Here is the second part of my chat with retired investor Robert Wilson, one of the greatest growth-stock jockeys and short-sellers in history. Wilson turned $70,000 into $225 million over 26 years before retiring in 1986 at age 59. (Think about that for a moment, next time you think you are God's gift to investing.) If you have already read Part 1, you know he is bearish on growth stocks, especially tech.

In this installment, the ever-quotable Wilson picks up more speed and talks about how he made money in the market, the money managers who oversee his fortune, the outlook for energy stocks, why the Internet is not such a big deal compared with past technological advancements, the difficult position of Federal Reserve Chairman Alan Greenspan and why the problems in Japan are so unsettling.

Brett D. Fromson: Bob, you have your money allocated among a dozen or so investment managers. Explain why you take that approach.

Robert Wilson: I have a group of money managers for the same reason that I used to have a group of stocks -- putting all my eggs in one basket and then watching that basket for a long time never worked for me. I would get so nervous about that one egg that I never bought the aggressive stocks. So, it's for diversification that I have this number of managers. Most of the guys work on a percentage-of-the-profits basis. They are smart, prudent people. One of them, who made a fortune in Internet-related stocks and then gave quite a bit of that back, is now heavily in cash. He doesn't know what to do. But basically, I am willing to trust their judgment and their capacity for self-preservation as money managers to let them do what they think best.

Brett D. Fromson: Do you do anything on the short side anymore?

Robert Wilson: For the last five years, just as an insurance policy, I have bought out-of-the-money puts on the S&P. As you know, I have lost money on them. They are June to June. But I was happy to lose the money on them. The fellow who sold them to me would say, 'Sorry you're losing all of this money.' I said, 'Are you sorry when you buy home insurance and your house doesn't burn down?' These puts have been my insurance policy. By and large, I am trusting to the good judgment and the fear of my money managers.

Brett D. Fromson: What is the mood of your money managers these days?

Robert Wilson: I practically never talk to them.

Brett D. Fromson: They must send you reports?

Robert Wilson: I don't read them.

Brett D. Fromson: Well, what does it mean that one of your growth stock managers has gone to cash? Does that signify fear?

Robert Wilson: Fear, or in a lot of people's cases, they just can't find anything interesting to buy. And it isn't as much fear as what is around to buy that is compelling. You can be bullish, and if all you see are companies whose earnings are declining and they are still at high multiples, you don't buy them. For instance, a fellow like Dick Gilder [founder and head of the New York investment firm Gilder, Gagnon, Howe and a longtime friend of Wilson's] never takes a position on the market. Right now, his partner David Howe has a lot of money in cash because he can't see what is going to really work for him.

Brett D. Fromson: Did you ever see anything comparable to the bubble in technology stocks when you were actively investing?

Robert Wilson: Absolutely not.

Brett D. Fromson: Does this market remind you of any other in prior periods of time?

Robert Wilson: I am only speaking here from my reading of history. I am glad to say I wasn't around, but it reminds me a great deal of the 1920s when there was an enormous technological revolution, far greater than the Internet revolution, in my view.

The proliferation of radio, the telephone, the automobile -- these were all products of that age. RCA Victor was the Cisco (CSCO:Nasdaq - news - boards) of 1929. There was this absorption, and properly so, with revolutionary technology. Of course, the technological revolution is not new. Young people tell me how the Internet has really transformed their lives and that we can't imagine the impact. What about the jet engine? What about air conditioning, which transformed the South and the West? You could not have Dallas or Houston without air conditioning. Think of direct telephone dialing. Even the lowly fax. Think of antibiotics. These are things that have certainly had as much impact on society as the Internet. There is a constant technology revolution.

Brett D. Fromson: Your point then is that what we saw with so many tech stocks in the past few years reflects less the new technology revolution than a stock market valuation revolution?

Robert Wilson: Yes, every once in a while, as in the 1920s, people become enamored with the technological developments that are in fact constantly occurring.

Brett D. Fromson: What position do you think Fed Chairman Greenspan is in at the moment?

