Y2K OK, but D10K?

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Y2K OK, but D10K?

[ For Educational Purposes Only ]

Y2K OK, but D10K?

Glitches could occur when the Dow hits the 5-digit 10,000 mark

Monday March 1, 1999, By Steve Woodward of The Oregonian staff

7,000 . . .
8,000 . . .
9.000 . . .

If you're a stock market investor 10,000 looks sweet. But is it? The number is the Dow Jones Industrial, Average, the index of 30 stocks that represents about a quarter of the value of all stocks listed on the New York Stock Exchange.

Generally speaking, the higher the average, the higher the value of the stock market.

But now, against a backdrop of concern about the Year 2000 computer problem comes tile Dow 10,000 problem.

That's the computer glitch some say will occur when financial programs that use a four-digit Dow Jones average suddenly run into a five-digit number they aren't programmed to handle. Like a full car odometer, the Dow will roll over from 9999 to 0000.

The worst-case scenario: Investment firm computers will interpret the rollover as a catastrophic stock market crash. They will automatically dump all stocks. That will trigger a massive sell-off. The market will go into free fall. Investors will be wiped out.

The best case scenario: Nothing happens, other than investors grow richer.

Place your bets on Scenario No. 2- with some caveats.

"We dealt with Dow 10,000 earlier in the (past) year," said Kathy Griffin,' a spokeswoman for Portland's Columbia Management Co., which manages the Columbia family of mutual funds.

The situation was likewise across town at Bidwell & Co., the Portland discount stock brokerage.

"We've adjusted all our systems," said Chris Hall, Bidwell's vice president of trading. "It's done."

Like many financial firms nationwide, Columbia and Bidwell tweaked their systems last year when the Dow Jones average broke the 9,000 ceiling for the first time.

Bidwell worked with its stock quote vendor to assure so-called D1OK compliance. Columbia modified its automated telephone transaction system for shareholdors, reprogramming it to accommodate the extra digit for the Dow index.

For most companies, Dow 10,000 is merely a display problem -- the underlying database can handle five digits, but the monitors can display only four of those digits. For a parallel, consider various brokerage signs around Portland that display the ups and downs of the Dow only up to 99.99 because they were built before 100-point swings in the Dow became commonplace.

Nevertheless, The Gartner Group, a prestigious information technology consultant, warned clients in May that the Dow 10,000 problem could be serious. In an interview with developer.com, a Web-based news service, Gartner's vice president of research, David Cappucio, worried openly about "the snowball effect."

Cappucio said a system that can't handle a five-digit Dow might automatically sell off big blocks of individual stocks or entire industry sectors. That sell-off, in turn, might trigger someone else's automated, homegrown system that is set up to react to swings in the prices of those same individual stocks.

"It only takes one system to not recognize the Dow properly to kick off this stuff," Cappucio told developer.com.

Bidwell's Hall worries about day traders who use home PCs and an Internet connection to buy and sell stocks all day for their own accounts. He said many of them use personal finance software or home-brewed programs that won't necessarily recognize a five-digit Dow -- or be Year 2000-compliant.

The federal Securities and Exchange Commission, the Securities Industry Association and the New York Stock Exchange all expect no significant problems. The Chicago Board Options Exchange underwent a D10K test in May without a hitch. And The Associated Press said its systems can generate a five-digit Dow to its thousands of customers.

Already, the Wilshire 5,000 stock index, Nikkei Stock Average in Japan and shares of Berkshire Hathaway stock are five-digit numbers, although the New York exchange's software couldn't handle Berkshire when it first rose past $9,999 a share in 1992.

At one point last week, it looked as if the world would find out just what would happen when the Dow added a digit. But after surging above 9,550 on Monday, the average receded again and closed the week at 9,306.

That means it's still a race to see which comes first: Y2K or D10K.
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-- Ashton & Leska in Cascadia (allaha@earthlink.net), March 01, 1999


Y2K first, D10K never, because of Y2K.

-- e (e@e.e), March 01, 1999.

Great. Something else to drag programmers away from Y2K work. Kinda like the Euro. <:)=

-- Sysman (y2kboard@yahoo.com), March 01, 1999.

It's been lightly discussed a while back (early September, I think) - the general consensus is that the actual "calculators "are probably" fixed at the SEC level and at "most/all" (take your pick) modern software packages. Older ones - probably not - so they would then trip back to either 015 (for 10,015) or 0000 and hang up.

