Mr Biz on DougStephan.com

El Valle de Anton, PANAMA (11 Sept 2002)--Three thousand people going
about their business one year ago, learned that if tomorrow never comes.
means more than the poetic title to a Garth Brooks song.
There are no guarantees of another precious day of life. There are no
guarantees that unsaid words of love, or a hug today, can be made up tomorrow.
Around these parts, where the tropical mist lingers until late mornings
in the world's oldest inhabited crater of an extinct volcano, there is
plenty of time to reflect on the Americans, Panamanians, and folks of more
than 60 other nationalities who were murdered. As if in a Gabriel Garcia
Marquez novel, the very mystical fog of it all, brings an emotional and
intellectual clarity.
Al-Quaida murderers wanted to kill all of us, and our families, and our
bankers and brokers, and our kids. They also wanted to kill all the
"infidels" harvesting precious vanilla beans from orchid gardens here in
Panama, and international insurance brokers in skyscrapers overlooking the
Panama Canal--as long as they didn't worship their peculiar version of Islam.
Their enemy's friend is their enemy. Thus, Pakistan, the United Kingdom,
and most civilized societies are their sworn foes.
If truly, tomorrow never comes, then the successes or failures of the
portfolios I help manage won't matter. There will be no Tootsie Rolls
purchased for Halloween. Not a single greeting card or aspirin will ever be
rung up at a Walgreens, and International Paper will never harvest or plant
another tree.
Thousands of investors have headed for the financial hills in the past
year. Some of them read my regular ramblings. They are content to take 3 per
cent from a local bank, when the cost of living might be 4 or 5 per cent, and
double that for retirees on fixed incomes. They shrug when their bank turns
around an invests in derivatives of AAA-rated U.S. government agency bonds
reaping total returns of 12 or 14 per cent.
Some investors look at my 5.85 per cent portfolio losses in the past year
and consider it the last straw. They don't care how "less worse" you did than
someone else, only that a money manager somehow caused the market slide. When
notified in late June that the technical underpinnings (based on 86 years of
research) for a market rally were in place, they did nothing. The investment
grade markets rose 1,200 points in the next eight weeks. As in 1987, the
markets will probably stay down, but can easily make a recovery run in the
final two months of this year.
American citizens in particular, should not have one penny in common
stocks, if Sept. 11 made them believe that America is dead. You are no
longer an American if you believe that Southwest, Spirit, or JetBlue will not
gobble up the inefficient excesses of American, United, and USAir.
You have capitulated to the modern Pearl Harbor, if you think that the
hundreds of thousands of corporate leaders who bust their collective butts to
help put their kids, and other people's kids through college, think that Ken
Lay and the Rigas Family are their poster children.
You've helped drive me and my colleagues, who year after year value
personal trust, have an agonizing concern over a client's wealth, and place
the worth of a man's name above his bank book, out of the business and into
early retirement. That's if you think that we condone Martha Stewart, Jack
Grubman, and disingenuous Merrill Lynch analysts.
Sitting in a country where country folks still rent horses instead of
Avis cars, and where a sixth grade education is a privilege, the selfish
greed, bizarre priorities, and materialistic mantras of many American cry
babies demands exposure. When not one in 60 Americans even knows someone in
the Armed Forces, people still buy books about "The Greatest Generation," and
give awards to movie stars who never busted a toenail in national defense,
but glorify World War II and Vietnam.
Three thousand people never came home from work a year ago. Thirty
million people grouse that their 401k plans will ever grow again. Three
hundred million people are asked to decide which "American Idol" with pierced
tongue and orange hair, will lead the populace to the Promised Land of Nike
sneakers and expensive water spelled Evian instead of Naive.
So, mourners, here's the bottom line, the real deal:
A dollar invested in large company stocks in 1925, had grown to $3 even
in the mid-1930s after the Great Crash of '29--a 300 per cent gain;
The same portfolio dropped to $2 when the Japanese attacked Pearl Harbor,
but was worth about $5 by the end of the War.
The five bucks were worth $10 when Eisenhower started his presidency and
had grown to $17 when he left office.
When JFK was killed the $50 value dipped to $49 and languished there for
nearly a decade.
But the now $100 value at the time of Watergate and the oil crisis and
recession dropped to the $70-80 dollar range...yet, as the Cold War
continued to rage, your one dollar portfolio was worth $200 in the early '80s.
When Desert Shield started our portfolio stalled at $800, but by the end
of Desert Storm was $900. At the end of the first Bush Administration it was
over $1,000.
Including the last three horrible years, the investment is still around
$2,000 today. If you sprung for some second tier companies--say Wal-Mart
instead of Sears; Southwest instead of Delta, you $1 in 1925 is now about
$6,000.
Inflation? Sure. It now costs you $9 to buy $1 worth of 1925 widgets.
then again, your buck in the stock market is worth $2,587.*
Of course, it will only be worth two things if tomorrow never comes.
Diddly, and Squat.

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