December 2001 Newsletter
Issue Twelve, Volume Two

A HISTORIC YEAR INDEED

By Mike Gasior

Many times I have admitted to you that I am occasionally struck with writer's block when, at month end, I sit to compose this hideous newsletter. For many sad and tragic reasons, this is not the case this time. My lifetime has spanned only four decades and I have been able to witness some of the most unbelievable and historic moments. I saw humans launch into space for the first time and then walk on the moon; U.S. Presidents resign and be assassinated, wars begin and end, stock markets soar and crash and much more. As I should have expected, none of this could prepare me for the events that have transpired over the preceding 365 days.

I intend to discuss many matters in this issue, but all of them combined will not equal a fraction of the weight carried by the events of September 11, 2001. Many of you either heard me in person, or read my words here, and understand the gravity of that day on me personally. I used to work in Two World Trade and that second airplane struck 8 windows under where I would have been sitting. I lived in Battery City. I have spent hundreds of nights at the Millennium Hilton. I have been a customer of every restaurant, bar, store and newsstand in that neighborhood at one time or another. When I sat down to review my year-end edition of this newsletter from a year ago, I read the part where I gave my favorite places from around the world, and the first thing I listed was my Favorite Bar. That bar was The Greatest Bar on Earth, which was at the top of One World Trade at one of my favorite restaurants, Windows on the World. I was struck by the irony of that.

Just about a month ago, I read an article in Talk Magazine which chronicled the final hours of some of the people that worked at Windows on the World. I sat there and bawled my eyes out reading the account of what would transpire that morning, much of the information gotten from surviving relatives and panicked phone calls that morning of 9/11. Over the years I had gotten to know some of those people, although I certainly couldn't have called them friends. Somehow, when I read that article, it didn't matter. They were good, decent and honest working people who were lost for no good reason. I hate more than ANYTHING to quote Hillary Clinton about anything (lying dirtball that she is...more on that later), but she was correct when she said that all these people did "was go to work". That's what all those people did, and now they're gone and I will never forget them.

The facility that I used for all my New York seminars was called the College of Insurance, which has recently become Saint John's Manhattan Campus. It is one block from Seven World Trade, which fell around dinnertime on 9/11. After the tragedy we moved all of our programs over to Newark, New Jersey, and every time I would be driving across the George Washington Bridge, my eyes would wander to the left and I would look down the Manhattan skyline. I was always surprised how affected I was not to see those towers standing proudly at the far end of the island. I haven't gone down to "ground zero" nor can I imagine the day in the future I will want to. I'm not given easily to hyperbole, but that area is truly sacred ground because of the people who continue to lie in the rubble there. I'm not certain yet what my personal feelings are with regard to what should occur on that site. Some sort of a memorial is obviously in order, and no doubt there will be one.

As far as the stupidest idea I heard, Bryant Gumbal actually suggested that they should re-construct the two towers, but leave them hollow and vacant as a memorial. Why don't YOU pay for that Bryant, you moron? Or better still, send your mother some money to get her teeth fixed you cheap SOB.

I will be back in Manhattan for my 2002 programs, and we will be selecting the facility in the next couple of weeks. It currently appears that the location will be in Midtown and convenient to Penn Station and most of the Subway lines. It will be posted on the website the moment the decision is final. Now on to the other topics.

THE RESULTS ARE IN

Since this newsletter now goes out to something more than 250,000 people worldwide, I know there are those of you who have kept track of my predictions in last years final issue and how things worked out for me. Although I didn't strike oil with every single prognostication, I certainly don't think I wound up looking like an idiot either, so I will revisit each prediction and what the reality is 12 months later.

Prediction - "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 gets stinky, it may be worse than that."
Reality - Not too bad on this one. The NASDAQ just finished 2001 at 1951.07, down 519.45. When will you people listen to me???

Prediction - Dow Jones Industrials - 10,000 or less
Reality - Dow Jones Industrials - 10, 021.64 (So I missed this one by 21.64 points and I suppose all my credibility is now gone.)

Prediction - NASDAQ - Under 2,000
Reality - NASDAQ - 1951.07 (Bingo!!)

Prediction - 30-Year Treasury Bond - 4.50%
Reality - 30 Year Treasury Bond - 5.47% (Although the yield is lower than a year ago, I am a lot more wrong than I expected on this one. The reason I'm surprised is because I expected the economy to weaken substantially as you all remember, and I expected that all interest rates would decline significantly. So far, only short rates have shown the kind of decline I thought would occur.)

Prediction - 10-Year Treasury Notes - 4.40%
Reality - 10 Year Treasury Notes - 5.05% (This is also lower than a year ago, but still much higher than what I envisioned, or what the current economy would dictate.)

Prediction - Fed Funds - 4.5%
Reality - Fed Funds - 1.75% (All I can say about this one is YIKES!! Yes, I expected the economy to falter and for the Federal Reserve to drop rates to stimulate things, but I never expected this. I can't even use September 11th as an excuse because the economy was in dire condition well prior to then.)

