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Posted 10/5/2000
Kenner & Niederhoffer
What's next for
Wall Street
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Extra!
Revenge of the old-hearted investors
We'd like to apologize for leading you astray occasionally in the past few months -- but just wait. We'll atone by vanquishing the value crowd with more ideas like our insiders and Down 30.
By Victor Niederhoffer and Laurel Kenner
If the day before Yom Kippur were three times as long as it is, it would not be long enough for Noah-Wolf the butcher to finish his work in time for the evening services. And this is his work: he has to apologize to a townful of people for his year's misdeeds. "Good yom-tov," he says. "If anything I have said offended you, I want to apologize, and wish you a happy New Year." And they say to him: "The same to you, Noah-Wolf. May God pardon us all." And they invite him to sit down and they treat him to a piece of holiday torte.
-- Sholom Aleichem, "The Day Before Yom Kippur: Sketches of Disappearing Types"
Holiday greetings, readers.
Since we first started writing for MSN MoneyCentral on April 21, we have emphasized that the market battle is fought between the young-hearted who seek out growth and the old-hearted who seek out value.
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We have pulled no punches in making fun of the old-hearted columnist at the leading financial weekly for being bearish since the Nasdaq hit 800, and the famous Nebraskan who is proud (a) of not buying shares of companies he doesn't understand, and (b) of finding the operation of a fax, lawnmower and computer quite challenging to his understanding.
Nor have we refrained from pointing the finger at those who base their championing of value stocks on data that is more than 10 years old.
The tale of the tape
But guess what? After being wrong for the last 10 years, some of the old-hearted are eking their way to a draw. The percentage changes in some relevant indexes from our spring arrival here through Oct. 2 tell the story: If anything that we have said may have inadvertently overstated the errors of the old-hearted ways, we wish to apologize, wish our old-hearted counterparts a Happy New Year in the Jewish tradition and hope they have a glass of bourbon on us.
When they fall on their faces next year, we will be sure to remember the draw they achieved during the last six months.
We're sorry, Doc Greenspan
We weep at our temerity for having suggested that Doc Greenspan leave his job at the Fed and trade places with Patrick Ewing, and we hasten to apologize for making fun of the "irrational exuberance" theme he used to talk stocks down, until we started directing him to exchange his wingtips for basketball sneakers. Considering the hole that he dug for himself, both in not disclosing to Congress that he was targeting stocks and in his repeated attempts to drive down the market with bad data, the doctor is to be commended for throwing out the irrational-exuberance speech and replacing it with his "innovation is good, productivity is increasing" speech.
Kenner & Niederhoffer
Victor Niederhoffer has traded stocks, currencies and futures worldwide for the past 40 years; he is the author of "The Education of a Speculator." Laurel Kenner is a trader and former Bloomberg markets editor. In this series of columns for MoneyCentral, they'll assess the past week's Wall Street performance and next week's prospects. Let us know what you think in the Start Investing Community.
We're also sorry for always referring to him as "Doc" Greenspan merely because he received his Ph.D. degree while he was chairman of the Council of Economic Advisers, 24 years after receiving his master's degree. We promise not to ridicule him again in this regard.
As for our own record, we're sorry about having told you in our Sept. 21 column that it was a good time to buy Nasdaq stocks, just as Nasdaq 100 futures began a sustained dive (10%, to be exact, through Tuesday).
We apologize, too, for not giving performance updates more often on all of the stock-picking systems we have unloaded here. As Vic's checkers teacher, Tom Wiswell, counseled his students: "I suggest you study your great victories a long time, and then study your great defeats twice as long."
Not quite ready to eat crow
To that end, we note that Vic is lagging in his challenge to Carr Bettis, founder of Pinnacle Investment Advisers in Scottsdale, Ariz., on picking stocks based on insider transactions. Vic's 26 stocks are down an average of 4.5%. Carr's five longs are up 17%, while his shorts are down 18%, for a total gain of 35%. The contest began June 2 and ends Dec. 2. Vic promised to eat crow, raw, squawking and fully feathered, if he lost.
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The Insider 20 list we recommended on May 5 has risen 3.7%, vs. 1.3% for the Dow, 0.4% for the S&P 500 and -9.5% for the Nasdaq. The Insiders are 20 medium-sized companies that declined at least 25% in the first four months of the year, and where the last trade by officers or directors was a buy.
Down…down…down…
The Down 35 list of stocks that fell from above $200 to below $100 (some from $300-plus to below $200) is up 15% since we recommended it on April 28, compared with a 0.1% decline for the Dow, -1.8% for the S&P 500 and -10% for the Nasdaq. Seventeen of the stocks have slid further. Three -- Interwoven (IWOV, news, msgs), Juniper Networks (JNPR, news, msgs) and Rambus (RMBS, news, msgs) -- have made new highs.
Since a month has not yet passed since we recommended our Adventurous list of money-losing companies and seven Innovative small-cap winners of R&D Magazine awards, we will forgo giving an update on them.
We hope our readers will pardon these and any other transgressions, and wish you a Happy New Year. Please enjoy the holiday torte.
At the time of publication, neither Victor Niederhoffer nor Laurel Kenner owned any of the securities mentioned in this column.
MSN Money's editorial goal is to provide a forum for personal finance and investment ideas. Our articles, columns, message board posts and other features should not be construed as investment advice, nor does their appearance imply an endorsement by Microsoft of any specific security or trading strategy. An investor's best course of action must be based on individual circumstances.