Freedom Lawyers of America

CBS.MarketWatch.com
11:11 am ET Jul 29, 2002
Thom Calandra's StockWatch
Turning into a liar's solitaire
Investors reject MBAs, money mags, advisers

SAN FRANCISCO (CBS.MW) -- Most people realize the only folks worth listening to in this liars' stock market are those who have:

No CEO or CFO titles.
No outside auditor.
No MBA degree.
No mutual fund affiliation.
No brokerage affiliation.
No "equity strategist" title.
No company stock options.
That leaves the folks on Main Street, the ones whose only safety net these days is a bowl of soup, or the hand-holding of a commiserating spouse, son, daughter or father-in-law. Ordinary folks, having squandered half or more of their taxable and retirement portfolios, are in equal parts: furious, mystified and queasy about the behavior of financial markets this summer.

To be sure, the stock market is at last behaving itself. Drug stocks (DRG) are rising smartly as investors finally appreciate their defensive qualities. Gold prices and metals stocks, sensing little or no inflation on the horizon, are in the tank. Retailers' shares are weathering the storm. And so on.

Here's what everyday people -- those without paper parachutes, are saying about these times:

Dan Diamond says, "History has a way of repeating itself. The two greatest stock market manias prior to this one were the roaring twenties, which ended in 1929, and the Nikkei 225 mania, which ended in 1989. Since this recent boom was greater than the other two follies, this bust should be equal to or greater than its predecessors. The three biggest problems facing us now are the debt Bomb, the housing bubble and demographics. The Fed added fuel to the fire every time it lowered interest rates, creating more debt for the consumer and for corporate America. The second is a housing market that is about to pop. Lastly, the baby boomers will not be able to wait out the crash; they will need their money for retirement or health care costs."

Mike Pascale says, "Do I have this right? The folks on Main Street are fools for buying and holding equities; yet buying and holding is okay for the gold mining stocks, which have tanked 20 percent to 40 percent in just the last week? I'm glad you consider last week's rally a joke; it was certainly no joke to see my gold stock holdings and options sink to multi-month lows."

Peter Stock says, "CNBC just reported gold down along with gold stocks, big time. It has no clue as to the reasons. The bullion dealers (JP Morgan Chase, Goldman Sachs, etc.) are selling massive quantities of gold they don't own, in order to manipulate the gold price for their own derivatives nightmare." (Read related article.)

Joe Adams says, "I have to disagree with your conclusion that investors are 'frozen in the headlights' by their refusal to sell into this decline. I think they are just trying to be long-term, buy-and-hold investors like the financial media has been telling them to do for years. Those who listen to the media don't have any other choice but to ride this out anyway, since the media has also told them it's too late to sell." (Read related article.)

Glynn Jones says, "My $7,000 investment in Enron (ENRNQ) (100 shares) went to $48. My $4,000 investment in Finova (FNVG) went to $42. 'Business is great!' declared the CEO one morning. My $3,000 investment in JDSU (JDSU) is worth maybe $100 (recommended by Money Magazine). My mutual funds have lost 50 percent. That's what I got from following the advice of financial magazines, TV programs, books and my financial adviser."

Keith Britton says, "I don't think it's a matter of fear that we hang on to these market sloths, but rather the successful brainwashing that was done to our poor minds years prior, where we were taught to dollar-cost average and think of the long-term and plan for a 10 percent annual return. We've also entrusted fund managers who we (mistakenly) believed would actively manage our funds - putting those expensive MBAs to use, hedging against down times and riding the wave of good times for us. We've gone through some intense, psychological conditioning and it's going to take a lot to break it. Perhaps a fourth year of recession and more execs paraded across the tube getting rich off our losses is the kind of pain we need to break our deer-like stares."