Sep

25

A note from Vic — the Minister first wrote and posted his 'predicted' column on September 17th, whilst the 'actual' column came out on September 23rd.

Predicted. A one Mr. G. Reaper just can't leave alone a certain Ms. Anna Nicole Smith, last seen in these pages on her betrothal to a somewhat more elderly gentleman who then accommodatingly perished, leaving her a not entirely parsimonious sum for her efforts. We return to her story now, having forgone, ahem, ample opportunities in the past, on the occasion of the near simultaneous birth of her daughter and passing of her son David, of causes that, at the time we grudgingly go to press, remain altogether undisclosed.

Actual. Unless the portents are all wet, there will soon be a number of vacancies on the board of Hewlett-Packard, a company, to its profound regret, much in the news these days. We'd like to suggest some possible candidates to fill those vacant directorships. We hasten to add that no one in authority at the company has asked us for our suggestions, but we're sure that's only because they're so preoccupied preparing their forthcoming testimony before a congressional committee on Thursday…Our proposed additions to Hewlett-Packard's board are: Mahmoud Ahmadinejad and Hugo Chavez, the presidents, respectively, of Iran and Venezuela.

Predicted. One can hardly breathe a word regarding Ms. Smith (and indeed she leaves us breathless) without pausing to think of the not altogether totally dissimilar predicament in which the up-until-very-recent Prime Minister of Thailand finds himself. Thai one on indeed! As Mr. PM sat in traffic here in our fair city, a subset of his countrymen, who one would have expected to be cooing over the tabloid travails of Ms. Smith, were instead coup-ing him right out of office. As he rested his constitution in the back seat of his darkened limo, they wrested the country's heretofore constitutional system and installed martial law!

Actual. The notion of weirdo and whacko as HP directors may strike you as absurd, although one could argue that recent disclosures about the company's approach to corporate governance strongly indicate they might fit right in. We're well aware, too, both suffer from some evident drawbacks. To wit: To judge by his history, Mr.Chavez, if irritated enough by bickering among the board, might easily be tempted to stage a coup, which we've not the slightest doubt would rub the present directors the wrong way. Even more serious, Mr. Ahmadinejad doesn't own a tie, a clear violation of the company's dress code, which mandates zero tolerance for such a major infraction, and, to make matters worse, he doesn't shave anywhere near often enough, either.

Predicted. Fitting for such an eventful week, we found ourselves privileged to meet with one Mr. Julian Smith, a name with which loyal readers over the past one score and ten years may not find themselves totally unfamiliar. He haunts the august chambers of Morgan Goldman, plying the trade of economist-in-chief, which, we aver, we do not hold against him. Mr. Smith's duties include not only the standard bottle-washing fare, but also the task of making predictions, moreover with regard to the future.

We found Mr. Smith in a mood that we would necessarily describe as not so completely altogether sanguine, if not to say perhaps a wee bit bearish, or even just a tad cranky, as this bold prognosticator directed us to the display below, showing the tortuous path followed over the past 160 seasons by his firm's Super-Sentiment-Indicator (SSI). Effusive as always, our perspicacious soothsayer observes that the reading today is higher, yes higher, than it was in December of 1974, reflecting the current effervescence seen both in the current markets and in the bosom of his namesake, the aforementioned Ms. Smith. He hastens to point out the silver lining of this billowing grey mass, that those far off levels of thirty and two years ago, just south of 600 in our old friend the Dow, represent what he avers is true "pound the table" opportunity for our bullish brethren, offering a dividend yield (remember those?) of 132%. Keep the powder dry.

Actual. The most obvious explanation for the market's recent favorable action just might be the favorable action itself, which invariably has a tonic effect on investors, as witness the steadily increasing chortling over the prospect of new highs in the averages. While, as we've noted, sentiment hasn't reached ridiculous levels of bullishness, it has been growing increasingly buoyant. At the very least, that's cause for caution.

As a shrewd market-watcher we know points out, for several months now this market has been prone, even while it was edging higher, to sudden reversals. No sooner do the bulls gear up for a sustained march higher than stocks do an about face, and no sooner do the bears start to enjoy life than the decline comes to a sudden end and share prices bounce.

He suspects, though, that such short-term swings of direction as they become the norm lull investors into anticipating an enduring pattern and set them up for a more pronounced and extended move. He further suspects such a move will be down, although he feels we need more febrile and widespread optimism before that happens.

We heartily second that forecast…this time, we fear, what we're in for is … a taste of the inevitable.


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