December 2000 Newsletter
Issue Twelve, Volume One

HAPPY NEW YEAR!

By Mike Gasior

Well could any of us imagined a more bizarre year than the one we've just managed to put to rest? Yikes! Wild markets. Dimpled, pimpled and pregnant chads in Florida. Lock boxes. Remarkable weather. Fuzzy math. Just when I think I might have actually seen EVERYTHING, the next year seems to hand me something brand new to digest.

And I am far from the only one who has to be impressed by the progress in each succeeding year. Consider some of the following observations from some pretty smart folks.

In the first century Roman engineer Sextus Julius thought the world had become so progressed that he actually said "Inventions have reached their limit, and I see no hope of further development."

In 1899 the commissioner of the Patent Office of the United States suggested eliminating his department because "there couldn't possibly be anything left to invent."

Most fun to recall is Thomas J. Watson, the founder of IBM, who decided in the 1940's that "I think there is a world market for maybe five computers."

This is an amazing age in which we live and each and every day is an adventure for me. It is breathtaking that in my lifetime medical science might make death indefinitely avoidable. I don't think I need to even offer anything else to prove that we might be living in the most amazing era of human existence.

I think the way I will approach this month's newsletter is to first look retrospectively and then prospectively. I definitely have a few things on my mind that I'd like to share.

WHEN WILL YOU PEOPLE LISTEN TO ME?

The NASDAQ

I wrote my March Newsletter the DAY the NASDAQ hit 5132.52 because the idea of it being so high made me feel like I was going to toss my cookies. Here are the EXACT words I sent to 150,000 people around the world:

--Value does matter. --The stock market still goes down. We just haven't seen it in a long time. --There are lots of people managing money who haven't a clue what a bloodbath looks like. --In as little as 10 years, college professors will be talking about this period of U.S. stock market history as one of the "classic" speculative bubbles. Right there with the tulip bulb craze of the 1600's in Holland. The U.S. stock market of the 1850's. The Florida real estate market of the mid-1920's. The U.S. stock market of the 1920's. And the Japanese stock market of the 1980's. --In the end there will be no money made by investors in ANY of the current crop of Internet companies. None. Not even if you manage to pick the handful of companies that survive the next decade. --Of the Internet "pure plays" trading right now, probably 90% of them will not exist in five years. --Over the next ten years nearly any other asset category will outperform stocks.

So there are my feelings. I want these talking head stooge portfolio managers that CNBC parades in front of the public to stop saying that "everything is different". Every thing is NOT different. Markets can still go down and they WILL go down. It is not a question of "if" they will go down. The only question is "when" it is going down. Rest assured that it will. Don't bother to write me and ask me when that will be. If I actually knew that, do you think I would ever tell you? Next time you see one of those stooges on CNBC think about that. If I really knew what the stock market was going to do, I'd be on my 85-foot yacht somewhere off Antigua watching the NCAA Tournament with my satellite dish. I wouldn't be telling anyone. Remember the first lesson your mother taught you was that people who don't know history are doomed to repeat it. Welcome to my nightmare.

Pretty ominous words from me and even I don't believe how close I called it. I admit I had been grumbling for a couple years about the valuations in the market. By March I had had enough. The NASDAQ closed the year at 2470.52. That adds up to a 52% decline. I still think it has another 500 to 700 points of downside left......at least. If the economy really gets stinky, it may be worse than that.

Priceline.com

On the day in August when I wrote the following words, Priceline.com (PCLN) was at $26.625:

"Priceline.com on the other hand is over. For whatever reason, as I sat and listened to the news of their revenue disappointment, it hit me like a lightning bolt that their whole business plan is stupid and won't survive long term. As soon as the airlines, hotels, supermarkets, and whoever else, figures out how to replace them with their own bidding systems they will. The airlines are already onto this with the introduction of a site of their own. So there's my feeble opinion. Priceline.com is done. Put a fork in them."

Priceline.com closed the year at $1.3125 representing a loss of 95% since my call. How do I not charge you people for this stuff? Yikes!! Although I completely stand by my sentiments, meaning that I think there is PLENTY of downside on this stock, if you're looking for a short.

The Bond Market

Just last month I wrote the following when the 30-year Treasury was yielding 5.88%:

"Bonds will outperform stocks for the next few years. I think maybe as many as ten years."

The yield is down to 5.45% now. So far so good, but we'll need to take a look back next year to see how smart I was. If I end up being correct, you'll be the first to know.

MY FAVORITE STUFF FROM 2000

BEST WORD - "Lockbox"

BIGGEST IDIOT - The kid from the Emulex story thinking for even a moment he'd get away with it. Dumbass.

