There's certainly nothing wrong with being "optimistic," however, I think these folks need to get aout a little more...

-- For ReEducational Purposes Only --

Outlook: The real danger of Y2K

NEW YORK. 05:00 AM EDT

"The only thing we have to fear is fear itself." --Franklin D. Roosevelt, 1932

Almost 70 years after Roosevelt spoke those famous words, they still resonate on Wall Street. This time it's not the Depression that threatens to cripple investors' confidence but irrational fears of what could happen on Jan. 1, 2000.

Granted, chances are slim that a string of Y2K-related computer failures could do more than isolated damage to society's infrastructure. Basic services such as utilities, telecommunications, transportation and financial systems are, for the most part, well prepared for the calendar change. Even the government, long a laggard in Y2K compliance, is catching up and expects to be fully compliant before the end of the year.

Aside from a few Cassandras like Deutsche Bank's Ed Yardeni, few Wall Street soothsayers expect much impact from Y2K. The one exception: A possible slackening of growth next year as companies scale back their information technology spending after this year's Y2K preparations, which could hurt some technology and software companies.

In the long term, though, this massive effort to get computers up to date may actually prove invigorating for the economy. Computer networks have been upgraded to run more efficiently, and the new technology should help companies become even more productive.

Nonetheless, it's too early to conclude, as some have, that the Millennium Bug should be renamed the Millennium Shrug.

Even as analysts conclude that Y2K fears are overblown, concern is growing that fear itself could cause harm. "Confidence is the underpinning for financial markets; therefore, should investors become unnerved as 2000 approaches, we could have the catalyst for a sharp sell-off," Bear Stearns concludes in an investment note on the possible impact of Y2K on stocks.

Bear Stearns' concern is shared by several big investment firms. And for good reason. Although more than 98% of banks are now fully Y2K compliant, a recent Gallup Poll found that 42% of U.S. adults expect ATMs to fail in the new year; 44% expect to lose access to their money; 38% feel their checks will bounce; and 22% think the whole banking system will shut down.

What's worse, some investors plan to withdraw from the market in anticipation of a massive breakdown. Some 44% of respondents told technology research firm Gartner Group they would "modify stock investments per risks"; 32% said they would do the same with their retirement investments.

As a result, investment professionals may face a challenge convincing people that their money is better off in stocks than under their pillows. Many big firms, including Bear Stearns and Merrill Lynch, have begun such an educational effort.

Of course, not everyone agrees. US Bancorp Piper Jaffray, for one, is advising investors to take action according to their "personal beliefs about the outcome of Y2K issues." For those worried about Y2K, the firm recommends reducing exposure to equities, especially small- and mid-caps, and buying bonds instead.

US Bancorp's intentions may be good, but that approach isn't going to help investors who are worried about Y2K. Professional investment advisors should tell their clients to act on facts, not gut feelings. And when fear threatens to grip a market, professionals have a responsibility to help avert panic.

Viewed in that context, in fact, a Y2K-driven market collapse could actually represent the buying opportunity of the millennium.

-- pshannon (pshannon@inch.com), July 23, 1999

Answers

Oh, Forbes the magazine. I though you meant Forbes the only presidental contender who has spoken about y2k as a serious problem. (Although that was quite awhile ago now. Don't know if he's said anything recently.)

-- ace (x@y.z), July 23, 1999.

"Professional investment advisors should tell their clients to act on facts, not gut feelings."

So, didn't someone just post last week "Facts" about how the market is overvalued according to all historical economic indicators? And if investors act on those facts, doesn't the market....what's the word....oh yes, Crash?

Still trying to make sense out of the stock market.

-- eyes_open (best@wishes.net), July 23, 1999.

My opinion: Person-Magazine. Same thing.

Z

-- Z1X4Y7 (Z1X4Y7@aol.com), July 23, 1999.

"The only thing we have to fear is fear itself." --Franklin D. Roosevelt, 1932

Perhaps this was appropriate in 1932. I would argue that it's a nice rallying call, but the numbers don't lie.

There's a lot of shit to be afraid of right now. Not the least of which is the urging of the US to convince Russia to participate in the nuclear missile early warning center this December. Thus far Russia is refusing to participate post Kosovo. Oops! Should I fear nuclear annihilation? Probably. At a bare minimum I should respect it.

A more appropriate set of quotes: "And the truth shall set ye free"

"You want the truth? You can't handle the truth!"-Jack Nicholson

-- Gordon (g_gecko_69@hotmail.com), July 23, 1999.

pontius pilate asked> what is TRUTH.and TRUTH was standing in front of him. JESUS the CHRIST is the TRUTH. all else is vanity.and JESUS SAID the TRUTH=HIMSELF will set you FREE.

-- TRUTH????? (dogs@zianet.com), July 23, 1999.

Aside from a few Cassandras like Deutsche Bank's Ed Yardeni, few Wall Street soothsayers expect much impact from Y2K.

The blithering moron that wrote this piece for Forbes was a lot closer to the truth than he knew... Funk and Wagnall's Encyclopedia says of Cassandra:

CASSANDRA, in Greek mythology, daughter of King Priam and Queen Hecuba of Troy. The god Apollo, who loved Cassandra, granted her the gift of prophecy, but when she refused to return his love, Apollo made the gift useless by decreeing that no one would believe her predictions. Cassandra warned the Trojans of many dangers, including the wooden horse by which the Greeks entered the city, but she was dismissed as a madwoman....

Yardeni has long predicted that Y2K would likely hurt the global economy, and he's pretty much been dismissed, just as Cassandra's warning about the Trojan horse was. The more things change, the more they stay the same...

-- Nabi Davidson (nabi7@yahoo.com), July 23, 1999.

pshannon,

Whether the author/s wanted it or not, this 'Tripe from Forbes' is revealing that a lot of S**T is Hitting The Fan already. The Big Fan I mean...

-- George (jvilches@sminter.com.ar), July 23, 1999.