. Seems like there is a much greater chance that the market will be tumbling as we head toward and into 2000 then of having a spectacular year. Do you have an opinion on how an investor might want to deal with the uncertainty of this problem? Will public discussions on this be productive as year 2000 approaches or will they be more likely to generate a run on the market? Do you consider taking the possible Year 2000 problems into account in an investment strategy a good idea or just another attempt to time the markets response to an externality that we cannot be sure about?”

A.T.: Well, public discussions will be productive to the extent they galvanize everyone into sensible contingency plans. Businesses and government agencies need to think through what their own software problems might be and how to minimize the impact of glitches or delays others might cause them. Individuals will be saving their paperwork and perhaps building up a little reserve of the type they might if there were fears of a power outage. I’m 95% confident there will be no horrendous problems, but one reason for that is that people will make these kinds of plans and will back up their data even more carefully than usual at the end of 1999. And so on.

I also think that, with the market at record highs, it would be unwise to be in stocks on margin (if you have a car loan and own stocks, in a sense, you’re in on margin). I also think that this is a good time to be sure you have adequate liquid emergency money (what if there’s a flood? a medical problem? a job layoff? your child needs a lawyer?) — which you should always have before you invest in stocks. “Timing the market” is impossible to do successfully over the long term, especially if you have taxes to pay on your gains in order to do it (whatever advantage your brilliant timing provides is likely to get more than eaten up, over the long run, by the drag of those taxes). But that doesn’t mean you should always have 100% of your assets in the stock market no matter what. Between Asia, Year 2000 and Iraq, I’m not sure it’s all smooth sailing ahead. I certainly don’t have all my money in stocks. Then again, there are powerful positive trends in place as well: see Where Are We Now?.

Given the low interest rates, people figure money has to keep going into the stock market — where else could it go? And there’s a lot to that. But one place it could go is to paying off debt. And if the market should ever drop sharply, some people will seek the comfort of fixed-rate guaranteed investments . . . at just the moment stocks are beginning to look attractive again.

Anyway, the short answer (as you can see) is: I don’t have a clue. If you’re young and have begun putting $200 or $1,200 a month into the market, directly or via an index fund — keep it up! Over a lifetime, you’ll be glad you did.

About the only original idea I can add to this discussion is the need we will all soon feel for words that rhyme with millennium. (Surely you will not be allowing the moment to pass without sharing poetic sentiments with your loved ones.) I hereby offer you plenty o’ ’em, as in:

Will there be problems in the millennium?
Probably not!
But there’s always a chance there could be plenty o’ ’em.

(Caused, I might add, by shortsighted programming long before Pentium.)



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