Wall Street Week with Louis Rukeyser; 1325; Forbes

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With Louis Rukeyser brought to you by a visit other public television stations and by grants from the Hilton Hotels Corporation Prudential Bache securities and the spere corporation. Produce Friday December 16. Our panelists are Frank happy yellow Monday Gordon and Carter Randall. Tonight's special guest is Malcolm is Forbes chairman and editor in chief Forbes Incorporated. Good evening I'm Louis Rukeyser This is Wall Street Week. Welcome back. Well it is a week before Christmas. And in the spirit of the season I know you want to reserve a special quantity of your seasonal sympathy and goodwill for my guest

tonight. Because he is a man who has a terrible problem this time of the year that will never trouble us luckier humans. His name has not come for this. And the problem he has at Christmas is indeed a formidable one. What can he put on his Christmas list that he doesn't already own. This after all is the man whose toys include more than 30000 model soldiers and art collection that would set Leonardo DaVinci to salivating. And the world's most valuable array of magnificently jewels Faberge Easter eggs making the Kremlin's rival collection look like the leftovers in the back room of Tiffany's. This is the man whose toughest decision may be whether to spend Christmas at his island in the South Sea is his chateau in France his ranch in Colorado his Pelisson 10 June air or his townhouse in New York. And those are just some of the choices he can call home sweet home. What's more there's the question of how to get there. Should he take his motorcycle

or his yacht. His hot air balloon or his chauffeur driven Lamborghini. Or should he just say The heck with it and climb aboard his corporate Boeing 727 jet. Adorned with that provocative slogan capitalist tool. Now there I submit to you is a man with real problems at Christmas. And aren't you glad you and I don't have big worries like that to contend with. And aren't you just a little bit ashamed for having felt sorry for yourself and your own petty holiday concerns. In addition to being rather stupendously rich so wealthy indeed that he appears on his own magazine's list of the 400 richest Americans. Noncom Forbes brings qualities that would be of interest even beyond the historical and almost universally human fascination with how the other half makes do. With only a few hundred million this great together when it comes time to buy the presents. He is chairman and editor in chief of the magazine that bears his name. He's a former would be politician. He's full of opinions about our economic and financial futures and he's

such a fine fellow that those who know him tend overwhelmingly to conclude that such good fortune couldn't have happened to a nicer guy. Except of course. For ourselves. But before we ask the man who calls himself chairman Malcolm for his latest facts and comments let's turn to the area that this month has definitely not been making the Bulls rich. And so what did happen this past week in Wall Street. And as the Dow Jones Industrial Average indicates too much good news. Scared the ungrateful market with retail sales roaring ahead and the recovery in general making pikers out of most forecasters worries grew that interest rates would be climbing higher. At week's then there was a slight snapback. The best of the month. Following news that wholesale prices actually fell last month. But for the third straight week the Dow was lower losing another 18 points. A total of forty five since it hit an all time high. The close at twelve hundred forty two point one seven. And there was no real reason to

sing Jingle Bells in the broader composite market indexes either down or all around. Clearly sung to sleep are lower by elves whose technical market index continued to drive those at minus 1 in the neutral zone for the eighth straight week. Maybe you will have to give them motorcycle lessons. For the week to the distress of just about everyone was the unsinkable US dollar which boasted a new by the firm mean of interest rates charged to all time records against the French franc the Italian lira and the British pound. No wreckage for precious metals though they continued to test their recent lows as Christmas approaches. Gold lost another 15 bucks. We'll have the quotations for frankincense and myrrh just as soon as they're available. Thank you Happy other whatever happened. Well as someone said on Wall Street it's turned into a turkey. But we probably will get some relief of pressure next week and we may get an aborted rally in a

couple of days I think the big pressure in a border rally What was that something down south. You'll probably get a rally not very much Lou but something as we end the year and I think that will coincide with the successful offering the Treasury which also incidentally is pushed up right psychological I think this upward drift of rates has been to the Treasury's refinancing that's coming out in about a week. The money supply news late today was just about what the market expected the bond market didn't move much. Finally right on the money the prognosticators were finally right. It is an unprecedented situation they don't know what to do. That's right they actually call one right. Exactly well you know one of the things that got the market upset with some of these perennial forecasters of higher interest rates right now in fact have been totally wrong for two years came so again to say well next year it's going to be terrible. Could be but they could be right this time. Well it could be lower. There's always the possibility after two years of probably what's going to happen is the psychological pressure will put rates up saying about 25 basis

points but I would be more than 4 percentage point more of a percentage point. But there's good reason to suspect that that's not going to last and I'm my betting is that sometime in the next mid January late January rates will start coming down. First of all the Federal Reserve Board does not want higher interest rates the dollar strong enough now. It would be murder. So I don't think the Fed wants it and I think the Fed doesn't doesn't want just doesn't happen. You got a man and you agree that the Fed has that kind of power but they don't. Certainly they have a lot of power. Lou I think the prophecy of much higher interest rate is a self-defeating prophecy and that is based on the fact that we're going to have a roaringly strong economy and therefore interest rates have to go up but I say if they go up. By 2 percentage points as predicted we're not going to have a roaring economy so I think it's a self-defeating prophecy. I happen to happen to agree with Frank that the predictions are probably hurt the market but I really look for lower interest rates in the first quarter of 1984.

