More Junkmail from Bob!
April 16, 2000
The stock market went down! Was it a crash? Is it the beginning of a
crash? Is it the end of civilization as we know it? The answers are no,
no, and probably. Well, it might be considered a crash.
A "crash" is supposed to be when the market loses 20% of its value. The
Nasdaq lost 25% last week, and 34% since its March 10th high. So
technically the Nasdaq crashed. How bad is it? Well, the Nasdaq is
still 32% above where it was a year ago so it must not be too bad.
The Dow Jones average lost a record 617 points. But since the Dow is so
high, that's only the 40th largest percentage drop at 5.7%. By
comparison, in the crash of October 1987 the Dow lost 508 points, which
was 22.6% at the time.
There are three (at least) new market factors at work here. First,
there are some very large companies with very high P/E ratios in the
computer and communications industries. When the Japanese Nikkei index
was over 35,000 in 1989, the average P/E there was a little over 50.
Now, 10 years later, the Nikkei
is a little over 20,000. I'm not sure what their P/E is now, but it's
got to be lower. I don't think we'll see a crash like that, but
climbing P/Es in the U.S. seem like a warning sign to me.
Second, there are lots of highly-valued money-losing internet
companies. Some of these companies will start making a profit. The ones
who maintain high growth and profitability will get to keep their high
stock prices. The others won't be so lucky. Several companies have
already started down.
WebVan went from 34 to 5 11/16 in 4 months, TheGlobe.com went from 38
13/16 to 3 in a year, iVillage went from 130 to 10 5/16 in a year, and
Learn2 went from over 9 to 2 13/16 this year. (I would like to point
out that most of this decline happened AFTER I left.) I'm guessing that
this downward spiral will continue for the non-profitable non-growing
The third factor is that everybody can trade stocks on the internet now
because it's so easy and so cheap. For some people it's turned into a
casino. In gambling, or the more politically correct term "gaming",
companies don't make their money on the 1 or 2 percent advantage they
get on the bets. They make most of their company because gamblers
always have to quit when they're out of money, and they don't have to
quit when they're ahead. This is also true in the stock market, which
contributes to volatility.
This is amplified with margin in the stock market. People can invest in
the stock market and borrow up to half of the money they invest from
their brokerage firm. For example, I can buy 100 shares of Microsoft,
and buy 100 shares more of Microsoft by pledging the 200 shares as
collateral. It's all automatic so I don't have to sign any loan papers
or visit a bank or anything. When the price of Microsoft goes
down enough, the brokerage company tells me I need to pay up on my
loan. It's called a margin call. So if I have no more money, I have to
sell my Microsoft stock to pay off my loan. If this happens a few
thousand times across the country, it can drive the price of a stock
These factors weren't nearly as big in the market 10 years ago. And I'm
not sure of their net effect now. Anyway, I think the stock market will
go back up and it's a good time to buy. This means if you're smart,
you'll do the opposite.
For equal time, here's what someone with some sense thinks about the stock market:
A lot of people are getting DSL's a lot now. That's a digital phone
line that gives you faster access to the internet. When you do that,
it's possible to leave your computer open for other people to browse
and modify your files. What should you do?
(1) Make sure that if you have file sharing enabled, you have everything password protected.
(2) Go to the Windows Update site occasionally and download the latest security updates.
(3) If you have more than one computer attached, you can consider some
firewall software. Wingate is pretty good. With firewall software, one
computer is generally "open" to the internet. This may not be necessary
IF you have all the sharing set up properly on your computers.
(4) You can use a router firewall, which costs more and is a lot harder to mess with.
The more people get hooked up, the easier it will be to find information on this. Here's an article
written to scare people.
Jim Wright used to be Speaker of the House. He amended a law once. That
amendment is curiously called the Wright amendment. Coincidence? Maybe.
That was (and is) a really stupid rule in my opinion. It says that an
airline flying out of Dallas Love Field cannot take people to New
Mexico, Oklahoma, Arkansas, Louisiana, Mississippi, or Alabama. Why
would they do that? Because American Airlines was operating out of
nearby Dallas Fort Worth airport, and they were trying to make sure all
the other airlines followed suit and moved to DFW. Southwest stuck to
their guns and stayed at Love. They're also cheaper to fly.
