The wisdom of Godzilla

When called upon to shine the light of time, the wisdom of the ages, and the benefits of hindsight on the events of the last week, historians, faced with the folly of bringing sense to the impeachment proceedings, will turn to well-worn, time-honored phrases of intellectual perspicacity and produce a response something like:

Huh?

The president of the United States gets impeached; his approval ratings soar to record highs; and the stock market tags right along.

It's all just too bizarre for words, so we won't try to add to the torrent of tedium already tossed on this political treadmill, other than to stand in awe of a stock market that has a certain Godzilla-like quality: It keeps roaring back no matter how unbelievable and ridiculous its antics.

Stocks, apparently, just wanna have fun. They just keep going up. Why? Look no farther than Guy Halverson's story on page 16.

Four words: Robert Rubin, Alan Greenspan.

Mr. Rubin, the US Treasury secretary, gets much of the credit for guiding the US economy along its path to nirvana.

And Mr. Greenspan gets all the credit for keeping the global financial crisis from US shores.

So the markets really don't seem to care whether Bill Clinton's presidency survives. Rubin and Greenspan will likely stay on.

Even so, a stock like Amazon.com at $325 a share is almost frightening. In mid-December, shares of this Internet bookstore cost $125, and they now seem headed for $400.

Huh?

One analyst notes that Amazon.com makes just as much sense at 5 as 400 - meaning it's almost impossible to evaluate this and other Internet stocks. It's like an old Godzilla movie - so bad you can't turn it off.

Beyond Net stocks we thought it might help to summarize the 1999 forecasts of a couple of people who normally get this sort of thing, if not right, then at least in the right direction.

Robert Goodman, senior economist at Putnam Investments mutual-fund family in Boston, sees more market volatility in the first half of 1999, followed by a strong second half.

Mr. Goodman thinks the US economy sits atop a deep reservoir of strength, and that it will eventually overcome other concerns. "Our potential rate of growth has increased," he says.

Global financial crisis? Not to worry. Goodman says that the folks who run the show - the Greenspans and Rubins of the world - can change the rules with the "stroke of a pen."

He points to the sudden appearance of a $90 billion international rescue fund for emerging-market countries. "It just appeared out of nowhere."

Onto another luminary - Ned Riley, chief investment officer of BankBoston.

Mr. Riley sounds like a bull in bear's clothing. "The markets have been doing some very strange things," he says, noting that while the average stock mutual fund was up only 6.5 percent through mid-December, the broader market (S&P 500) was up 17 percent.

And within that last number, 12 stocks delivered 50 percent of the performance.

In other words, all the action's in just a few companies, either paving the way for some catch-up by the rest of the market or a retreat by those few stocks.

Riley sees a slowdown in the US economy, a continuing deflation threat, and international problems that linger.

Then, off comes the bear suit. He forecasts the Dow at 10000 in the next 12 to 15 months - because it's Super Investor to the rescue - able to leap walls of worry in a single bound.

It just doesn't seem to matter what happens in the real world. Investors keep heaping money into stocks, driving markets higher and stocks like Amazon.com into the stratosphere.

* Comments to mccormickl@csps.com