Summer Fun II July 30, 1998February 5, 2017 I got so carried with my Amazon.com short yesterday, and my quest for the goggles, I forgot all about the summer fun. Here was the deal. I was in a pool shaped wrong for water volleyball, and how are you going to play water volleyball with just three guys anyway? So, not being ones to lie around aimlessly in the sun – where’s the competition in that? – we set about devising the rules of the afternoon. There would be a series of five events, each scored 3 points for the gold, 2 points for silver, 1 point for bronze. I was thus assured of at least 5 points, notwithstanding my pals being two decades my junior. The events were to be: Underwater Distance Swimming, Underwater Breath Holding, Push-Ups, Poker, and Scrabble (there is only so much time one can stay outdoors in Miami in the summer). I actually used to be able to swim pretty far underwater, and now that I had a pair of Nike goggles, I felt a silver medal or perhaps even a gold was not out of reach. Until it developed that David knew how to do flip turns. I need hardly point out the importance of flip turns in generating the most flowing pushshsh off the side, or the importance of that pushshsh in covering the length of a 12-yard pool. In high school, I had pretty serious trouble with flip turns, living in constant fear that I would go into mine too early (pushing off vigorously against nothing) or else too late (smashing my knees against the edge of the pool). But that was a long time ago, so even what little expertise I had developed had pretty much left me. Making matters worse, when we did “odd-finger” to see who would go first, I “won” and had to go first. (Just in case you were wondering, it was the first time I had done odd-finger in perhaps 35 years. Yet it is an effective method for breaking a deadlock and one that should probably be used more often in corporate and diplomatic stalemates.) I adjusted my goggles, hyperventilated, and pushshshed. I embarrassed myself with three truly pathetic turns and, thus, did four laps underwater. David did six, so Marc did six-and-a-smidgen. This made David, who feels a deep need to win, crazy. “Two rounds,” he announced, meaning that each of us got a second try. For my second attempt, I merely dipped my head underwater for a moment and brought it back up, grinning broadly. “That’s it?” asked the pentathletes. “That’s it,” I affirmed, knowing that I couldn’t have done better than third in this event so I shouldn’t, if you will, waste my breath. David, who I may have mentioned is competitive, swam nearly seven lengths underwater and when he surfaced, pretended to be having a seizure of some kind. This was funny, until we realized he had so stretched the edge of his personal envelope that perhaps he was having a seizure of some kind. Fortunately, the pool is even shallower than it is short – yes, you can drown in six inches of water, but generally not if two guys are in there with you (unless they are both truly competitive) – so whatever respiratory problem David was having lasted only a few seconds, and he soon began to deny having had any difficulty at all. Marc merely repeated his previous six laps, fearing (I think) that if he beat David, David might go for a third attempt and truly do himself in. Meanwhile, I rested. So the score at this juncture was: David 3, Marc 2, Me 1. “Who has a watch with a second hand?” was our shared question at the start of event #2. And then we realized none was needed. We would submerge simultaneously and simply see who could stay down the longest. “On three,” I said. “You count.” (I was hoping to trick one of them into counting out loud while I was hyperventilating, but instead we all mouthed the words.) One … two … three. With my Nike goggles, I watched as first David and then Marc surfaced, breathless. But I was excelling at what I do best. Nothing. I was expending no energy, not moving, not breathing – that was the whole point of this competition: to do nothing. And I was doing it very well. Soon, the other two started shouting “you can come up now.” But after my defeat in the first event, I felt it was important to make a point. I stayed underwater, doing nothing, for another 20 seconds or so, and then – still underwater – I swam over to the edge of the pool and, with my head still submerged, kicked furiously for about half a minute, watering all the plants to either side of the pool. Aha! Triumph for the old guy. The score, as you have already tallied, was now David 4, Marc 4, Me 4. Push-ups are a very individual thing. I do mine on my knuckles, having once done damage to something in my wrist architecture doing them the normal way. And I go all the way down when I do them and come all the way back up. I do great push-ups. I just don’t do very many of them (or do them very often). David agreed that “form” was critical to a fair event, and offered to do his on his fingertips. Marc’s push-ups were, to put it charitably, non-standard. Though there had been a lot of them, David and I agreed to disqualify Marc’s push-ups. The score was now David 7, Me 6, Marc 5. And now we were coming into the “brain” events. The poker was five-card draw, and once we had agreed what beat what – an exercise I’m sure we did wrong because we had decided to leave the two jokers in the deck, which changes everything – I had my stroke of genius. Rather than just play best out of five hands or something, which would have left it entirely to luck, I realized my edge would come if we got strategy involved. (Because I’m so smart.) So I dealt each of us $50 in Monopoly money, with a $1 ante – success wouldn’t be who won the most hands, which is just luck, but who won the most money, which takes brains – and, through skillful betting, bluffing, and calculation of the odds, I proceeded to go bankrupt. Marc had all the money. David: 9, Marc 8, Me 7. Which meant we were tied, and a nice way to end the day friends. (We were tied because it wasn’t even necessary to play the Scrabble – indeed, they refused, so sure were they of the outcome. This annoyed me, but I took the 3 points anyway, and Marc, who is also a writer, took his 2. We were 10, 10, and 10, although David somehow remembers it as being 13 for him. We are not quite sure how.) I love summer. I hope you are enjoying yours. Monday, at last: The Physics of Coffee
Summer Fun July 29, 1998March 25, 2012 So I finally found a pair of goggles that work. The water stays on the outside of each goggle, leaving each of my eyeballs dry and happy. This means I will be able to swim, which means I will get the aerobic exercise I need, which means I will live forever (if my Amazon.com short doesn’t kill me first). "What kind are these?" I asked the friend who let me try them. "Nike," he said, which a sharper man might have deduced from the NIKE logo. He actually offered to give them to me he had another pair but I would have been embarrassed to take his goggles, and I would then have had no excuse not to swim laps the next morning … let’s not rush in to physical fitness … so I said I would just pick up a pair of my own. A week or two later, I found myself in midtown Manhattan, passing Nike Town on East Fifty-Seventh Street. Nike Town occupies an entire five-story building. It is the mother of all Nike stores, with a huge atrium and what would appear to be room for 80 different boutiques, 16 per floor. And yet it’s all Nike. Nike, Nike, Nike. "Where would I find swimming goggles?" I asked the Nike Town crier in the atrium. "We don’t carry goggles," he said, helpfully. "No, no," I explained. "I’ve seen them. I’ve worn them. They’re great: Nike goggles." I made zeroes out of the thumb and forefinger of each of my hands and placed them over my eyes the international symbol for Nike goggles. "I know," said the Nike guy. "We don’t carry them. Why don’t you try Sports Authority on Sixth Avenue?" "What do you mean you don’t carry them?" I marveled, gesturing with my arms now outstretched at the extraordinary scale of this giant store. He smiled at the irony but held firm: no Nike goggles at this store. At Sports Authority I found only Speedo goggles, of which I bought two pair, but which I assume will leak and so haven’t tried them, because let us not, after all, begin an exercise regimen without an appropriate consultation with our doctor. There will come a time, I have decided as a result of this experience, when Nike Town will be mainly for show, like a giant 3-D billboard, whereas actual Nike product will mostly be bought by clicking on the Internet and delivered the next morning by UPS, FedEx or priority mail. You will log on to Amazon.com, survey the tabs across the top right now they are just BOOKS and MUSIC, but can SOFTWARE and EYEWEAR (for replacement contact lenses, mainly) and INSURANCE be far behind? pause briefly to ponder whether Nike goggles would be under the SPORTS or EYEWEAR and decide simply to search on (category) Goggles and (brand) Nike, just as now you might search on the title and author of a book. A moment later, there would be a photo of the goggles my pal let me try and … click … in the morning the goggles would arrive by Federal Express. Which is one of the reasons I am long Federal Express, and also a reason I am wavering in my resolve to stay short Amazon.com. And yet I have noticed through the years, based on a series of mostly disastrous shorts, that it is when I finally "get it" when I finally see why U.S. Surgical (which seemed overpriced at 20 and which I shorted at 60 but which is now 140) actually might blow Johnson & Johnson out of the water and revolutionize surgery throughout the world that I cover my short, at the top, only to see Johnson & Johnson offer a little healthy competition, after all, and the stock fall back to 20. "Trees don’t grow to the sky," is a very old saw on Wall Street. But of course a handful do (Berkshire Hathaway comes to mind) and even shorting a relatively few shares of such a tree can wind up clear-cutting your entire forest. So one is never quite sure, with a U.S. Surgical or an Amazon.com, which kind of tree this will be. But here’s the point: Does anyone know where I can get a pair of Nike goggles? Coming Monday: The Physics of Coffee