Now, Legend Airlines has started scheduled flights out of Love Field.
They're getting around the Wright amendment by only seating 50 people
on their DC-9s. The Wright amendment only applies to planes that hold
56 or more people. The DC-9 normally holds about 100 people. That
should make for comfortable flying! I checked the price, and it's
reasonable, $262 from Dallas to Washington and back with the
Here's their web site
Here's how the Wright amendment affects Southwest
I think it should be repealed. It's outlived its usefulness, if it ever was useful.
I was going to write something about a 60% ozone loss in the Arctic,
but it turns out that they were just joking. The loss is only 15% more
than pre-1976 levels, and it's less than that at altitudes other than
11 miles high. It's kind of boring anyway.
But I did notice that NASA has some wind tunnels at their Ames Research Center. This one
is 120x80 feet!
Four people (3 from Italy and 1 from France) decided they'd like to fly
a small plane to Baghdad. They didn't make a secret about it, and they
didn't get shot down. They landed in Baghdad on April 3, a couple of
days after the more appropriate date. These guys were "important"
people, like a European parliament member, a priest and filmmaker, and
a journalist. They were protesting UN sanctions against Iraq.
After they left Baghdad, they went to Jordan and were promptly
arrested. They let the important three go but kept the pilot in jail
for a few days. The let him go on the 8th or 9th, but kept the plane.
Here's what they flew, an Italian light twin:
I don't think I'll be doing that soon. But I would like to visit Cuba sometime...
Maybe the four people in the P68 should heed the wisdom of Roger Bacon, 13th-century philosopher:
"It is not necessarily impossible for human beings to fly, but it so
happens that God didn't give them the knowledge of how to do it. It
follows therefore, that anyone who claims he can fly must have sought
the aid of the devil. To attempt to fly is therefore sinful."
I'm guessing that Mr. Bacon wouldn't think much of the internet either.
I would like to reiterate, whine, AND complain that I'm tired of
hearing about the 6-year old Cuban kid. Politicians and the press
people are taking us for a ride on this one. Don't they care about a
6-year boy in Cincinnati with Leukemia?
Richard and John work at the U.S. Postal Service in Washington. They do
financial stuff. They were paid $142,000 and $105,000 in moving
expenses to move across town, even though they kept working in the same
place. So THAT's why stamps are going up! That's enough to BUY the
houses, not move furniture. The Postmaster General Bill, not to be
confused with President Bill or Microsoft Bill, said that it was a good
decision and that's the way things should work at the Post Office. The
USPS board of directors may disagree with him, especially after the
amount of publicity this has gotten.
In the meantime, the dot-coms were complaining that the U.S. Postal
Service is planning to get into the internet business. It's now
www.usps.com, not www.usps.gov. It seems like they won't be much
competition with this kind of thing going on.
Nick Timbers is in the uranium business. He's the head of USEC, formerly known as U.S. Enrichment Corporation.
The U.S. Enrichment Corporation started manufacturing enriched uranium
for nuclear weapons and submarines in the 1950's. In 1994, they started
buying weapons-grade uranium from Russia and processing it for use in
power plants. It was owned by the U.S. government. In 1998, Clinton and
others decided to privatize the company, so they sold stock on the
public market (USU).
Now the company is still profitable, according to their financials, but
they say they need $200 million from the government to keep going. They
also say they might stop buying Russian uranium.
This is making some people in Congress pretty mad, especially since
Nick is personally taking home over a million dollars a year. It looks
like they'll postpone doing anything until closer to the election,
though, because the Republicans want to get more bang for their
political buck. Nick will bring home a few hundred thousand more in the
NPR Quote: "62% of Americans are in favor of economic globalization."
It may have been sixty-something-else, but it was in that neighborhood.
I contend that 98% of Americans don't know or couldn't agree on what
economic globalization IS, let along make a decision on it. That's such
a broad, meaningless term that I don't think anybody could come up with
a precise definition. It is a good term for an election year, however,
because politicians can change its meaning and their stance with a mere
Some people from Montenegro, Serbia, and Albania have been stealing
domain names -- the names for web sites like "upperspace.com." The
largest registrar of domain names, Network Solutions, has a security
weakness that allowed some hackers to redirect dozens of popular web
sites to their own locations.
