Bull!
Page 59
22. John Mauldin, “The Supercycle of Debt,” Thoughts from the Frontline, 16 January 2004.
23. Shawn Tully, “America’s Credibility Gap: Growing Deficits,” Fortune, 8 April 2004.
24. For example, in July of 2001 one Euro was worth just 84 cents; by the spring of 2004, a Euro fetched roughly $1.20.
25. “Chairman’s Letter,” Berkshire Hathaway Annual Report, 2003.
26. Grant’s Interest Rate Observer, 23 March 2003.
27. Peter L. Bernstein, “The Twin Deficits: A New Look,” Economics and Portfolio Strategy, 1 November 2003.
28. Jeremy Grantham, “Skating on Thin Ice,” GMO Quarterly Letter, January 2004.
29. Steve Leuthold, interview with the author.
30. In Perception from the Professional, March 2004, Leuthold explained how the Bureau of Labor Statistics (BLS) was keeping a lid on the CPI: For example, instead of using the cost of owning a home to measure housing costs, the BLS used a rental index—which excluded home ownership costs like real estate taxes. Meanwhile, 70 percent of all households owned their own homes. Statisticians also kept the CPI artificially low by adjusting prices downward when they believed that the quality of a product had improved—if it had become faster or offered more features. For instance, “since 1979, the average price paid for a new car in the U.S. has risen from $6,847 to $27,940, about 308%,” Leuthold observed. Meanwhile, the CPI shows that “over the same period,” automobile prices are up “only about 71%. But the fact is, anyone buying a car for personal transportation must pay 308% more for personal transportation than back in 1979, regardless of quality improvements.” Moreover, Leuthold complained, “appliances and home entertainment equipment have all sorts of new features, but have you noticed they don’t seem to last as long? ‘They don’t build them like they used to.’ How many times have you heard that phrase in the last few years?…Plastic parts and panels on cars, appliances and many other items reduce quality in many cases. But as far as we know, the BLS does not adjust for quality deterioration. [emphasis his].”
31. Steve Leuthold, interview with the author.
32. Marc Faber, The Gloom, Boom and Doom Report, March 2004.
APPENDIX
Searchable Terms
Note: Entries in this index, carried over verbatim from the print edition of this title, are unlikely to correspond to the pagination of any given e-book reader. However, entries in this index, and other terms, may be easily located by using the search feature of your e-book reader.
Page numbers in italics indicate charts, graphs, or tables.
AA corporate bonds, 381
ABC, 18, 414n.24
Abelson, Alan, 47, 315
Acampora, Ralph, 8–12, 30–31, 96, 153, 190, 282, 300, 307, 404n.31
accounting, 279–82
AOL and, 178, 193–202, 306
bubble and, 145, 178
Buffett on, 138
Cisco and, 207, 208
Abby Cohen on standards, 243
corporate crime and, 343–44
corporate 401(k) contributions and, 103
damage claims against, 147
dividend payments and, 380
earnings misrepresentation, 56, 110, 202, 207, 269–87, 306, 318, 319, 389
independent research on, 178, 182
legality of, 273–75
Levitt and, 144
operating income and, 274–75
pervasiveness of “creative,” 178, 180–81, 182, 195, 256, 270, 271–75
profits reports and, 257
proposed reforms, 123, 124–49, 343
proposed reforms skeptics, 389–90
short seller findings, 55–57
Sunbeam and, 180, 181
See also stock options
Ackerman, Rick, 64–65
Acorn Funds, 323, 341, 361
acquisitions. See mergers and acquisitions
advertising
AOL and, 199–200, 202
