The Week in Review -- August 27, 1999

The Markets

  8/20 Close 8/27 Close Change %Change
DJIA 11,102.51 11,090.17 -12.34 -0.11
S&P 500 1,336.61 1,348.27 +11.66 +0.87
Nasdaq 2,648.31 2,758.90 +110.59 +4.18

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Things of Varying Interest
by Jerry Thomas (TMF Cheeze)

"The one function that TV news performs very well is that when there is no news we give it to you with the same emphasis as if there were news." -- David Brinkley

Greetings, Fools.

On Tuesday of this week, the Federal Open Market Committee, lead by the venerable Alan Greenspan raised interest rates by one quarter of a point. If you are a Foolish investor, you have about as much use for that information as Calista Flockhart has for a meatball sandwich with extra mozzarella. This is not to say the actions of the Federal Reserve aren't interesting, at least in a macro, abstract, propeller-head sort of way -- the subject does, after all, have its fascinations. You can even read the Fed's own press release on their rate action and the reasons behind it right here on the Fool website.

However, unless you happened to be applying for a loan this week, the rate hike will probably make no difference to you at all, although those who were trying to time the markets probably thought the Fed action was a big deal. (I suspect that most of these traders were surprised to find the Dow making new highs even while interest rates were tightening.) As events go, the market roiling in the wake of this rate hike sort of reminds me of kids playing in a swimming pool: Never mind how much splashing and kicking they, do -- take the kids out, and three minutes later the water will be as tranquil as if they had never been there at all. This week's events certainly won't make much difference to the likes of say, Warren Buffett, who has kept his money in stocks, through thick and thin, for decade after decade. A quarter point up or down? Whatever.

Still, judging from the off-line media coverage of the move, you might have thought that some kind of epoch-making event was at hand. I have my own theory on such things: television and print media are limited for time and space, so there is an inherent tendency for them to trend toward sensationalist methods in order to draw attention. Here online, however, we have no such restrictions, so we can dispense with the shouting. Yi-Hsin Chang (TMF Puck), in Monday's Fool on the Hill commentary, does much to explain the headline value of the Federal Reserve, comparing it, convincingly, to the lurid boldface type of your typical supermarket tabloid. It's an apt observation. If you find Yi-Hsin's message sufficiently intriguing, you might even want to turn to an edition of these Notes I wrote nearly a year ago, in which I examined similar themes.

Then again, maybe Jeff Fischer (TMF Jeff) had the most intelligent response to the whole Fed thing, which I'll leave for him to explain in Tuesday's Rule Breaker report. Hint: don't get too settled in front of your computer screen before you read it.

If the thought of dispensing with trivial concerns when planning your investment strategies appeals to you, maybe you'd like to spend some time studying the life of Warren Buffett, the patient fellow I mentioned a few paragraphs above. Buffett's early life is the subject of a three-part bio by Louis Corrigan (TMF Seymor), and the attitudes and methods of this century's most successful investor are well worth emulating. If you are at all troubled by the Fed's rate hike, a long look at Warren Buffett might be just the tonic.

Of all our Foolish features this week, I probably most enjoyed Thursday's Rule Breaker report by Selena Maranjian (TMF Selena). Curiously enough, this portfolio report says almost nothing about the portfolio, which is sort of the Foolish point. Portfolios aren't there for you to tend to them. They are there for them to tend to you. So Selena turns to thoughts that interest her, in this case, the nature of identity on the Internet.

Since I'm plugging Rule Breaker reports right and left, and since the Internet is a part of the life of virtually everyone who is reading these words, let me also mention Jeff Fischer's Monday Report, which examines the challenge (Nasdaq: AMZN) faces from Wal-Mart (NYSE: WMT), the retail giant that is now venturing online. Also, be sure to check out Tuesday's Foolish Four report from Barbara Eisner Bayer, which rounds up investment advice from Motley Fool staffers far and wide.

Until next week,
Fool on!


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