The kink in the armor appears to be the plus/minus factor for programs that automatically sell/buy based on differences from a previous point: thus 0015 is less than 9985, so sell everything; then 9995 ( a few minutes later) is greater than 0015, so buy everything - until trading gets hopelessly "stuck".)

Most people "think" this won't happen/can't happen - so we'll see. The US Navy "knew" that Japanese aerial torpedoes couldn't work in the shallow waters of Peral Harbor because US aerial torpedoes couldn't work in shallow water. Funny thing is, the Japs knew that too - so they "broke" their topedoes by resetting them to run artificailly too shallow - too close to the surface - and they worked just fine.

-- Robert A. Cook, P.E. (Kennesaw, GA) (cook.r@csaatl.com), March 01, 1999.

Robert, thank you. That is interesting. So it may be that we will find out this year :-)

-- Leska (allaha@earthlink.net), March 01, 1999.

Dow hitting record territory today; inching toward D10K issue ?
csy2k has a post about Nasdaq being down for a time due to computer malfunctions. Imagine there will be many instances of that throughout 1999.

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-- Leska (allaha@earthlink.net), March 05, 1999.

Dow Hits Record High of 9,736.08

[ For Educational Purposes Only ]

Dow Hits Record High of 9,736.08, By Rachel Beck, AP Business Writer

Friday, March 5, 1999; 6:24 p.m. EST

NEW YORK (AP) -- The Dow Jones industrial average soared 268.68 points to a new record Friday and cracked through 9,700 for the first time.

Stocks were ignited by a government employment report that calmed worries about rising interest rates.

The blue-chip average closed at 9,736.08, topping its Jan. 8 record finish of 9,643.32 and bringing 1999's rise to 6 percent.

Other indexes also rose sharply, but none set records.

``You've gone from lethargy to euphoria in this market over the last few days,'' said Larry Watchel, a market analyst at Prudential Securities. ``I'm sure at sometime next week the Dow will be sweeping up toward 10,000.''

In the last two days, the Dow has risen more than 460 points, or 5 percent. That's the average's biggest two-day advance in points ever, surpassing a record of 447.98 on last Oct. 15-16. The gain is not close to a record in percentage terms. For the week, the Dow gained 429.5.

Prior to Thursday, stocks had been struggling amid uncertainty over whether company profits will justify the market's huge rebound since early October, when the Dow dipped below 7,500.

There have also been fears that the fast-growing economy would spur inflation and force the Federal Reserve Board to boost interest rates.

But a jobs report from the Labor Department helped dampen those concerns on Friday. The unemployment rate edged up slightly to 4.4 percent in February, while average hourly wages -- long considered a barometer of inflation -- rose a mere 1 cent to $13.04.

``This is a sign that the economy is truly not overheating,'' said Brian G. Belski, chief investment strategist at George K. Baum & Co., in Kansas City, Mo. ``If the economy isn't running on all cylinders, nothing should happen with interest rates.''
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-- Leska (allaha@earthlink.net), March 05, 1999.

Dow Closes To Within 42 Points of 10,000

We're watching to see what happens on rollover to 5 digits.

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-- Leska (allaha@earthlink.net), March 15, 1999.

This just up on Breaking News, don't know what to make of it, but a while back Yourdynamites were keeping track of resignations ... anybody familiar with the European Commission, and how this might affect USA financial world?

European Commission Resigns

3/16/99 -- 12:10 AM

BRUSSELS, Belgium (AP) - The chief executive of the European Union and 19 other senior officials abruptly resigned early today, after an investigative panel alleged cronyism and financial irregularities in their ranks.

It marked the first time in the group's 42-year history that the European Commission, which runs the day-to-day affairs of the powerful trading block, had stepped down under fire. The action would be roughly equivalent to the entire U.S. Cabinet resigning.

Franz Fischler, EU Agriculture Commissioner, said the report, issued Monday, had created a climate in which the EU executive could not remain in office.

``All the commissioners have resigned. We will prepare a statement to explain the reasons for our resignation,'' Fischler told reporters after an emergency session of the European Commission. ``It is better than to continue in such uncertainty.''
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-- Leska (allaha@earthlink.net), March 16, 1999.

Here's more:

Entire EU Resigns

[ For head-shaking and Educational Purposes Only ]

3/15/99 -- 11:10 PM

BRUSSELS, Belgium (AP) - The chief executive of the European Union and 19 other senior officials abruptly resigned early Tuesday, after an investigative panel alleged cronyism and financial irregularities in their ranks.