by financial services, 170, 314, 435n.53
by mutual funds, 222–23
Affordable Access Trust, 172
Against the Gods: The Story of Risk (Bernstein), 116, 118, 175, 284, 359
Agnew, Spiro, 88
Ailes, Roger, 155
AIM Aggressive Growth Fund, 209
AIM Management Group, 223
airplane invention, 25
Alamein, battle of, 49–50
Alcoa, 206, 425n.24
Allyn, Maureen, 44, 279–82, 287, 378
Amazon.com, xvii, xviii, 97, 106, 278, 289–94, 348, 398n.3
American Association of Individual Investors, 388
American Express, 128, 425n.24
American International Group, 327
American Stock Exchange (Amex), 128, 129
America Online. See AOL
Ameritrade, 18
Amgen, 428n.42
analysts, 96–101
AOL conferences with, 199
broker’s fees deregulation effects on, 183
changed function of, 183
conflicting audiences for, 294–300
crash of 1987 and, 63–64
cynicism vs. whistle-blowing by, xxi
expertise on specific industry, 183
fund manager’s role vs., xviii, xx
fund managers’ view of, xviii–xix, 206, 207
Great Bull Market aftermath and, 343, 345–49, 388–91
as gurus, xvii–xxii, 8–9, 29, 81–101, 168, 240–43, 289–300, 304–10, 397–98n.3
high salaries of, xviii
Institutional Investor ranking of, xix, xx, 206
investment bankers and, xix, xx, xxi, 10, 29, 183, 351
losses by (2000–03), 341
media relationship, 166, 169, 190
momentum investing and, 207
overvaluation and, xx–xxi, 234, 235
power of, xvii–xix, 9, 29, 96
pressures on, xx, 347
raised earnings estimates by, 62, 206–7, 272
rebound of 2003–04 and, 389–91
recriminations against, xx–xxi, 29, 347–49
research and, xx–xxi, 177–81, 182, 183, 290
short sellers vs., 55, 57
Spitzer investigation of, xx–xxi, 349–52
veterans in 1982, 50
Andreessen, Marc, 97
Annuziata, Robert, 320
anti-Semitism, 12
AOL (America Online), 106, 107, 154, 182, 193–202, 289, 292, 296, 335
accounting, 178, 193–202, 306
investor-determined value of, 21, 23
as Meeker pick, 98, 100, 198
stock volatility, xx, 200
ubiquity in mutual funds, 23, 301, 302
AOL Time Warner, 61, 201, 202, 277, 305–6
Apple Computer, 26, 50, 404n.21
Applegate, Jeffrey, 120, 305, 327
Ariba, 24, 157
Arnott, Rob, 389
Arthur Andersen, 135
Ascend, 204
Asian emerging markets, 355, 357, 377–78
Asian financial crisis, 259–60, 263, 315, 355
asset allocation funds, 219, 422n.44
asset gathering. See momentum investing
AT&T, 28, 277, 296
Atlantic Richfield, 177, 320
Atmel, 259
auto industry, 25, 46
aviation industry, 25–26
Avon, 41, 210
Awad, Jim, 36–37, 38, 41–42
B2 (broadband company), 272–73
Babson, Roger, 401n.23
baby boomers, 18, 31, 59, 102, 103, 114–18, 173, 211, 333
Baker, James, III, 91–92
balance sheets, 176, 177, 243
Baldwin-United, 56–57
Ball, Robert, 264
Baltimore Sun, 341–42
Bank Credit Analyst, 356, 358, 359, 361, 371, 375
Bankers Trust, 285
Bank of New England, 93
Bank of New York, 277
bankruptcy, 14
airlines, 26
Baldwin-United, 57
banks, 93
Enron, 319
Global Crossing, 320
insider selling and, 319
Orange County (Calif.), 20
Sunbeam, 181
banks, 56, 59
discount rate, 92
Federal Reserve and, 252
fed funds rate, 85, 86, 94
leveraged buyouts and, 74
losses, 93, 341
LTCM bailout and, 285–87
productivity decline, 257
reserves, 252
savings accounts, 95, 104, 114
short-term interest rates, 94–95
variable rate loans, 393
Barbarians at the Gate (Burrough and Helyar), 53, 76
Barnes, Martin, 356, 358, 359, 361, 371, 375, 381, 474
Barrett, Craig, 328
Barron’s, 87, 116, 180, 181, 206, 209, 212, 288, 412–13n.17, 461–62n.36
on Meeker, xviii, 97, 290, 296–97
1982 bull market prediction, 46–47, 50
on 2003 new bull market, 388