Prediction - Yield Curve - Pretty damn flat
Reality - Yield Curve - Not very flat at all (This, of course, is due to long interest rates not following short rate downward which is what I was expecting.)

Prediction - 30-Year Mortgage Rates - 6.00%
Reality - 30 Year Mortgage Rates - 6.60% (The rate did get down below 6.50% for a while, but I missed this one by 60 basis points because I was wrong on the 10 Year Treasury Note by 65 basis points.)

Prediction - The Economy - Slowing further, potential recession occurring by 2nd quarter of 2001
Reality - The Economy - In recession (I got a ton of "you suck" e-mail last year after my recession prediction, but may I remind you who was using the word almost a year before anyone in the "mainstream" was using it. Quite frankly, the economy is in much worse condition than I expected it to be and very little of that is a result of 9/11. I am quite baffled that long term interest rates are still this high since an economy like the one we are in should have lowered them a lot. Perhaps too many people are still more optimistic than they should be.)

Prediction - Real Estate - Softening all year
Reality - Real Estate - Softened all year (No real bloodbath here, but I never called for a bloodbath either. I used the word soften, and it did.)

Prediction - Oil Prices - Begin rising in early 2001
Reality - Oil Prices - Rose throughout the year (Oil began 2001 just under $27 per barrel and rose to $34.42 in November and have since dropped to nearly $20 per barrel. I didn't do too badly on this one.)

Prediction - Unemployment - Creeping up modestly
Reality - Unemployment - Rose 1.5% for the year (The unemployment rate began in January at 4.2% nationally and rose to 5.7% by the end of November.)

Prediction - Tiger Woods - Two more majors in 2001 including his second Masters
Reality - Tiger Woods - One more major - The Masters (I thought I had this one in the bag early when Tiger won at Augusta. I suppose I could claim a moral victory by saying that he won the Players Championship which lots of pro's call "the fifth major", but then I would sound like one of those weasel politicians I make fun of. If you want an amazing statistic, he won $4,088,000 of his total $5,687,777 in prize money in just FOUR tournaments. Now that's some kind of inflation!)

Prediction - More sleep for me
Reality - Nope. The same 4 hours a night I've gotten for years.

MIKE'S PREDICTIONS FOR 2002

Dow Jones Industrials - Lower than it is right now. If you make me pick a number, I'll say under 9,000, which would be a 10% decline from here.

NASDAQ - Somewhere around 1,750, also a little over 10% lower.

Ten-Year Treasury Note - 4.75%

Fed Funds - 2.00%

Yield Curve - Finally beginning to flatten as long term yields drop

30-Year Mortgage Rates - 6.00%

The Economy - Continuing to worsen into the second quarter for the U.S. and beyond that timeframe in many other parts of the world. Any recovery at all in 2002 will occur very late in the year.

Real Estate - Continued softening

Oil Prices - Continuing to decline as the global recession worsens and demand for petroleum slows. OPEC will try to support prices but members will break from the group due to the economy.

Unemployment - Spikes higher in early 2002 and finishes the year somewhere above 6.50%.

U.S. Inflation - A negative number.

Tiger Woods - Two majors, which will include his third Masters and the British Open at Muirfield. Also watch for John Daly to win something important this year.

Me - Perhaps a better planned travel schedule. I always seem to end up in Des Moines in January and Grand Cayman in August.

MY FAVORITE THINGS FROM 2001

BEST WORD - Evildoers

BIGGEST MORON - Without a doubt, Mark Green who ran against Michael Bloomberg for mayor of New York. This guy was actually stupid enough to say (out loud) that he could have handled the September 11th tragedy as good as, OR BETTER, than Rudy Guiliani. Even if you actually thought such a thing, only a total egomaniac or fool would ever utter the words where someone might hear them. This was an amazingly difficult election for him to lose; yet he managed to rise to the occasion. Congrats Mark.

BIGGEST SCUMBAG - Continues to be Gary Condit who just announced he would be running for re-election later this year. I have to imagine that the Democrats are wishing this guy would just fall off the face of the earth and disappear himself. Perhaps they ought to give O.J. a call down there in Florida and see if he's busy.

BEST LINE - From "The Concert for New York" which raised money for the disaster victims, the firefighter from Queens who suggested that Osama Bin Laden kiss his "royal Irish ass!" God, I love that.

BIG FAT LIAR - This year's winner is Hillary Clinton. I was actually watching as Hillary was giving a press conference on September 11th and she told this amazing story about how she had just spoken to her daughter and how her daughter told her how she had been out jogging during the disaster. She went into details about how Chelsea would usually take a break from her jog and sit on the steps near the Trade Center and how fortunate she was that her daughter hadn't done that today....blah, blah, blah. It's just too bad that Chelsea was simultaneously giving an account of her day to another media outlet and telling them how she hadn't gone anywhere all day long, and had decided to just stay home at the apartment instead. Hmmmmm.

