For most people, it's time to look forward to the coming year. Or this time around, the coming century and--for optimists--the coming millennium. For me, though, it's the same old thing: time to review my work for the year, which is occasionally a painful exercise. It's one of the ways I try to keep perspective on things. And there's no better way to stay modest--a good thing for us media-elite types--than to read some of your articles that sounded great, got good reactions and turned out to be wrong.
Before I get into mea culpa mode, let me explain why I spent so much time on two topics: the stock market and AT&T. And why I wrote two columns about the tax-dodging tactics of Times Mirror Co., one of my former employers.
Like it or not--and I don't--the stock market has been the business story of the past two years. I write a lot about AT&T because I think recently installed Chairman C. Michael Armstrong's attempt to transform a troubled old-line economic icon into a nimble "total communications" company (whatever that's supposed to be) is one of the best business stories of our time. And I've written about Times Mirror because part of my beat is corporate and personal piggery. I think the way the company and its controlling Chandler family dodge taxes is a classic example of how some of America's richest and most powerful organizations and people don't seem to feel much of an obligation to support with tax payments the society that makes their advantages possible.
From morality to money. My problem with the stock market isn't that I don't believe in markets--most of my family's net worth comes from investing--but because I think much of the United States is obsessed with the market. And obsessions are never healthy.
The real market story this year, of course, is that even though the broad market indicators are up sharply, most individual stocks are down. This is the same thing that happened last year, and I didn't think it could happen again. But it has. What does it mean? I wish I knew.
The main reason for the disparity between the broad indicators and the average stock is that technology stocks have gone to the moon, dragging the broad indicators up. When Microsoft is up more than 60 percent for the year and is dragging down the performance of the Nasdaq composite index, you know that things are very strange.
This spring's trend to "value" stocks was short-lived. Ditto for the uproar over Dow 10,000. Remember what a big fuss we media types made about that?
And now to specific calls. In the summer, before China.com's initial public offering of stock, I wrote that I considered the stock overpriced at the projected $7.50 (adjusted for a stock split) IPO price, even though I thought its price would soar. I also wrote that it was shameful for investors to go partners in China.com with Xinhua, the Chinese government's propaganda ministry and a China.com founder. So what happened? When last I looked, China.com, which came out at a split-adjusted $10, was in the 80s. What can I say, except that I think the price is nuts? And I'd write the same thing again. And would be wrong again, at least for now.
Unlike China.com and other Internet IPOs that have gone to the moon, the attempts by Disney and General Electric to produce their own Internet currency by taking Go.com and NBCi public have been strictly from blahsville. But it's still early in the game.
I've taken an occasional swipe at Yahoo--not at the company, which I think is terrific, but at the stock price, which I consider insane. The company's stock, which currently values the company at $100 billion or so, isn't based on any model of future profits or cash flows. At this price, it couldn't be. Rather, it's based on moonbeams, wishes and price momentum, as most Internet issues that succeed seem to be. Momentum is driving up the Yahoos of the world. Someday--I don't know when--momentum will drive it down.
It's becoming increasingly clear that the Standard & Poor's index committee was right to kick Chrysler out of the S&P 500 when German-based Daimler-Benz bought it. Despite DaimlerChrysler's talk about being a "transnational" corporation, it's acting like a German company, not a U.S. company, in its disclosures. So it clearly doesn't belong in the S&P 500, which includes such grandfathered foreign companies as Unilever and Royal Dutch Shell and such foreign-based U.S. corporations as Global Crossing (which this year bought one of my longtime holdings) that are incorporated abroad for tax purposes. I'm not a big fan of corporate tax dodging, but Global Crossing clearly is a U.S. company despite its Bermuda domicile.
In 1998, I engaged in contrarianism, comparing the then-upcoming IPOs of Fox, a sexy issue, with the decidedly unexciting IPO of USEC, owner of U.S. Enrichment Corp., which enriches uranium. I was right about Fox being a doggy stock--it's way underperformed the S&P 500 since coming out at $22.50 in November 1998. But I hadn't counted on the collapse of enriched-uranium prices and other problems dragging USEC about 50 percent below its IPO price.
On of my major frustrations, as a 55-year-old U.S. citizen, is that we seem to have given up any attempt to cut back Social Security and Medicare benefits to levels my children will be able to afford when people like me start retiring en masse in a decade or so. My kids will look back and rue the day that we didn't address these problems from economic strength as the 20th century ended. Believe me, we'll have to deal with these problems in 15 years or so, and it won't be a lot of fun.
But forgive my grumbling. Thanks mostly to my mutual funds, whose managers buy stocks I wouldn't personally touch, I've had a financially fabulous 1999. As I hope many of you have had. Have a happy and healthy new year and a wonderful next century.
Sloan is Newsweek's Wall Street editor. His e-mail address is email@example.com.