Robert Wilson: I think he would like to be anybody but Alan Greenspan. He has been God. Alan Greenspan is very smart, and he knows that gods with three legs don't stay gods forever. If we do have troubles, everybody will blame it on Greenspan, just as they gave him credit for the good times. I don't envy him at all.

Brett D. Fromson: What precisely is the box Greenspan finds himself in?

Robert Wilson: We have seen a slight pickup in inflation, and yet there is a slowdown in economic activity. I am sure that he will opt for monetary stimulation. This is one of the reasons he has been so successful. When in doubt, pump up the money supply. And in the main, I think that is sound. The problem today is that there is that ugly little thing economists call 'velocity.' If consumers cut their spending and decide they want to start saving some again, you can let them have home mortgages for 2% and they may want to build up their equity instead.

Brett D. Fromson: You are not worried that he will step too hard on the monetary gas pedal?

Robert Wilson: No. The risk of inflation compared to the likelihood of recession is very low. I would also say that while inflation isn't nice, recession is even less nice. Aside from energy prices, I am not especially worried about inflation.

Brett D. Fromson: Are you one of those people who expects energy prices to stay high for longer than folks think?

Robert Wilson: I would think so. The long-term outlook for energy demand is very bullish.

Brett D. Fromson: When do you expect to see a bottom in tech stocks?

Robert Wilson: I will answer that question without hesitation because whatever I say will be wrong. I think it will take a couple of years before we make a bottom. I think it will take a long time. I think we are in for a miserable little patch. I expect that this will be like Chinese water torture. Remember, in the past few years that companies were constantly exceeding earnings expectations, and inflation came in lower than expected. Now, everything is suddenly going wrong. Doesn't that ever happen in your life?

Brett D. Fromson: When you were running money, did you typically have a view on the overall market?

Robert Wilson: Always. That was what determined how net long I would be. If I was very bullish, I would be net long 100%. If less bullish, I might be net long 25%.

Brett D. Fromson: If you were active today, how net long do you think you would be?

Robert Wilson: Shorting has been such a ravaging experience for so many people in the last five years. Normally, I would say, "Be fully hedged." But I don't know if that will work now. I think I would be long the value stocks, the Sanford C. Bernstein stocks and short the Alliance Capital stocks. Long value and short growth.

Brett D. Fromson: Do you think that the Fed can forestall a recession here?

Robert Wilson: No. I don't even think they think they can. All they can do is ameliorate it. The main thing for them is to avoid doing something stupid, like letting money supply growth go down. If the stock market goes down and if there is panic selling, I think you can count on Greenspan calling in the banks and brokerages and saying, "Here is some money. Take it. Use it." That is what he did in 1987. That is what he did in 1998 with Long-Term Capital Management. That would help a lot in a crisis. It will prevent a disaster.

Brett D. Fromson: What do you think of the people who fear that we might go the way of Japan, which has been in recession for a decade and whose market has basically been in a bear market?

Robert Wilson: Japan is unsettling in that before it happened, we really thought we had the business cycle licked and that a recession that long in any advanced country was impossible. The Japanese have done a lot of stupid things to create their problems, but they haven't let the money supply go down. They have done Keynesian deficit financing. They have done a lot of the right things. We tend to forget that. The fear for us is that if it can happen in Japan, it could happen here for other reasons that we do not understand.

In Japan, it is simple Keynesianism -- they have a huge savings rate and as long as they could increase exports, they could live with that savings rate. But now, they cannot increase their exports. So what do they do? People save too much. So the government runs a deficit. The economy still doesn't work because people save more than the government can prudently spend. Now, that isn't going to happen in the United States. But you should ask yourself whether we don't have some different, insoluble problem. That is what worries me.

Brett D. Fromson: What might be the American version of the Japanese disease?

Robert Wilson: A collapse in capital spending and consumer spending and reluctance on the part of Washington to cut taxes enough to offset that. You could have this impasse: The Democrats don't want to reduce taxes because they prefer to have the government allocate the money. The Republicans will not permit government spending to increase that much because they think that is close to sin. We could see an impasse.