What kind of market to look for in the rest of December. I am optimistic I have been optimistic and it has worked but I think there's a lot of churning here and I think the big buyers aren't willing to stick their necks out but they'll be in toward the end of the year and the first of the year also. So far not yet the traditional year end rally instead the traditional year end tax selling and that's what they say when it goes down is tied up money go and you watch a lot of year ends what kinds us look like to you. Well I'm not going to make it a threesome. But I think you know I think the market is I'm already worried when I say I think it really is disarmingly simple things that the market is really focused in on exactly where the problem is and that is the threat of the rising interest rates. What you are finding is that people are beginning to focus increasingly on the deficit as the basic culprit in the whole package. Recognizing that in the near term it will tend to keep interest rates up and in the long term it threatens the growth of the U.S. economy so the problem now has to come down to the deficit and the answer to that one has and I think in a surprising way people are really as concerned about the

Fed tightening. As they are about the fact that the Fed might become accommodative. I mean you know wanted to handle the deficit and therefore monetize the debt as it's called or increase the money supply later on in order to prevent a serious rise in the money and the interest rate as a consequence of the deficit. So they're really more afraid of future inflation than the current crunch and you have yours. Molly One last quick question we had a terrible week of news in the Middle East none of us mentioned that that affect the market. I think it has a serious effect on the market I was surprised for so long the market ignored 11. I don't I think that the President Reagan has backed off a little bit from his earlier position. I think the market will be responsive to that but increasingly the focus is on domestic development. Already. Now this is the point of the program when we usually answer around the viewer questions because we have so many questions about what it's like to be super rich. We're going to move right along to our guest and his thoughts. But next week we'll be back to our customary tricks so keep those cards and letters coming to Wall Street Week. Always Mills Maryland 2 1 1 1 7. That's Wall Street Week.

Always Mills Maryland 2 1 1 1 7. Now before we meet tonight's special guest let's take a look at a few of his more quotable quotes and see if you can float away on the colorful sayings of Chairman Mao. My guest tonight has a knack for definitions and investor according to him is one who bought stocks that went up. And a speculator. He says that's one who bought stocks that went down. People who knock money he says my multi-millionaire guest either have too much or too little. Most can't get enough of it. According to him. He also speaks from experience when he says that one thing to be said for inherited money is it beats not having any. Tonight's guest also has some ideas on taxes a tax loophole he says is a deduction that the other guy gets. And what's a mature person according to my guest that someone who agrees with you. And tonight's guest also has a definition of a bore someone who persists in holding to his own views. After we have been enlightened him with ours. And being a boss himself he has this to

say those who act as if they know more than their boss seldom do. Those who do according to him have sense enough not to make it obvious to the boss. And being a father of two he offers this telling observation. Kids in their early teens who don't regard their parents as an embarrassment or at best a nuisance don't have proper parents. Also in the age vs. youth department my 64 year old gas contends that use is wasted if you spend it getting ready to be old. What does he say is the hardest work of all. Doing nothing according to him and the man who has just about everything also has this to say about life. If you expect nothing you're apt to be surprised. You'll get it. And finally tonight's guest sums up his own bountiful life with characteristic good cheer. I so did living and he says that no one will be sadder when I am dug under. To capture some of that cheer and maybe even a few megabucks for ourselves. Let's go over now and meet tonight's special

guest Malcolm S4. Welcome welcome we're just delighted to have you with us. I would sure. If that. Build up a little trepidation. Don't you be trepidation. I know you're intimidated but take it easy. You may have a career if you do well tonight. Forbes is often called the happy capitalist and one look just now we'll tell you why. In addition to his notable holdings he is the chairman he's the editor in chief as well of Forbes the business magazine founded in 1917 by his father a Scottish immigrant. Now one of the largest the most respected in the field Malcolm you were born rich you've become a heck of a lot richer but most of the public attention as I already suggested is centered on the way you've spent all that money. Now your father they tell me it was a pretty tight Scott. How do you feel about all this publicity. Well I'm sure you wouldn't mind the publicity yes the price that it would be was it was was he stingy in expenditures without the household atmosphere.