BEST INVESTMENT - Long Treasury bonds.

BEST NASTY LINES FROM MY READERS

-"get back on your medication"

-"You are an idiot!"

-"Send your bearish thoughts to bears not bulls. Long-term the market goes on to set new highs." (sent 4/17/2000)

-"While I appreciate your observations on the market and on accounting issues, I sincerely hope you will CLEAN UP YOUR LANGUAGE!" (college professor - figures)

-"Your comments are useless and annoying. Your ignorance is only exceeded by your poor use of the English language. GO AWAY!"

-"I did take a moment to peruse the newsletter and did not care for the tone of it - self- serving arrogance sprinkled with derogatory remarks is not what I would call informative."

BEST SWEET THINGS FROM MY READERS

-"I just wanted to get my 2 cents in on last month's newsletter. I thoroughly ENJOY (spelling mishaps and all) reading your newsletter each month. When I first started receiving the newsletter, I wasn't sure how I had gotten on your mailing list, and I basically thought of dumping the e-mails. But once I started reading, I must say I have enjoyed every minute of your dry sense of humor. I have a minimal background in finance (I am in the middle of my MBA and currently work in marketing) and your delivery makes things that are probably over my head that much more understandable. Keep up the great work (and as for the critics, take what you can use, leave the rest and tell them to try writing their own newsletter -- for the length your newsletter is, I would EXPECT a lot more errors than I see)."

-"This is the first newsletter I have received since attending your seminar in Salem, OR last September. I can almost hear you speaking as I read it - very enthusiastic speaker and writer. Thanks for including me."

-"Mike, many thanks for your monthly newsletters. I find them educational, direct, understandable and laced with humor! The topics are provoking - in a good way - and expose me to issues that help broaden my risk management bent. Please keep up the fine work which you do for so many of us."

-"I appreciate you newsletter and especially the way it is written. I'm not concerned with spelling errors. I'm concerned with content. I have never been heavily involved in the stock market. Your newsletter does help me and is one of few informational items that I truly take time out of my day to read. Keep up the good work."

-"That was astounding! But not surprising when I look at how stupidity just continues to flourish in spite of the obvious lessons all of us should have been learning through all the previous debacles. Thank you. I hope someone reads what you wrote and 'hears' the message before they go and do likewise. Hopefully, integrity will rear it's glorious head one of these days."

-"I guess what you predicted a few months ago, is now becoming a reality. Nice Call...."

-"Thanks for the education and keep your Newsletters coming."

-"I think you monthly email newsletter is great. I look forward to receiving it every month. To the people who don't like it - too bad - tough shit etc. Keep up the hard work."

-"Another great article. When are you going to come and visit us in Cayman? There are plenty of Internet start ups registering down here so it would be good for the lawyers and accountants, as well as the investment professionals to hear what you have to say about questionable accounting techniques." (see you in 2001 in Grand Cayman..)

-"Mike, of course you're going to get beat up....you're actually saying something. Keep it up."

BEST EXECUTIVE DECISION OF 2000

From the Wall Street Journal:

"Two top executives of the Sirena Apparel Group kept resetting the company computer's clock repeatedly for 12 days to avoid closing the books in the first quarter until revenue had met analysts' forecasts, according to Federal prosecutors. The maneuver fell apart within weeks, the executives were fired, and last week indicted on charges of securities fraud, according to a report in the Washington Post."

FROM MIKE'S TRAVEL LOG

Maybe it's because I travel 230 days a year and log almost 200,000 air miles but people are always asking me advice about travel. Here comes a fast and concise list.

Favorite Bar Anywhere - Windows on the World "Greatest Bar on Earth", NYC

Great Place for a Sandwich in NYC - Stage Door Deli

Good Mexican Joint in the Village - Panchitos

Best Ski Resort Bar - The Ground Floor, Squaw Creek, California (8200' above sea level)

Best Alaskan Bar - The Red Dog Saloon, Juneau

Favorite Place for Brunch in LA - Walter's in Beverly Hills

Prettiest Place for a Cocktail in LA - Loew's Santa Monica by the pool

Best Evening Bar in LA - The Sky Bar, West Hollywood

Great Outdoor Place in LA - Gladstones4Fish, Malibu (the head chef's name was Gasior too)

Pretty Waterfront Joint Outside Seattle - Madrona Waterfront Café, Bainbridge Island, Washington

Great Steakhouse in Atlanta - Tavern at Phipps in Buckhead

Best Steakhouse Anywhere - Trail Dust Steakhouse, Englewood, Colorado

Great Food and Very Romantic - The Ritz, Newport Beach, California

Best Sunset Restaurant - The Peninsula at the Marriott, Grand Cayman BWI

Great Bermuda Restaurant - Pickled Onion, Front Street (eat outside)

