A Picture Worth A 1,000 Hopes
by Jas Jain
February 10, 2005

Jas Jain�s Dictionary (for newcomers): Scam is the same as what people call a stock; this is based on 300 years of Anglo-American stock market's real history as opposed to theoretical gains. People have gotten scammed periodically, every 20-40 years, for a very long time. Hopebuilder = homebuilder; Notworking = networking.

We all remember how well the Notworking business was doing during 1996-2000. In July of 2000, I did an analysis from the available data that showed that Cisco�s business should take a hit around January of 2001. In December of 2000, Cisco executives were guiding for 30-50% long-term growth and 50-60% near-term growth in the business. Then, in January of 2001, Mr. Chambers dropped the famous Bomb of �very challenging conditions,� later to be characterized as a 100-year flood on the Scam Market.

Obviously, CEOs of the hottest Scams keep promising great growth until the very last moment before the business �suddenly� gets into the reverse gear. This is because their main business, or preoccupation, is to sell Scams. The underlying business is merely a means to that end! In the past 3 months, CEOs of most publicly traded Hopebuilding Scams have promised a 40% growth in earnings. This has been going on for a while.

No Scam was hotter than CSCO during 1999-2000. I met a toilet-fixer, a topless dancer, an Iranian dentist babe, and an Indian brain surgeon, all of whom bought CSCO between July �99 and July �00 (the brain surgeon paid the highest price of $78 per share!). The �financial advisor� of the brain surgeon, in a high position in New York City, challenged my view of CSCO by asking me if I knew so much about Cisco�s future business prospects how come I wasn�t working on Wall Street. The answer I wanted to give was that not everyone is stupidly blind and not everyone is a money whore, as most people on Wall Street are, but I was a guest at a wedding in Long Island, so I didn't say anything.

I can’tpinpoint the dive of the Hopebuilding industry, but it will happen during 2005Q2-Q3 as the rise in the short-term rates filters thru the financial system (most marginal buyers have been taking ARMs mortgages). Who would have thought that on a relative basis a Hopebuilder would do much better, twice as good over a 5-year period, than CSCO did during its best five years? But that is precisely what has happened as can be seen in the graph below:

The American dream is not far from becoming the American nightmare. The clock is ticking.


PS: Cisco has a unique distinction in history of losing more dollars for the shareholders than any other company, including Worldcon (I was the first one to use the term in 1999) and Enron. Nowhere is the generosity and forgiveness of Americans more evident than in the fact that Mr. Chambers remains the most respected corporate leader in America. After all, money is only money and a leader like Greenspan, or Chambers, must be judged based on his charisma and not his performance in dollars. Mr. Chambers� charisma only cost few hundred billions, while Mr. Greenspan�s charisma would cost few tens of trillions. Americans are all wet, for now, but when the flood recedes they will be high and dry.

© 2005 Jas Jain
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Jas Jain

Tehachapi, CA USA

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