Some of the hijacked web sites are adidas.com, jamesbond.com,
mafia.com, france.com, italy.com, spain.com, slovenia.com, croatia.com,
sarajevo.com, kosova.com, washington.com, and bosnia.com.
They're getting thinks back in order now. The funny thing is that some
of the victims don't even know they're victims -- they haven't noticed
that their web traffic is gone.
avid Stanley is the son of a Baptist preacher. He swindled some
elderly people out of a million dollars or so in the 1990's. (I don't
think those are necessarily cause and effect.) He got caught, but he
disappeared when he was out on bail.
While he was away he changed his name and started a company -- a
dot-com company. Last October he threw a party. It was, according to
Craig Bicknell, "the most extravagant net start-up bash in the short,
self-indulgent history of decadent dot-com shindigs."
He rented the MGM Grand in Las Vegas and hired some rock bands:
Kiss, The Dixie Chicks, Sugar Ray, and Brian Setzer. He even paid for a
reunion performance by the Who. In this one party he blew over $12
million dollars. Or invested it, I suppose, if you ask him. He had
collected a total of $35 million in venture capital, so he spent 1/3 of
it on this party.
This past winter the company's venture capitalists and board directors
replaced him as CEO. Then last Tuesday, Captain Terry from the Virginia
State Police Bureau of Investigation called him at home in San
Bernardino and told him he was really in trouble.
Stanley's company is called Pixelon. They are still around, claiming the "Best Video on the Web:"
Pixelon doesn't think that Stanley stole anything, but they're going to have an audit just for good luck.
Iwon.com gave $10,000,000 to Lee Huu Truong yesterday. At least they
got a lot of publicity for it, and it was a little cheaper than
Stanley's party. In addition, iwon.com has collected $200 million in
financing instead of the mere $35 million that Pixelon raised. Iwon.com
gives away a million dollars a month, $10 million on April 15th "Tax
Day", and the paltry sum of $10,000 every day. People go to their web
site and get an entry every time they do a search (or something like
Let's see... how long can they keep this up?
Since February there have been 3 or 4 "most distant object in the
universe" records broken. The latest one, if it is verified, will blow
the others away. The universe was already a lot bigger than I can
comprehend, just like the U.S. federal budget. And it keeps growing,
just like the U.S. federal budget.
The latest potential record:
Two of the other records:
Some people at Microsoft did a no-no. Someone who was working on
Internet Information Server added a "back door" so that you can enter a
secret password (something like "Netscape engineers are weenies") and
gain access to anybody's web server. This is on IIS with Front Page
Extensions, in the file dvwssr.dll. If you have that file on your web
server, maybe you should delete it. It doesn't apply to Windows 2000
systems. Microsoft is coming up with a solution "real soon now."
Also this week, a back door was discovered in the Dansie Shopping Cart.
This is a system that web sites can use for their online stores. There
are about 200 web stores that use this system. Any of the servers it
resides on can be accessed freely by Craig Dansie or anyone else who
has the 9-character password. But don't worry... your credit cards are
safe on the internet. Maybe not, but at least they'll give you a refund
if someone borrows your number. Dansie has not responded to this
Dansie Shopping Cart
Patrick and Chad are 19 and 20 years old. They're in trouble. They
defaced web sites at the White House and the Army. Chad pleaded guilty
to defacing the U.S. Army web site and making it look like the Chinese
government did it. He was sentenced to six months "in custody" and
fined $8054. Patrick will be sentenced right away.
The Motion Picture Association of America had their web site "DoS'd"
last week. A Denial of Service attack, probably by DeCSS supporters,
pretty much put their web site out of business on Thursday.
Not to be outdone, Napster fans defaced the rock band Metallica web
site after Metallica filed a lawsuit against Napster. Here's what the
Metallica site looked like earlier today:
Here are details on the lawsuit:
Some of the dot-com people are doing good things. Here's an interesting article about some new philanthropists:
The picture of the day is Supernova Remnant E0102-72
after one huge explosion. This picture was formed using red for radio
waves, green for optical light, and blue for x-rays. It's 40 light
Here are some pictures from Sun-n-Fun, the airplane show:
Here are some Spring pictures from behind my house:
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