Sell Puts to Buy, Write Calls to Sell? July 28, 1998February 5, 2017 From Jarrett: I came upon this strategy, and for the life of me I can’t figure out how to lose money with it. I don’t mean paper losses, I mean lose actual money commonly used to buy Twinkies and the like. After researching Pioneer Aviation (a fictional company: Symbol: PIOAV), say I decide that it is a good value (let’s assume for a moment that I am correct about this). It is currently selling at 15. I then sell the July 15 Put, and take whatever premium is offered – let’s say, since it’s selling at the money and it’s almost expired I get paid 5/8 ($62.50 for a put on 100 shares, less commission). One of two things now happens. Either the option is exercised, in which case I have to buy 100 shares at 15 where I was going to buy it anyway – but I’m $62.50 richer – or it expires and I buy 100 shares at whatever price it then is (which would have to be 21 before I see a paper loss). [A.T.: Well, that’s the first flaw. Jarrett misplaced a decimal point. Paying $2,100 for 100 shares of this stock, instead of $1,500, sets him back an extra $600. The $62.50 he got for selling the put barely puts a dent in that. What I think he meant to say is that he could pay as much as 15-5/8 – not 21 – before this strategy gave him a paper loss.] Several years later in January, PIOAV is selling at 85. I think 85 is plenty, and I want to get out, and I would be completely happy with $85/share. But instead of selling, I sell a June 85 Call, and get paid a premium of 17 ($1700). (Incidentally, 85 and 17 are the actual numbers from yesterday’s Intel closing price.) Three things can now happen: The call is exercised and my 100 shares are called away from me at $85. So I get $8,500 plus the $1,700 plus the $62.50 I got for selling the put. (Net profit, $8,500 less $1,500 to buy the shares = $7,000, plus the two option premiums = a total profit of $8,762.50.) The option expires with the stock above 85. [A.T.: Actually, this would never happen. No one would “leave money on the table” this way. Even if the option purchaser forgot to exercise the option, his brokerage house almost surely would do so for him.] The option expires worthless, with the stock below 85, so I keep the $1,700. In that case, I either wait for it to rise or sell another call and make some more money on it. Now, I know the price of PIOAV could very well go to 125 in February, and I’d have it called away from me at $85. But if I hadn’t sell [sic] the call, I would have sold the security in January when it hit 85 – so at least I have the extra $1,700. What is wrong with my logic? If this works then why is everyone anti-option? There are LOTS of scenarios where you can lose a ton of money with options, but I don’t see it here. Help me out please. A.T.: Well, let’s do these one at a time. If you definitely wanted to buy PIOAV, then selling the put is not dumb. You either get a small premium for doing so – but lose the chance to buy it at 15 because it shoots straight up, say. Or else you do wind up buying at 15, but with this little 5/8-of-a-point discount (in your example). It can certainly work, and some smart people do buy stock this way. But it’s not a free lunch, because you tend to buy only stocks that aren’t doing so well and miss the ones that do indeed sprint to new highs. There’s also the risk that you’ll get cocky and forget that for $62.50 (less commissions and taxes) you have put yourself on the hook for $1,500 – even if fraud is discovered at the company and you have to pay 15 on a day when the stock has collapsed to 3. So maybe you’ll sell more puts than you can afford to – it seems so innocent, so no-lose – and in a meltdown come home to find yourself more heavily invested in PIOAV then you like. But if you’re careful and are truly prepared to buy all the stocks you sell puts against (because if the market melts down, you’ll get ALL of them, not just PIOAV), then be my guest. Now, what about when it comes time to sell. At that point, I believe you should just sell. There’s no reason to hold on just to get the call premium. (Better, indeed, to buy some other stock you think has brighter prospects and, if you like, write out-of-the-money calls on it.) Except for taxes. Taxes can be a good reason to hold on to a stock you think may be headed south – if you believe it will ultimately come back – and write calls on it in the meantime. You get the dividends, you get the call premium, you avoid forking over the taxes. The problem is, the market is wily. It’s not uncommon for it to foil one’s best laid plans. You sold a call at 85, accounting irregularities are discovered, and now it’s 45 – a la Cendent. You got a little premium but missed the chance to sell at 85. Oh, no! Or gold is discovered, and now it’s 125. You took the risk of it falling to 45, yet reaped little or none of the gain from 85 to 125. Oh, no! In short, your strategy could earn you a Twinkie or two and every once in a while make you too sick to your stomach even to think about Twinkies. It’s not terribly dumb to do what you describe from time to time when you feel the circumstances are right, but neither is it remotely a no-lose strategy for easy money. Sorry!