No he wasn't stingy he was stingy in non-essential expenditures of which he considered over generous allowances. In that category I remember whenever we left the living room for going to dinner we were all taught to turn out the lights on the way into the dining room. He wasn't standing he just had a great respect for money and I've developed a great affection for him. What is your attitude toward money. That it's a very nice thing to have. As you know a lot of people look at the way you have fun with money and say it's disgraceful. There are people starving in this world there are people who don't have any money. How can you spend it on Faberge eggs instead of feeding the hungry of India. What's your response. Well I don't get it. Criticized for having money. Anybody that criticizes having money I say that's a foolish thing to do it's a very useful thing to have. Whether you spend it for Faberge eggs.

I think that the collection we've made for instance this is a group concerned with investment. When we began they didn't have the value they have now. They've gone way up in value that is why we acquired them. But people have gotten a great deal of joy out of seeing these remnants of what were considered Czarist decadence to the Kremlin. The Russians got rid of after the war for foodstuffs. Now these treasures of art great wealth is often in the Creator and progenitor of great art. I haven't created any great art but we have made it visible to a great many people. I have absolutely no apologies for Faberge I wish everything I had spent money on had also so appreciated in value and was so appreciated by so many people. You're going to be surprised to hear this but remarkably few of our viewers are able to buy Faberge eggs but they are able to try and make their smaller amounts of money grow how much standard investing do you do. Do you oversee stock and bond investments in your own

portfolio. Yes to a limited degree. I have a son that's Steve who's the president of the company and writes editorials for us. He's a very astute investor. I think his judgments are good I make my own but in major measure based on the caliber of a person running a company it was my father's philosophy and I don't buy balance sheets and common stocks and most of us in the company don't we make most of our money honestly selling advice not following it. We recommend forms to people want to make a lot of money and if they enough of them buy it. We make a lot of money. What do you what do you then do with it. I put it to work. Either in living in. Living a full life I mean motorcycles aren't that expensive but if you have very little money they are what's the most fun you have the most fun I have is opinionated

sitting down and every morning I go to my desk I'm there between 7:00 and 7:30 and I start dictating editorials and it's great. You're a perfect example it's fun to have a lot of fun thing in this and be able to express them. And no editor to say to you you know that has to go it's not worth being on the air or in print or in the catbird seat and you have to admit it's a joy to a shy fellow like me it's all I can do to come out of the closet. Well let's talk some more about you. You put that name capitalist tool on your plane. You use capitalist tool as the only partially ironic slogan for your magazine. Does capitalism have a but worse name that it deserves. Well it did I think that in a very minor way we've helped regenerated people. You know the cartoon capitalist the big fat felon the walrus mustache sitting on a bag of money while everybody starving to death under him. A capitalist is somebody who has a little money put to work and when his working he

puts a lot of other people to work producing things. A capitalist is a catalyst. Money is a useless thing you can't eat the stuff. It's what it what it makes it's the sinew of the whole system. I mean I'm not going to make the lecture we all know that the point capitalism just got to be a bad word in the mouths of economists. Now there's nobody believes in that ism as a philosophy creeping capitalism is absolutely eroding communism capitalism works because it simply says if a guy wants to make a buck or a lady and can keep a part of it they are motivated to move. And if the movers in this world that create a standard of living that create everything that we have and we do and we all are. You used to be known as a liberal Republican. I would take someone that has today as you pass time going to say well maybe you still are going to say that would take one as gifted as you

definitions to tell me exactly what a liberal Republican is. You but you were one of the first people for Eisenhower. You ran unsuccessfully for the Republican nomination for New Jersey in 1953 you ran successfully for the nomination in 57 unsuccessfully for the election. What do you think of Ronald Reagan. He's not a liberal Republican. I think he is absolutely a liberal Republican conservative to maybe these are misnomers people say a conservative is somebody who wants to conserve. You don't conserve anything by blocking an opposing change. That's a dangerous radical. Somebody that wants to make things stay as they are there's no such animal. They're there in much more danger than the illogical leftist. I think Reagan. You don't hear Reaganomics talk about anymore. It's not a putdown anymore why because the damn things working. The fact the guy is not an economist knows practically nothing about the economy is his greatest strength. He has the gut

