Camejo still bullish

Louis Proyect lnp3 at
Sat May 12 11:41:31 MDT 2001

[This is from a letter from stockbroker Peter Camejo to his customers,
which can be read in its entirety at While Camejo
apparently sold Progressive Assets Management, a so-called social
investment company with branches in over 6 cities, to investors some time
ago, he continues doing business from an office north of San Francisco.

[Before restyling himself as a social investment broker, Camejo was an
ex-Trotskyist leader trying to launch a non-sectarian left formation in the
USA. Many of my ideas on the problem of "democratic centralism" were lifted
from him. While I was working with him on this project in the early 1980s,
I discovered that he was becoming more interested in the stock market than
socialism. Until the mid-1990s, Camejo tried to maintain an appearance of
using profits from his business ventures to further the radical movement.
No such pretensions exist any longer, at least based on a cursory
examination of his website.

[As far as the letter is concerned, it expresses a peculiar kind of
bullishness influenced by his Marxist past. It smacks of Ernest Mandel's
"long wave" notions, in my opinion although he has enough good sense not to
scare his customers away with references to the deceased Belgian Trotskyist
leader, who remained a maverick to his dying days. Camejo's bullish
economic views were presented in a more elaborated form in a 1999 issue of
Against the Current as part of a series of responses to Robert Brenner's
article predicting a global financial meltdown, a shorter version of
something that had already appeared in the New Left Review. My own take on
Camejo's bullish Marxism stands up pretty well, in light of the NASDAQ
nosedive. It can be read at: ]

March 18, 2001

To All Clients

Dear Clients,

With this letter you are receiving a newsletter written primarily in
January of this year. I am enclosing this letter to bring some of the more
recent market developments up to date.

We are living through a rather unusual bear market. Simply put we are going
through two bear markets. The first is a "normal" cyclical bear which
appears about once every four or five year with about 20 to 30% decline
(the S&P 500 is down 25.9% from its high) combined with a crash in the
NASDAQ composite that has dropped 62.8% from its high of 5078 on March 10,
2000 to 1890 as of today.

Since the time I prepared the newsletter evidence is growing that the
economy, while mixed, is slowing. Therefore for example, the semi-conductor
drop is not only an inventory problem, as many originally thought, but also
a product of an end user slow down. The semi-conductor index, the SOX, is
down 61% from its high.

In the newsletter I refer to two possible explanations. I refer to these as
A or B. A being mainly an inventory issue and B being a more serious
economic slow down. Greenspan is arguing for explanation A and recently
stated he feels the inventory build up is starting to bum off The market is
saying B is correct and Greenspan is behind in cutting interest rates. I
remain in camp A but feeling less confident each day as the market
continues its free fall.

During this drop we focused on tiying to buy into the extremely low
valuations of quality companies, primarily in the technology sector. The
error in this approach is the degree of the drop we are going through.
Taking advantage of this drop and buying a little Ariba (ARBA) when it went
from 180 to 37 was obviously a mistake, since it is now 10. That drop is a
94% drop. The crash of 1929 was an 88% drop. For some individual technology
leaders like Ariba ("B2B" software) this crash is similar in magnitude to

What is so different from the only other two times drops of this degree
have occurred (1929 and 1973-74) is the economic background. In 1929 we
were at the beginning of a depression. At that time, interest rates were
mistakenly raised for a period and tariffs increased. Today, the fed is
lowering interest rates and the federal government has a surplus. Sooner
rather than later, someone will tell President Bush to stop talking about
not spending and start helping with fiscal stimulation. Unemployment is
below 5% and certain sectors of the economy (e.g., housing) seem to be
holding up. This is not at all a similar framework to 1929.

In 1973-74, the nation was facing strong inflationary pressures and the
market came off what amounted to a 40-year bull market. This bull market is
only 19 years old with little inflation. THIS IS NOT THE END OF THE BULL
MARKET. Even technology, now declared dead by many commentators, is quite
alive. We are living through a profound technological revolution that is
accelerating, in spite of short periods of slowdown in its growth rate.
Nothing moves in a straight line in terms of the economy and the market.

Louis Proyect
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