Selling Gloom

The U.S. economy's growth is slowing, the dollar is beleaguered, the stock market is shaky, and inflation ravages the land. Even President Nixon concedes that "confidence in our management of our fiscal affairs is low." But bad times are boom times for a special breed of economic forecaster who makes a living by predicting dire troubles and suggesting ways to avoid them.

These pessimists sell their advice through counseling services, newsletters and books. Like anyone else in the habit of making a great many predictions, sooner or later they are able to say, as they do now: "I told you so." Almost all of the scaremongers, for example, like to brag about having recommended that their clients buy gold coins or gold-mining shares, or make similar hedges against recession. With recent jumps in the prices of precious metals--gold coins have doubled in value in the past year--many of their clients have indeed made handsome profits. But the gloomy prognosticators soft-pedal the buying opportunities in bull markets. At the very least, though, the scaremongers have done handsomely for themselves. Among them:

> Eliot Janeway, often known as "Calamity Janeway," operates out of an East Side Manhattan town house, has 1,800 subscribers who pay $125 a year for his four-page Janeway Service, and 350 subscribers who pay $550 a year for the single-page Janeway Letter plus the right to phone questions directly to Janeway. His two weekly publications alone yield a gross income of $417,000. He correctly predicted the market plunges of 1962 and 1970, but was prominently quoted as forecasting that the Dow Jones industrials would plummet to 500 last year (the year's low was actually 889, and the high 1036). Janeway now argues that there was no time frame for that prediction; he still believes that "we'll have another test of the Dow Jones" in the 500 area. Pessimistic about stocks because interest rates are so high, he recommends that investors put their money instead into "debt securities with short maturities."

> Thomas J. Holt of New York City sells an advisory letter for $144 a year to "several thousand" subscribers; he also has a portfolio management service for "a few hundred" clients, who pay Holt up to 2% of the funds that they invest. He thinks that gold--in coins or shares of mining companies--is one of the best investments. He recommends as well a few high-yielding utilities, notably those in rural areas, where soaring food prices will create a demand for more services for prospering farmers.

> Edward C. Harwood, a retired Army colonel, runs American Institute Counselors Inc., which employs ten investment advisers in Great Barrington, Mass. Harwood, 72, sees the dollar on the road to worthlessness as a result of three decades of inflating the money supply, but he refuses "to set a date for the collapse--we just say it's inevitable." Harwood claims that about 20,000 people subscribe to his $15-a-year investment bulletin, and his firm manages about 600 portfolios. He says that clients who followed his advice have doubled the value of their investments in the past 18 months by buying gold coins and South African gold-mining stocks.

> James Dines, based in Manhattan, claims that he sells the weekly eight-page Dines Letter to "several thousand" subscribers at $95 a year. Back in 1961, he predicted that gold would eventually rise to $100 an ounce. Since it recently topped $127, Dines predicts that it will soar to $400 or more--notwithstanding gold's drop to $107 in London last week.

> Richard Russell of La Jolla, Calif, would like to see the official price of gold rise as high as $500 an ounce so that the value of U.S. gold reserves would soar and the Government could use them to buy back the scores of billions of dollars now moving around overseas. "Until we do that," says Russell, "there will be nothing but speculation against the dollar." Russell publishes his Dow Theory Letters 36 times a year for about 5,000 subscribers, who pay $75 a year for advice to stay largely liquid, keep out of most stocks, but buy some shares of gold-mining companies and Treasury bills.

> Robert Persons Jr., an economics professor at the University of Bridgeport, has sold more than 25,000 copies of his $10 book, How to Beat the Depression That Is Surely Coming!, which was published last year and is now being plugged on TV. He is perhaps the ultimate trader in bad news. Persons tells interviewers that gold stocks once were good but have reached their plateau; gold coins are no good because the small investor must buy retail and sell wholesale; real estate is too often overpriced; commodities are just too complicated to trade in. So what does Persons recommend as an investment safe from hard times? Coming full circle from the traditional scaremonger view, he suggests that some of those U.S. stocks with depressed price-earnings ratios just might be a good buy.

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