When All Is Said and Done, Well--There You Have It
Happy Holidays! Whatever your investment portfolio has achieved this year--or not--there isn’t much you can do about it now. The books are about to close.
So rather than spend time ruing the missed opportunity or the investment that bombed, better to look ahead to the markets’ new year with hope and optimism.
If we have to look back, let’s do so with amusement. Herewith, our somewhat-less-than-respectful review of the financial market highlights and lowlights of 1996:
* And Ovitz Hadn’t Even Gotten His $90- Million Severance Yet. In what threatened to become a presidential campaign issue, American executives in February suddenly found themselves under blistering attack for “corporate greed” by the unlikely combo of Democrats Edward M. Kennedy and Robert J. Reich, and Republicans Bob Dole and Patrick Buchanan. Fortunately for business, the topic fizzled on the campaign trail.
* It’s Just Our Little Way of Rewarding Our Greedy Shareholders. Mostly in the name of boosting shareholder value, an unprecedented 1,367 U.S. companies have announced plans this year to buy back a record $153-billion worth of their own shares on the open market, a 50% increase from 1995.
* Can’t Talk Now, Andy, We’re on the Phone With Bill Lerach. Andrew Grove, head of Silicon Valley-based computer chip titan Intel Corp., berated Southern California entrepreneurs in October, thundering to Times columnist James Flanigan: “Why aren’t they [the entrepreneurs] out working against Proposition 211 as we are up here?” Largely thanks to Silicon Valley-financed opposition, the lawyer-sponsored initiative to make it easier to sue companies for alleged investor fraud suffered a crashing defeat at the polls.
* Oh, Is That All? For a Minute There We Were Worried. Robert Prechter, the Gainesville, Ga., investment newsletter editor who has been predicting a stock market cataclysm since the late 1980s, wrote in October that “it is a historic time in stock market history, the top tick for U.S. stocks in the worldwide Great Asset Mania of the late 20th century [and] . . . a historic juncture in human history as well.”
* Listen, Maybe Barbie Didn’t Get the Calculus, but She Always Aced Her Fractions. A fired Mattel Inc. executive sued the toy company, accusing it of fudging its accounting to make earnings look better than they actually were. But a judge dismissed her allegations, citing her failure to raise objections while she was still employed.
* We’re Beginning to Understand This “Fool” Thing. In May, a disciple of the wildly popular on-line investment forum the Motley Fool excoriated San Francisco Chronicle stock columnist Herb Greenberg for his comment that technology phenom Iomega Corp. was overpriced, suggesting to Greenberg that his sources “did not know what they were talking about, but those people on the Iomega message board did.” Iomega has since plunged from $55 to $19.
* Huh? I Can’t Hear You Over the Printing Press. Comparator Systems of Newport Beach, a company with barely any sales to speak of, managed to issue 610 million shares of stock over a period of 17 years, then acted stunned when the shares began setting trading volume records on Nasdaq in May on rumors that the firm had a hot new product.
* Well, We Think This Steak Is Overpriced Too, but We’ll Still Pay for It. Los Angeles-based restaurant chain Sizzler International, poorly managed but financially viable, filed for bankruptcy protection in June in large part to escape high-cost leases on many of its properties.
* Was That “Explosive” or “Implosive”? Royce Biomedical of Vancouver, Canada, a start-up company making home testing kits for the HIV virus, sent unsolicited e-mail to perhaps millions of investors over the Internet, shamelessly touting its stock as having “EXPLOSIVE” potential. The price has since fallen from $2 to $1.38 a share.
* On the Other Hand, Apparently Nobody Was Begging You to Stay, Either. Jeff Vinik, whose wrong-way bet on bonds in the first half of the year led to dismal performance for the giant Fidelity Magellan stock fund, insisted when he quit as manager in May that Fidelity had not asked him to leave.
* I Like That Little Leather Number, but It’s Kind of Outside My Price-to-Earnings Range. A clothing store calling itself NYSE--and using the very same logo as the New York Stock Exchange--opened on L.A.’s trendy Beverly Boulevard.
* And There’s Really Nothing in This for You All, of Course. Leslie’s Poolmart management, in announcing a leveraged buyout offer for the Chatsworth-based company at $14.50 a share--26% below the stock’s 1996 high--enthused that it was motivated by the desire “to increase value to the shareholders.”
* We Share So Much: Sun, Palm Trees, Orange Groves, Massive Fiscal Impropriety. The city of Miami is teetering on the edge of bankruptcy exactly two years after Orange County plunged into bankruptcy because of former Treasurer Robert Citron’s ill-fated investment schemes.
* OK, but Let’s First Find Out if Mother Teresa Likes the Dividend Yield on Calcutta Electric. Survivalist investment advisor Gary North, forecasting ruin for the U.S. stock market, told his newsletter subscribers to flee the major U.S. cities, and invest in the India Fund.
* Excuse Me, Folks, but I’m Just Wondering if This Theater Might Be on Fire. Federal Reserve Board Chairman Alan Greenspan caused financial markets worldwide to swoon earlier this month simply by asking--not stating--whether there might be “irrational exuberance” in securities prices.
* And That Goes Double for Our Theater. Ten days after Greenspan raised the issue of market speculation, the Chinese government declared unequivocally that its stock markets were “overheated” and in danger of crashing.
* What Part of “Don’t Buy This” Don’t You Understand? In the prospectus for Berkshire Hathaway’s new stock offering in spring, Berkshire Chairman and legendary investor Warren Buffett advised investors that he was offering the lower-priced shares only to thwart others who planned to sell “hybrid” Berkshire shares without his permission, and that he personally wouldn’t buy Berkshire at its then-current stock price.
* Righteous, Dude, Let’s Just, Like, Crash the Thing and Book to Zuma! UCLA economists, in their 1997 economic and market forecast, declared that “a decent collapse in the stock market would be nice right now. We need a break for a change.”
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Maybe Going Public Wasn’t Such A Great Idea After All
Nearly 180 California-based companies issued stock for the first time in 1996. Here are the 10 stocks in that group that have sunk the most from their initial offering prices, through last Wednesday.
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Offering Wed. Price Company HQ price close decline Kaye Kotts Assoc. Sherman Oaks $5.00 $0.94 -81% Dignity Partners San Francisco 12.00 2.63 -78 Prism Solutions Sunnyvale 17.00 6.00 -65 Helisys Torrance 5.50 2.00 -64 Fusion Medical Mtn.View 13.00 4.75 -63 Whitewing Labs Mission Hills 5.00 1.88 -63 Pioneer Commercial Reseda 5.00 1.95 -61 Parcelsus Health. Pasadena 8.50 3.38 -60 Electron. Hair Styl. Mill Valley 8.00 3.19 -60 Ultradata Pleasanton 10.00 4.00 -60
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All trade on Nasdaq except Paracelsus (NYSE).
Source: Securities Data Co.