Most Spectacular Landscape - Juneau, Alaska

Best Surfing and Body Boarding - Kawailoa Beach and Waimea, North Shore, Oahu

Great Place to eat in Fort Wayne - Sorry......just kidding

Best Ribs in America - Montgomery Inn at the Boathouse, Cincinnati, Ohio

Best Hotel in Lower Manhattan - Millenium Hilton

Best Boston Hotel - Le Meridien Boston

Best Atlanta Hotel - (tie) Ritz Carlton Buckhead and Swisshotel Buckhead

Best Phoenix Hotel - The Phoenician Hotel, Scottsdale

Best Chicago Hotel - Four Seasons at the Watertower Mall

Best Florida Hotel - Ritz Carlton Naples

Best Dallas Hotel - Four Seasons Resort and Club at Las Colinas

Best Bermuda Business Hotel - Fairmont Hamilton Princess

Best Bermuda Beach Hotel - Sonesta Beach Resort

Best Grand Cayman Hotel - The Marriott at 7 Mile Beach

Best Golf Hotel - The Lodge at Pebble Beach (no contest)

Best Escape and Relax Hotel in the U.S. - Ventana Inn, Big Sur, California

Decent Airlines - American and U.S. Airways

Scary Airline - TWA

Don't EVER Use These Airports - Laguardia and Orange County

Decent Airports - Pittsburgh and Cincinnati/Northern Kentucky

Best Huge Airports - LAX and O'Hare

Best Hotel Chain - Four Seasons

My Most Frequent Hotel Chain - Hilton

Most Over Rated Place - South Beach in Miami (sucks actually)

Surprisingly Nice City - Indianapolis, Indiana (terrific downtown area)

Prettiest City When Not Raining - Seattle

Company Campus Worth Visiting - Microsoft (you just gotta see this)

My Favorite Rental Car Company - National

Best Shopping High End - Phipps Plaza and Lenox Mall in Buckhead, Georgia

Best Thrift Store Shopping - Madison, Wisconsin and Los Angeles

GET YOUR PEN - MY 2001 PREDICTIONS

Dow Jones Industrials - 10,000 or less

NASDAQ - Under 2,000

30 Year Treasury Bond - 4.50%

10 Year Treasury Note - 4.40%

Fed Funds - 4.5%

Yield Curve - Pretty damn flat

30 Year Mortgage Rates - 6.00%

The Economy - Slowing further, potential recession occurring by 2nd quarter 2001

Real Estate - Softening all year

Oil Prices - Begin rising again in early 2001

Unemployment - Creeping up modestly

Tiger Woods - Two more majors in 2001 including his 2nd Masters

Me - More sleep I hope

VERY SPECIAL ONE-TIME OFFER

Because our printer was delayed in delivering our 2001 brochures, we are delinquent in getting them into your hands. For that reason I would like to extend an opportunity we have never offered before.

We will be holding our three day Advanced Securities & Markets program in New York City on January 22, 23 and 24, 2001 at the College of Insurance. For this program ONLY if you register 2 people we will allow 3 people to attend. Simply stated, three people can attend for the price of two. Call my office at (860) 347-6568 and they will be happy to help you get registered.

LOOSE ENDS

My Web Master has assured me that by the time this Newsletter goes out, the 2001 Seminar Schedule will be residing on my Website at http://www.afs-seminars.com

We will once again be running a large curriculum in New York City, along with a smaller one in Hartford, Connecticut. There are also various programs we host throughout the United States that are open to all.

The Bermuda Program was a huge success and will be held again this year during the week of November 26th. We will announce exactly which topics will be held in the next several months.

There will also be a weeklong series of programs hosted on Grand Cayman the week of July 23rd. Both the Grand Cayman and Bermuda programs will be available on the Website shortly when the details are confirmed.

If you would like to host an in-house program for your personnel please call us at (860) 347- 6568 and we will be happy to give any presentation to your group for as few as 10 participants.

HAVE A HAPPY AND PROFITABLE NEW YEAR!!

Thank you all for your patience with my occasional ramblings, and to all of you who took a moment to drop me a note......good or bad. I am already looking forward to what the new year has in store for all of us.

If you would like to add anyone to the distribution list, or change the e-mail address where you receive this newsletter you can accomplish this by visiting our website at http://www.afs-seminars.com.

http://www.afs-seminars.com

Copyright 2000, Michael Gasior. All Rights Reserved.

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