A Brief History of Interest Rates July 27, 1998February 5, 2017 How long can these low interest rates last? I don’t know and I’m not making any predictions. But from 1880 to 1965, there was no such thing as a home mortgage for more than 6%, with bond rates even lower — and that was 85 years. (Some facts are so telling, I should just shut up and get out of their way.)
Anybody Seen That Dog? July 24, 1998March 25, 2012 A while back, I asked you to send me your credit card stories for an article I’m doing. Scores of you responded – I got just what I needed. With luck, the result will appear in PARADE in a couple of months. One last favor on this, though. About two weeks ago, I was lying in bed, the “Today Show” helping me to wake up – I could swear it was the “Today Show” – and out of the corner of my eye … on the news segment, not one of the interviews … I saw a story about a dog, whose name I believe was Nicklaus Arnold, who had two credit cards. One of them was a platinum card. Naturally, I concentrated my sleepy mind on this story about this dog whose owners marveled that they hadn’t even included his date of birth or social security number in his application – and the dog got the credit cards. Shots of the dog, some kind of dark-haired little terrier, and the tag line, if I got this right, quoted a spokesman from First Union Bank: “We have no problem with this as long as he pays his bills on time.” I didn’t rush to my desk or to the phone or anything; I figured it would be easy to grab the details later, either through a friendly producer at the “Today Show” or else by calling First Union’s PR department. Well, no one at the “Today Show” has any recollection of this story, and neither does anyone at First Union. Nor does a Lexis-Nexis search turn up any pooches with plastic, let alone platinum. But I swear I wasn’t dreaming. It could have been CNN, I suppose, or some other channel. And maybe it was First USA, not First Union. But ever since I bluffed my way through the essay exam in Philosophy 1 (“Is this examination real or a dream – how do you know?”), I have been keenly aware of the distinction between dreaming about dogs with credit cards and dogs who actually have them. And this dog had two. So here’s the favor: Did any of you see this? I can’t imagine you’ll remember specifically where you saw it (it was July 9th or thereabouts) … and it may only have played in the New York area, if it was a segment on the local “Today Show” news (so I don’t expect a lot of you to have seen it) … but just knowing I am not losing my mind would be helpful. Failing that, if your own dog has a credit card, please let me know.
The Need for a Driver’s License — and Editing July 23, 1998February 5, 2017 Here’s one I’ve been saving up for more than four years, only now realizing its true relevance. It’s not really about drivers’ licenses; it’s about the Internet and the future of communications. First, the exchange. You may have read it on CompuServe. From John, a disgruntled citizen, addressed to “All”: CAN GOVERNMENT FORCE YOU TO CONTRACT WITH A THIRD PARTY? (i.e. Auto Insurance, Health Insurance Alliances, etc.) NO! This is also specifically prohibited here in the Republic of Arizona by our Constitution. Are you aware that the Federal Courts have decided that it is UNCONSTITUTIONAL to require a person to obtain a driver’s license, auto registration or mandatory insurance in order to travel on our nation’s roads, highways and waterways. See Chicago Motor Coach vs. Chicago Volume 169 of the Northeastern Law Reporter, p. 22 (in your local law library) where the court stated that “Travel is NOT A PRIVILEGE requiring licensing, vehicle registration OR FORCED INSURANCE.” Also see Sheer vs. Cullen Vol. 481 Federal Reporter p. 945; Vol. 11 American Jurisprudence (1st) Constitutional Law, Section 329, p. 1135, which states: “The right of the citizen to travel upon the public highway and transport his property thereon, by horse-drawn carriage, wagon, OR AUTOMOBILE, is NOT A MERE PRIVILEGE, which may be prohibited at will, BUT A COMMON RIGHT, which he has under the right to life, liberty and the pursuit of happiness.” [Emphasis added] Just so you know, my wife and I do carry liability insurance, BUT only because we need it for asset protection. We do not license or register our cars, and we have revoked our driver’s licenses. Instead we carry a Sovereign Travel Permit (a photo ID imprinted with our affidavit #, as recorded in our local county recorder’s office) issued to ourselves, by ourselves, as is EVERYONE’S right under Common Law. We know this information is correct, as I’ve already been pulled over twice by law officers for expired plates. As soon as they saw my affidavit, there was no ticket, no warning, just a “Have a nice day, sir!” Why are YOU letting the government steal your money in the form of driver’s license fees, vehicle registration fees (hundreds of $ every year in some states), etc.? A.T.: Pretty scary, no? But soon there was this reply. From Craig, a deputy attorney general who, fortunately, happened to be passing by the CompuServe forum: Just in case anyone else had decided to throw away his license and registration, I spent a few minutes today looking up the cases cited in the message to which this is a reply. Chicago Motor Coach v. Chicago, a 1929 case decided by the Illinois Supreme