As the Clock Ticks, the Worries Subside

Our columnist heads once more around the considerably cleaned-up Y2K track.
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When I wrote here

earlier this year of my Y2K worries and what investors should be thinking about and maybe doing to get ready for the clock change, I promised one last look at Y2K plans and odds just before year-end. Here goes.

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I have to say that this isn't the column I thought, and feared, I'd be writing. Though my shop is not a "Y2K consultancy," we've done a lot of work on Y2K issues for clients over the past four or five years. This year, 70%-plus of our billings have been related to Y2K issues, and I've made well over a hundred speeches about getting ready for Y2K, from early 1997 through the end of this year.

That's given me a pretty good sense, I think, of the pulse of the Y2K problem, and of your fears and plans.

Throughout, I've urged people not to play the game called "the sky is falling," but instead to cautiously explore what might happen in their communities and what they ought to do personally, with their families, to get ready for those local Y2K issues.

And throughout, I've been mainly concerned on a societal level about just a few big things: the reliability of electric utilities, especially, and also, on a lower level, about other public services; breakdowns in the distribution system, leading to temporary and localized shortages of food and certain drugs; our tendency to overreact to possible crises, resulting in large-scale hoarding, with unpleasant side effects; and lawyers and the potential for almost any Y2K bobbles to turn into the Lawyers' Full-Employment Act for the next decade.

Today, after four-plus years of talking to and working with people addressing Y2K issues for major companies and to their suppliers, I still worry about the same things, but in most cases my worries are substantially fewer.

  • I do believe we'll see some power outages, mainly relatively short-lived, none on the level that literally shuts down a city or region for weeks. I think they'll be scattered around the U.S., with an emphasis on rural areas, which are often served by tiny, underfunded and understaffed cooperatives, which usually buy power from large regional electric utilities (and thus should be able to count on a pretty safe supply), but do their own distribution, over grids too often woefully archaic and badly maintained. Worry level, nationally, on a scale of 1-10, with 10 the worst: 2. Worry level, locally: 2-10, depending on where you live.
  • I do believe we'll see interruptions in other public services, but only in a very scattered and generally thin pattern. Police and fire departments, ambulance services and hospitals have done a good to excellent job of getting ready for Y2K. National worry level: 1. Local worry level, 0-3, depending on where you live.
  • I no longer think we're going to see meaningful problems, nationally or locally, in distribution systems. There may be a few temporary problems, usually limited to local difficulties with toll roads, bridges and perhaps traffic-control systems, and receiving warehouses may be closed for a few days because of a lack of heat and maybe electricity. But in general, I don't look for distribution breakdowns as a source of major trouble. National and local worry levels: 1.
  • I think we'll see a number of law firms feasting at the trough over Y2K issues. Nearly every law firm has had a "Y2K section" for a year or more, getting ready for clients' problems, and that kind of preparation (and investment!) tends to become a self-fulfilling prophecy. I think we'll see a slew of suits against medium-size to large companies, some of which will briefly make a significant dent in those companies' share prices. But while the legal bills are going to be large, I don't foresee the kind of catastrophic firestorm of liability litigation that sinks big companies and wrecks the market. Worry level, period: 0.5.

All this leaves aside three big issues: What about the banks and financial industry? What about problems outside the U.S.? And finally, and maybe most important, what should

you

do?

More on that tomorrow.

Jim Seymour is president of Seymour Group, an information-strategies consulting firm working with corporate clients in the U.S., Europe and Asia, and a longtime columnist for PC Magazine. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. At time of publication, neither Seymour nor Seymour Group held positions in any securities mentioned in this column, although holdings can change at any time. Seymour does not write about companies that are current or recent consulting clients of Seymour Group. While Seymour cannot provide investment advice or recommendations, he invites your feedback at

jseymour@thestreet.com.