So was Hillary lying about talking to her daughter? Or did Hillary ACTUALLY speak to her daughter and then decide to make all the other stuff up? Either one is troubling since she decided to use the deaths of thousands of innocent people AND her own family to somehow make political hay and connect herself to the disaster somehow. Even Al Gore wouldn't have done that....probably. Either way, she's once again a no-class, low-rent liar who would do almost anything for political gain. Plus, what was the stupid puss she wore on her face while George W. gave the address to a joint session of Congress? Did she even notice she was the only one not clapping? Grow up lady and get a grip. And if any of you think my comments have a political base, you could not be more wrong. If you can defend her lying on September 11th, I beg you to send me your explanation.

BIGGEST MEDIA LOSERS - The winner here is the production executives at VH1 who now re-write history as part of their programming day. I watched the previously mentioned "The Concert for New York" when it was broadcast live. By the way, the whole thing was great, especially the set by The Who, which rocked, and Adam Sandler as Opera Man who almost made me pee my pants it was so funny. Plus Keith Richards playing the Stones tune "Salt of the Earth" was a great moment.

Well, VH1 re-ran the concert on Christmas Day and I sat there to watch it again. When Hillary comes out to make her statement and introduce a Jerry Seinfeld video clip, the crowd starts booing and hissing so loud she almost couldn't make it through what she had to say. However, as I watched the re-run a week ago, VH1 had doctored the audio track so it sounds like the crowd is CHEERING so loud she almost couldn't make it through her statement. My jaw was literally on the floor.

I obviously am not that fond of Hillary, but booing her was probably inappropriate for an event like this, and the crowd should have cut her some slack. That was not supposed to be the tone of the concert, but it IS what happened so why not leave it in for the re-run? Perhaps it's because Bill Clinton tore John Sykes, the president of VH1, a new orifice moments after the incident. Bill, backstage while his wife was jeered, went WILD on VH1 President John Sykes, screaming and pointing his finger since it was Sykes who talked the two Clintons into participating in the concert. Bill felt that Sykes should have known this was going happen. I give Bill Clinton credit for standing up for his wife and busting this Sykes guy open since he owes her at LEAST that much loyalty after all she has done for him.

In the defense of the thousands of cops and firefighters who led the booing, you can understand their anger after Hillary and her crew put one of their own in the hospital a week before. It seems a van carrying Hillary to the Westchester airport was asked to stop at a security checkpoint near the runway by officer Ernest Dymond. As the van approached the gate, officer Dymond moved into position and tried to get the van to stop so he could go through the routine security check. Well the van didn't even slow down and struck officer Dymond and sent him to the hospital. The van finally stopped several hundred feet away, but Hillary was busy on a cell phone call and was unable to comment or apologize to the officer. All of that occurred on October 14th, and the concert took place October 21st.

STUPIDEST MOVIE - I had to go see Vanilla Sky because it got so much hype, and because Cameron Diaz's character reminds me of my ex-wife who fortunately never drove me off a bridge. All I can tell you is that Mike gives it TWO THUMBS DOWN and I want my $7.50 back. I won't ruin anything for those who haven't seen it, but remember my thought at the end of the movie; "This is how you end it?? Are you freaking kidding me??" Let me know what you think. Stupid, stupid, stupid.

MY REQUEST FROM YOU FOR 2002

Change your voicemail. Don't tell me that you can't answer the phone right now. I kind of assume that's why the machine is picking up my call in the first place, and why they invented answering machines and voicemail at all. Please don't put anything on there like "I'm either away from my desk, or on another line so please leave me a message." Do everyone the decency of telling the truth, which is that you had two El Grande Burritos and a quart of gin for lunch and will be spending the afternoon in the bathroom. Everyone knows the truth anyway, so your professional sounding message doesn't fool anybody.

BIG CHANGES ON MY WEBSITE

I am very excited about recent changes to my website.

First things first, the entire schedule of U.S. programs is added and there are lots on new things being offered. For example, I will be holding a very special series of one day programs in four U.S. cities; New York, Los Angeles, Chicago and Hartford. The programs are:

--Private Placements and Restricted Securities
--Global Securities Markets
--Swap and Swap Derivatives
--CMO, ABS and CMBS
--Hedge Funds

Second, I have created a Bulletin Board call Mike Gasior's Securities Forum, which I hope will become a central point where people can ask technical questions regarding securities. This is not meant to be an investment advice board; there are millions of those. This is meant to be a forum for questions relating to the problems encountered by institutional investors regarding operational, accounting or management issues pertaining to securities. I encourage all of you to participate here and to help each other out.

Finally, the investment glossary and links page are among the best I have ever found on the Internet and I hope you will use these resources to help you out during the workday. You can also view all past issues of this newsletter by visiting the site.

The web address is:

http://www.afs-seminars.com

We also still have some time available if you would like to host any of our seminars in-house for 10 or more of your people. If you would like more information on this, or would like a hard copy of our 2002 schedule mailed or faxed to you, please call my office at (860) 347-6568.

I wish you all the happiest, healthiest and most profitable New Year! Hope to see you soon.

http://www.afs-seminars.com

Copyright 2001, Michael Gasior. All Rights Reserved.

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