Apocalypse? No.

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By David Forrest (TMF Bogey)
July 23, 2002

I was watching CNBC this morning, and I swear they used the word "capitulation" a dozen times in 30 minutes. They even had their Nasdaq "mistress" quoting a Lehman Brothers report about Novellus, saying, "Novellus' earnings report is the first of three legs of capitulation for the semiconductor equipment manufacturers." Three legs of the capitulation? Sounds like the Four Horsemen of the Apocalypse, doesn't it?

For the uninitiated, "capitulation" is when the little guy (that would be you or me) finally throws in the towel and sells all of his stock. There is a secret recipe, however. This mass-market surrender must come with hellfire and brimstone, a 10% to 20% one-day market drop, and heavy, heavy volume, otherwise it's not capitulation. And like the groundhog on Feb. 2, we're in for six more weeks of market destruction until we can schedule the next capitulation.

Of course, it has to be the little guy because all the "smart money," a.k.a. the Wall Street insiders and institutions, got out at the top. Yeah, right. If you've seen the mutual fund returns for the last two years, you know that that "smart money" is just as stupid as everyone else.

Let me give you some advice out there. If you hear or read anyone or anything about "capitulation" (aside from this, of course!), turn it off, throw it away, or just run. These television pundits, newspaper gurus, magazine mind readers, and barbershop brain surgeons are talking about capitulation as if someone's going to ring a freaking bell to tell us "it" has taken place.

Heck, maybe we can have a party, dance a jig around the dead market's head, and sing Irish folk tunes all night long. Maybe they can schedule this capitulation, so we can make sure to be in front of a TV when it happens. Like an "MTV World Premiere Video," we can all anxiously gather around the boob tube, waiting for Abbey Joseph Cohen to bust a move and pronounce this bear market dead. (Wait, she's been doing that all along. Never mind.) I assume then it will be safe to party like it's 1999.

David "Bogey" Forrest wakes up on the wrong side of the bed every Tuesday, Thursday, and Saturday. The Motley Fool is investors writing for investors.

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