OT: Bill Bonner says........

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The Bible is full of things for which the rational mind finds no ready explanation.

And, as noted yesterday, so is the stock market generally, and the market in Internet stocks particularly.

Christianity does not rest on a literal, simple minded reading of Genesis. God made man from the dust of the earth, we are told. The ancients, who wrote Genesis, had no reason to lie about it. Darwin came along and described what the process might have looked like if you were able to rerun the tape, fast-forward. You would see the little molecules of 'dust' coming together, taking shape, trying out different forms, growing, specializing, (just as human progress depends on an ever-increasing division of labor... so does all of nature), dividing, recombining, mutating, flourishing, dying out... whew! Nothing Darwin said contradicts the Biblical account. His hypothesis, to the extent it proves correct, merely fills in the gaps.

But what if the Red Sea did not part? What if the reporter on the scene decided to make up that part of the story to make it more exciting? What if he exaggerated a little? What difference would it make? The story could be disproved without undermining Christianity's stock.

The Book of the World Wide Web includes many hyperbolic stories too. But unlike the early Christian martyrs, who were made to suffer for the amusement of Roman mobs, the early 'true believers' in the web enjoyed the mob's approval. Many nerdy Internet pioneers are now very rich. Millions of new disciples have gathered round their banners and bid up their stock.

Our job is to find the trend "whose premise is false." In this, we are hampered by the fact that we cannot know the future. We can never know, for example, when something will come along that is really new.

Stone Age Pacific islanders got their first glimpse of the outside world during WWII when cargo planes dumped supplies in the jungle. The primitives could only explain this phenomenon in terms they understood -- the cargo planes must have been sent by some deity... or were divine themselves. Long after the war was over, the 'Cargo Cults' continued to worship the supply planes.

Likewise, when the first water clocks replaced sundials, it was presumed that the water clocks were wrong -- because the sundials were the accepted standard of measure.

Since we cannot know which new thing will become the new standard, we merely look for aberrations and assume they will regress to the mean. Usually, they do.

We don't know what the ultimate impact of the Internet will be. But we do know that the prices paid for Internet stocks are irrational and foolish, by any proven, time-tested measure. Unless there is something going on that is so new and so revolutionary that we cannot possibly understand it... these prices will revert to the mean.

Faith is a necessary ingredient for Christianity, but it is not by faith alone that ye enter investment heaven.

Yesterday's market suggested that investors might be thinking about an exodus. True believers will still hope for a Moses who will deliver them from the bondage of the non-wired world. They may pray for a miracle that will give them 30% per year capital growth. They may dream of a land across the Jordan, flowing with milk and honey -- a land where even current Internet prices may be reasonable.

But money, alas, is agnostic. Fickle. Cynical. Contrarian. It does not deliver up what people want -- but what they deserve.

When the Christians faced the lions, Roman mobs would bet on how they would die. With faith enough, perhaps you could have bet on some Daniel and been rewarded. But the smart money was on the lions.

Bill Bonner

-- James (brkthru@cableone.net), January 25, 2000

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