It marked the first time in the group's 42-year history that the European Commission, which runs the day-to-day affairs of the powerful trading block, had stepped down under fire. The action would be roughly equivalent to the entire U.S. Cabinet resigning.

Franz Fischler, EU Agriculture Commissioner, said the report, issued Monday, had created a climate in which the EU executive could not remain in office.

The report said fraud and corruption pass ``unnoticed'' at the top of the institution that represents the EU in international trade negotiations as well as drafts laws and enforces them.

Shortly afterwards, European Commission President Jacques Santer confirmed his resignation along with the 19 others. He planned to meet Tuesday with Jose-Maria Gil Robles, the president of the 626-member European Parliament, which instigated the fraud inquiry in January.

The European Commissioners were expected to stay in office in a caretaker capacity. There was no word on when a new commision can be sworn in.

The fraud report stemmed from testimony last December in the European Parliament by a Dutch EU auditor who complained about the failure of the commission to eradicate fraud.

Monday's 140-page report by five independent experts concluded that several commissioners exercised lax control over programs, put friends and relatives on their payroll and pleaded ignorance when asked why they did not act sooner to stop problems.

The commissioners have denied any wrongdoing, some saying they were unaware of sloppiness and fraud on their watch. The experts dismissed that defense.

``It is becoming difficult to find anyone who has even the slightest sense of responsibility,'' the report concluded.

The conclusions led key political factions in the European Parliament to call for the entire EU executive to resign or face dismissal. A few hours later, they did.

The report could not have come at a worse time for the EU.

Leaders of the 15 EU nations meet next week in Berlin to finalize 18 months of tortuous talks about overhauling EU finances. A crisis of confidence at the EU head office is bound to distract them.

Pauline Green, leader of the socialist group that is the largest in the European Parliament, spoke of a ``collective responsibility for mismanagement'' at the EU head office.

Wilfried Martens, leader of the Christian Democrats, said EU Commissioners ``have lost control of management.''

The fraud report was most critical of Research Commissioner Edith Cresson, a former French prime minister who ``failed to act in response to known, serious and continuing irregularities over several years'' in educational and other programs for which she was responsible.

The experts said when she was informed of fraud and waste by an outside contractor that squandered $160 million meant for a youth training program, she failed to stop it.

She also was criticized for getting a short-term EU research job for a friend in 1995 who was later judged to be unqualified. He was paid for 10 months but was allegedly sick for nine.

The report condemned others for cronyism, too.

Regional Development Commissioner Monika Wulf-Mathies of Germany, and Portugal's Joao de Deus Pinheiro, the commissioner for relations with developing nations, put friends and relatives on the EU payroll.

It cited Development Commissioner Manuel Marin, a Spaniard, for lax control over aid for Mediterranean nations, irregularities in hiring and doing too little, too late to stop fraud in the EU's humanitarian aid budget in the early 1990s.

The report said there was no evidence any commissioner ``was directly and personally involved'' in fraud or had personally enriched themselves.

It found no irregularities in Santer's office. But it did express dismay that the Luxembourger did not act sooner on allegations of fraud in contracts for EU buildings in Brussels dating back to 1993.

Santer's commission was to end its five-year term on Dec. 31, 1999. European Commissioners are political appointees earning $17,280 a month and up. They are unelected and virtually unaccountable.
Ooooo, look at that monthly salary! And they didn't even earn it! Is there a disparity between rich & poor? What a world.

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-- Leska (allaha@earthlink.net), March 16, 1999.

Here's a URL that may stick for a couple hours:

http://nt.excite. com/news/r/990315/19/news-eu

.... The unprecedented move risks plunging the 15-nation EU into political crisis just weeks after the launch of the euro single currency and days before EU leaders meet to take key decisions on reforming the bloc's finances ahead of an ambitious expansion into Eastern Europe.

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-- Leska (allaha@earthlink.net), March 16, 1999.

Now it might get interesting. Not likely that they will advertise any problems right away from over-the-10,000 mark. A comment on

http://www.msnbc.com/news/ 249277.asp

Dow tops 10,000

"... Morgan Stanley's chief global strategist Barton Biggs told CNBC that the markets next big move will be down, not up and that Dow 10,000 didnt really mean much. Biggs said stocks are incredibly expensive, the rest of the world economy is languishing and the hyperactive U.S. economy is simply not a perpetual motion machine. ... "
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-- Leska (allaha@earthlink.net), March 16, 1999.

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