Clarifying Our Position Jude Wanniski April 18, 2001

This edited exchange with a client should clear up any confusion on where we stand right now...

CLIENT QUESTION --

Jude:

My attraction to you has always been based on the fact that your analysis is grounded (literally, as in in "gold in the ground") in consistent and delineated criteria, as opposed to all the other gurus who are ultimately throwing darts and then retroactively spinning what it was they said to make it sound like they predicted whatever turned out to happen.

So, here we are at perhaps an economic watershed and I seem to be reading all kinds of contradictory analysis coming out of Polyconomics, from the Barron's commentary, which seems to portend doom for the Dow and the economy, to speculation that the bottom may have already been hit. I realize that reading tea leaves is an inexact science and you are uiltimately trying to divine the whims of the leaders of our political economy. But, I put you on a pedestal above the pretend soothsayers who hedge their bets for a living, and am concerned when it appears you may be playing their game and forecasting a range of scenarios so that, when one of them happens, you can say, "I told you so."

Tell me what I'm missing.

Thank you,

Name Withheld

JUDE's RESPONSE --

We said the bottom may have been hit because we finally persuaded one policymaker, Trent Lott, that there is a problem, and that other policy makers may now realize we have been right. You have our forecast, which thus far has been correct on the bottom, and you have our reasoning. We now add the fact that Barron's is very bearish, which helps our case, because if things get too good, we will lose the interest of the Trent Lott's and go into reverse, perhaps looking for a new bottom.

All we can do is present our best analysis and give your our precise reasoning behind it. We have no "black boxes," and agree that those who do, will make several predictions over a track of time and then pull out the one that supports where the market finally went. If you see us doing that, you have reason for complaint... or perplexity.

Jude T. Wanniski