feel that this country will run better if people are taxed less if there is less absolute total pressure of government. If people are afraid to move and create and to do now the antithesis of that is accused of having no concern for the poor and no concern for the starving that's absolute baloney. The man is the foremost economist in the country because he doesn't listen to those who are. He has a gut feel that I free marketplace and a reward in terms of being able to have less taxes and keep more of what you earn is what's going to move the country and by God it is you slandering the man who studied economics at Eureka College. Well he was fortunate it didn't take. Malcolm I want to turn you over now to three budding super capitalist talking to Frank Caprio a regular of this. Malcolm You say you bet on people and you've also had a long period to observe some of the great men and near great men of our time in

business. If you were going to bet on one person or one big company over the next five or 10 years. Which person and company would you bet on in terms of an investment. Just betting on the person that. Well put it this way I'd I'm betting on a person. I think that the ablest far and away extraordinary able guys at a very crucial time that are making an enormous impact. Charlie Brown at AT&T John Noble at IBM. John Noble has taken a company that had it all and whose biggest problem was an anti-trust thing. And recognizing the competition in every area he's going to be back to having an anti-trust problem because they are being so successful again in every aspect they run in every aspect of the business like the head competition. He's outstanding that company is going to be AT&T s biggest problem. AT&T Charlie Brown took something John to but his predecessor for what. To those damn

near to his dying breath to keep AT&T an entity that the whole world's going to miss including all these people pick up the phone and have nobody to complain to he has decided OK we're going to have to divest. But part of their wisdom of that decision and when he took it by Charlie Brown was to undo this gigantic company but to recognize unless he did they also couldn't get into all these competitive arenas in the area of communications AT&T wasn't in communications. They're in communications now communications is the decade we're in and they're in it. Those two fellows are what I mean when I say it's the man with the steering wheel that determines the value of a company as an investment. Those fellows are in my book I think Malcolm or one of the big problems of many many years has been the adversity between labor and management. And it occurs to me that we may be evolving into a system of worker capitalism where workers now or owning shares more and more of their companies and

interested in the profitability. Would you react to that. Yeah I think it's a no I don't think that is what it really often happens or is going to happen. I think a worker in a company wants his paycheck. He like the Dubai company to do well but he isn't going to work all week in the hopes that at the end of three months the earnings are going to be up and his earnings will be up. He's got a more a more immediate motivation. He had now recognizes to a degree never before that his company. Is competitive even that of Caterpillar. Peoria Illinois things have changed. They run now recognize that from Japan and elsewhere. Their competition is real if they can help meet the price. That's what's happened in the airlines it's what's happened to the Greyhound. They now recognize that it is part of a competitive world. So their interest in how the company is doing is a selfish motivated one. And it's

the strongest motivation in the world if you don't have a selfish motivation or are motivated by money. You know in order to make your own questionable enthusiasm valid there must be some problems around what do you perceive to be the problems in US economy and what would you suggest the solutions. Well I think of it I think. I think our greatest problem now nobody's going to agree with this with me on this. I think our greatest problem in the year ahead is going to be the degree of recovery the rapidity of recovery in this country. Nobody has talked about what is the the huge underlying demand in this country in infrastructure. We're sitting here being fed by pipes and lines and coming over bridges roads and until 95 bridge collapses and a supposedly modern highway we've forgotten what a fragile storing this whole so-called infrastructure which is nothing more to say than pipes and lines and all these things made out of steel and concrete all these buildings all these structures

all these. They're eroding. They're in bad shape they haven't been paid attention till until the pipe breaks the pipes are breaking all over the country so that the demand in steel companies talk about glamour industries take an arm called Take companies that are position spend a lot of money modernizing. They're going to have a hit that is going to be tomorrow. But. Unemployment in this country hasn't gone. Nobody predicted really the drop. Now I want to stop it when we got to talking I want to hear your answer to this question. We have to have in about a sentence. What would you say to the poor of America this Christmas. I would say to the poor of America there's going to be much more opportunity job opportunity than there has been in many years. The poor of America this Christmas I would say the best thing in their stocking is going to be the fact that there. Is going to be more. There are going to be more jobs than people capable and willing of filling them in the next three years in America.

Thank you very much Malcolm Forbes A man who thinks it will be a merry Christmas for us all thanks to the panel. Hope you'll be back again next week. I won't be taking the night off but my friend and colleague Frank happy I will be sitting in and talking about one of the biggest business stories of the year the impending breakup of AT&T and what it all means for customers and stockholders alike. Your guess is guess will be a leading telecommunications analyst Amy Newmark. It will ring the bell for you so be there. Meanwhile this has been Wall Street Week. I'm Louis Rukeyser. Good night. Wall Street Week With Louis Rukeyser has been brought to you by this and other public television station migrants from. Hilton Hotels Corporation Prudential Bache security ambers ferry corporation. For pretty price riff that was program. Sent $2 to transcripts of the Wall

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