on Vinik, 226, 227, 229
Barth, Mary, 139
Bartiromo, Maria, 17, 153, 155–56, 175, 249
Bary, Andrew, 457n.33
Beardstown Ladies, 18, 19–20
bear market, 359–84
bull market overlap, 27, 315–16, 325
Bush stimulus strategy, 391–96
in commodities, 372, 480
cyclical vs. secular, 11, 365, 366, 368
duration forecasts, 342, 364
euphemisms for, 12
financial media and, 163
financial pundits and, 326–27
first phase, 315–30
forces marking, 14
forecasters, 9–12, 27, 226–31, 246, 282–87, 304–16, 325, 355, 370
individuality of each, 391
insider sales and, 317–30
interest rate cuts and, 392
investment alternatives, 354, 371–84, 391
investor losses, 333–34
March 2000 as start of current, 324–25
in mid-1970s, 3–4, 7, 44–45, 327, 364–65
past patterns, 364
performance since 2000, 387–88
predictions, 395–96
as proportionate to prior bull market, 361, 364
psychological factor, 4, 7, 15–16, 205, 364–65
rally pitfalls, 16, 365–71, 390–91
resistance to signs of, 15, 307–13
stock purchase timed with, 7, 173, 205, 369–71
20 percent rule, 326–27
value investors and, 363
See also market cycles
Bear Stearns, 285, 453n.18
Bedford Oak Partners, 347, 412–13n.17 Behind the Numbers (newsletter), 177, 178, 182, 302, 375
Bentsen, Lloyd, 142
Beresford, Dennis, 135
Berkshire Hathaway, 21, 35, 38, 47, 136, 137, 145, 289
Buffett on dollar slide, 395
Buffett on overpriced stock, 171–72
Buffet on 2004 market potential, 388–89
net worth growth, 62
table of returns, 407n.21
Bernanke, Ben S., 330
Bernstein, Peter, 31, 68, 116, 118, 175–76, 182, 185, 284, 325, 327, 359–61, 364–66, 368–69, 371, 379, 444n.33
market prospects (2004) and, 395, 396
Bernstein, Sanford, 258
Bezos, Jeffrey, 97, 278, 289, 292
Bianco, Jim, 325
Bierman, Harold, 98
Big Blue. See IBM
Biggs, Barton, 49–50, 96, 299–300
Binder, Gordon, 428n.42
biotechnology, 50, 160, 299, 324
Birinyi, Laszlo, 196, 289
Black, Fischer, 427n.36
Black Monday. See crash of 1987 Black-Scholes model, 427n.36
Blodget, Henry, xvii–xxii, 12, 29, 97, 183, 289–300
Amazon.com forecast, xviii, 289–94, 348, 398n.3
scapegoating of, xx–xxi, 346–49, 350–52
Bloomberg, Michael, 161
Bloomberg News (online news service), 161, 191, 292, 425n.24
blue-chip stocks, 28
1995–99 bull market, 210
1960s bull market, 40–41
technology prices, 259, 301
See also “Nifty Fifty” stocks
Boeing, 210, 328
Boesky, Ivan, 76, 116
Bolster, Bill, 180
Bond, Alan, 309, 311, 314, 342
bonds, 38, 52, 59, 60, 62, 112, 287, 328, 391, 414n.35
basic difference between stocks and, 423n.49
efficient market theory and, 282
Faber recommendations, 357
glamour of stock ownership vs., 119, 358
junk bonds vs., 76
pension funds and, 104, 109–10, 334
potential for (2003), 371
Russian default, 282
stock performance comparisons, 118–19, 173–74, 231, 284, 356, 357–59, 359, 367, 423n.49
bonds
types, 381
Vinik recommendations, 227, 229, 230–31
yield decline, 114
See also Treasuries
book value, 69
Boston Globe, 229
Boxer, Barbara, 131, 132, 141–42
Bradley, Bill, 131, 132
Brady, Nicholas, 94
Brandywine Fund, 232
Briloff, Abraham, 195
brokers, 20, 21, 36, 85, 156, 223
discount, 182, 257
fee deregulation, 182–83, 295
kickbacks by, 311–12, 342
losses by, 341
margin buying and, 244, 322, 460n.13
online trading and, 257, 295
See also Wall Street firms
Brooks, John, 37, 40, 241, 242
Brown, Martin C., 398n.5
Brown, Thomas K., 346
Browne, Christopher, 212
Browning, E. S., 250
bubble
accounting and, 145, 178
beliefs about, 12
Dudack and, 304–7, 325
Greenspan and, 244, 248–49, 251–53, 263, 286, 322, 323, 329, 450n.28