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It’s been a long and interesting road from “avaricious monopolist” and world’s richest man to full-time philanthropist, but Bill Gates now appears to be completing the transition. In 1975, the first full year of the bull market, Gates caught hold of the emerging bull market in social mood by starting Microsoft, the company that would go on to ruthlessly rule the software world for the next 25 years. In the middle of wave three in 1986, he took the firm public, and, in December 31, 1999 his personal fortune peaked (with Microsoft stock), at more than $100 billion. Recently, he has stated that he regrets his status as the world’s richest man and talked about the difficulties associated with the title.

January 2005, EWFF
Time Magazine Covers The Top
The November issue observed a new flurry of charitable giving and concluded: “The stage is set for a whole new round of bubble-busting, as philanthropy is all the rage once again.” The end of the trend, and by extension a renewed stock market downturn, is confirmed by Time magazine’s “Persons of the Year,” which goes to rock star Bono, and the world’s richest couple, Bill and Melinda Gates, for their willingness to spread their wealth and get the rest of the world to join in. As a similar spike in early 2000 demonstrated, philanthropic fever reflects a positive social mood and is therefore a sure sign of a major stock market top.

Time’s person of the year coverage is a massive double sell signal because in addition to its long history of identifying trends as they are expiring, its fawning tribute to Bono and the Gateses depicts a societal infatuation with giving that is totally out of bounds with historic precedent. In additional stories, Time reveals that the great benevolence runs deep. It tabs 2005 as “The Year of Charitainment” when “celebrity do-gooderism was in fashion.” And it wasn’t just the big shots: “Americans dug deep to raise billions for those who lost everything.” Why? Because the end of a long bull market is the only time when people feel so confident in their future earnings that they are willing to part with more than usual amounts for charity. We have nothing against charity, it’s just that when so many people are being mobilized to give by powerful social forces, society is operating under the blissed-out influence of a long advance. In December 1999, Time honored Jeff Bezos of Amazon.com as its person of the year. The choice celebrated the vast wealth generating capacity of the new information age and signaled that a major peak was at hand just as the January 2000 issue of EWFF suggested. Five years later, stocks must be at an even more bearish juncture because instead of honoring the creation of wealth, Time is recognizing the willingness to give it away. In terms of social mood, it’s the perfect send-off for the next phase of the Grand Supercycle bear market.

November 2005, EWFF
Charity Begins at the End of a Long Rise
Within three weeks of the March 2000 NASDAQ peak, EWFF reported that charity had become “a huge, looming thing” among high-tech types. When the Valley’s nouveau riche started casting about for ways to “give back,” EWFF observed that “philanthropy fever” was a sure sign that the boom was at its peak. Charity is the ultimate luxury, and “luxury of every sort” has been a by-product of manias since the Tulip Bulb craze of the 1630s. One such “gift” was the proposed creation of an online university that promised a “free ‘Ivy League-quality’ education to anyone in the world.” It was supposed to be funded by shares in Microstrategy, an Internet stock that started to collapse almost in concert with the unveiling of its endowment, which, of course, comprised shares. “The real ‘huge looming thing’ is how common these reversals of fortune are going to become,” stated EWFF. From a (split-adjusted) high of $3330 a share in March 2000, Microstrategy fell to a low of $4.20. This is a decline of 99.9%. Along the way, it was joined by so many other 90% to 100% declines that utter collapse did, in fact, become commonplace.