From daemon Sun Sep 29 06:08:27 1996 Return-Path: Received: by pencil.math.missouri.edu.math.missouri.edu (4.1/SMI-4.1) id AA24131; Sun, 29 Sep 96 06:08:26 CDT Date: Sun, 29 Sep 96 06:08:26 CDT Message-Id: <9609291108.AA24131@pencil.math.missouri.edu.math.missouri.edu> From: lar-jen@interaccess.com (Larry-Jennie) Subject: BARRON'S: Cocaine Investment Authority Organization: InterAccess,Chicagoland's Full Service Internet Provider Newsgroups: misc.activism.progressive Followup-To: alt.activism.d Approved: map@pencil.math.missouri.edu Apparently-To: rich@pencil.cs.missouri.edu Status: OR BARRON's by Alan Abelson September 28, 1996 Drugs have finally been injected into the election. And we're not referring to the tranquilizers and soporifics the candidates have been dealing in so prodigiously. We mean the hard stuff. Desperate to give his lagging campaign a shot in the arm, Mr. Dole seized on a newly issued report showing a sharp rise in drug use among kids during the past four years. Proof positive, he snorted, that under Bill Clinton, the country has gone to pot. The President retorted that Mr. Dole must be hallucinating. For even a child could see that the study was hopelessly flawed and politically motivated, since it failed to even mention that Mr. Clinton never inhaled - as his medical records, when he gets around to releasing them, will show conclusively. And anyway, he knew for certain that the kids interviewed weren't stoned but merely scared out of their minds by Mr. Dole's TV spots. Nonetheless, he urged a joint effort against marijuana. Strangely, neither Mr. Dole nor Mr. Clinton has sought so far to make an issue of the startling disclosure that the CIA was hawking crack in L.A. during the 'Eighties. Mr. Clinton remains mute out of consideration for his loyal supporters in the area, many of whom patriotically patronized the CIA in its somewhat unorthodox attempt to raise money for worthy causes. Mr. Dole's discreet silence is in deference to the fact that the CIA's venture was mounted under a Republican Administration (no surprise, really, since Republicans have always been dedicated to nourishing the entrepreneurial spirit in government as well as the private sector). We can authoritatively report that it's all a fantastic case of mistaken identity. For the CIA enagaged in selling crack was not the Central Intelligence Agency but an entirely different hush-hush unit, the Cocaine Investment Authority. The latter was set up specifically to invest in the illegal substance trade, inspired by the brilliant notion (rumor credits it to Oliver North) that the surest way to kill any business - drugs included - was to establish a large government presence in it. Unfortunately, the operation had to be aborted because of a misguided decision in 1987 to target what was perceived as an even more alarming addiction - to dangerously inflated stocks. The special force recruited for the mission quickly infiltrated Wall Street, set up shop and made a very promising start toward effecting a general cure in October of that year - only to fail to follow through. What happened, simply, is an old story on the drug beat - the special narcs became hooked on - you guessed it - dangerously inflated stocks. Fearful that the rogue agents in their delusional state would blow the project's cover, Washington dismantled the Authority. Those very agents today are managing the portfolios of a score of leading mutual funds and, thanks to thoroughly undistinguished performance, they're flourishing mightily. And so, too, of course, is the addiction they nobly set out to eradicate nearly a decade ago. For those agents and the millions of us just plain addicts, what a trip it has been! Milestones have been passed, heights have been scaled, records have been broken, peaks have been set. We're indebted (again) to Merrill Lynch's master sage and our old buddy, Bob Farrell, for counting the ways in which this market is extraordinary and the wondrous things it has done. The dividend yield on the Standard & Poor's 500 of 2.1%, for example, is the lowest of this century. The value of stocks relative to GDP is the highest ever. The Tobin Q Ratio (financial assets/corporate balance-sheet assets) is the highest ever. And so is the ratio of the S&P 500 to book value. Ditto, the S&P 500 price-to-sales ratio of 4.45. The value of stocks relative to house prices is at peak levels. The number of hours a working stiff must labor to buy the S&P 500 has risen to a record 53.75. Trading volume on the New York Stock Exchange is the most ever. The ratio of Nasdaq to Big Board volume is also at a peak. IPOs, mergers and stock buybacks are all at record highs. There is an unprecedented number of mutual funds, and the volume of money pouring into them is twice last year's peak annual rate. As never before, investors are snapping up the shares of aggressive growth funds. The number of people registered to sell stocks and bonds is 527,000, the most in history and 30% more than in 1987. There are a record number - 32,000 - of candidates to become Chartered Financial Analysts. Seat prices on the NYSE have reached an all-time pinnacle of $1.45 million. There are more investment clubs active - 22,000 - than ever before. And there are 4,700 hedge funds, or comfortably more than one for every stock listed on the Big Board (3,419). Just one high after another. We suppose we're compelled by the strictures of our calling to note that while naifs like ourselves view all those exciting peaks and records as cause for celebration, Bob Farrell sees them in a more sober light. He comments that he remembers drawing up similar lists back in 1968, time of the last secular market peak. Trouble developed in the second half when the only thing that stopped making record highs was prices. ``Similarly,'' Bob observes, ``we have posted many activity and participation records in 1996, and prices have shown limited response. This failure to respond to record demand suggests informed selling and, when combined with record valuation levels, raises doubts about the longevity of the bull market.'' As that last phrase suggests, Bob is a true pundit. A true pundit always says the end is near, but he never says the end is here. Copyright © 1996 - Barron's Online, All Rights Reserved Two World Trade Center - 18th Floor New York, NY 10048 $$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$ The CIA cocaine smuggling on behalf of the Contras through Mena, Arkansas corrupted the Presidencies of Bill Clinton, George Bush and Ronald Reagan. For details, see: ftp://pencil.cs.missouri.edu/pub/mena/ $$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$