Court, is a case about whether the City of Chicago could require the Chicago Motor Coach Company to get a license from the city to use public streets when the company already had a certificate from a state agency. The court said that Chicago didn’t have that power. The case contains this statement, “The Legislature may prohibit by general law the operation of motor vehicles upon the highways of the state. …” It says later, “Even the Legislature has no power to deny to a citizen the right to travel upon the highway and transport his property in the ordinary course of his business or pleasure, though this right may be regulated in accordance with the public interest and convenience.” John quotes the court as having said, “Travel is NOT A PRIVILEGE requiring licensing, vehicle registration OR FORCED INSURANCE.” That sentence simply doesn’t appear in the case I read. Perhaps it’s missing because of some strange typo. It would be surprising if the court had said it since the case had absolutely nothing to do with drivers’ licenses, vehicle registration, or forced insurance. As for the other case John cites, Sheer v. Cullen, it’s a case in which a court said the IRS had unlawfully fired an IRS agent for failing to produce certain documents when the IRS tried to audit its own agent. John doesn’t explain how this case relates to his beliefs about the Constitution and driver’s licenses, auto registration, or mandatory insurance. Our library doesn’t have a copy of the other source John cites, American Jurisprudence, 1st edition, since the first edition was replaced long, long ago, by the second edition. I was thus unable to check the quotation. (The quoted language is a slightly surprising statement to find in a legal treatise since it seems to imply that citizens have direct rights under Constitutional law to “life, liberty and the pursuit of happiness.” The quoted language is from the Declaration of Independence, not the Constitution.) In any event, though I can’t give legal advice, I would suggest that people might be acting in a rather dangerous manner to their own liberty and property to ignore their state’s laws on automobile registration, operation, and insurance. A.T.: All of which leaves me, and perhaps you, wondering: How can someone bright enough to make legal citations and find his way to a CompuServe forum be so nuts? And, more to the point, how are we to tell truth from fantasy in the great new world of cyber-publishing? I attended a panel discussion a few years ago that included such bright lights as Rich Jaroslavsky, who headed The Wall Street Journal On-Line, and Esther Dyson, who lived down the street from Einstein when she was a little girl (suggesting that genius may be contagious), and one of the few things on which these cyber-seers seemed to agree was the increasing, not decreasing, importance of “editorial input” on the Internet. Sure, they said, anyone can publish anything on the net. But with zillions of choices, people will thirst more than ever for editors to do two things: direct them to the good stuff and certify its accuracy. So don’t give up on the old brand name publishers just yet.
Silicon Cowboys and Indians: Three More Views July 22, 1998February 5, 2017 From “Tony”: I agree with your correspondent, that software development is moving offshore rapidly. Having worked in Silicon Valley for thirty years, I’d like to add a couple observations. (Please withhold my name if you use this. I still have to earn a living. Most of my work colleagues are foreign engineers in the situation I describe.) 1. “There is a lack of trained engineers in the US.” Well, sort of… There are many trained US engineers available whose only sin is being over fifty. Companies favor younger foreign engineers. They are cheaper. And because they need a green card to work in the US, the company – as their sponsor – has enormous power over them. 2. “(Indian) government sponsored education.” During the Cold War, the US government sponsored higher education through loans, military schools, and state colleges. This sponsorship, and Cold War technical research, is the basis for the current technical revolution. The Internet itself is an offshoot of Defense Department research to build a secure communications network. Now, as we reduce sponsorship of education, foreign governments increase theirs. A middle class US engineer comes out of college heavily in debt. He or she must compete with a foreign engineer educated at government subsidy. The result is fewer US students, a stream of high paying jobs flowing offshore, and fewer good jobs in this country. I live in a semi-rural, working-class neighborhood. When I talk to my neighbors it seems to me that they work twice as hard to make a living, and are generally closer to bankruptcy than any time in the past thirty years. From Jeff Houston (in San Francisco): I don’t quite agree with the author’s assertion that software design will shift to other countries. Some of it will, but the truly innovative and new ideas in software engineering will stay in the U.S. I have been a software programmer in the U.S. for over 15 years. I’ve come to the conclusion that the reason the U.S. is ahead of the game in software design is because of our culture. People born and raised in the U.S. are familiar and can deal with constant change, one of the main ingredients in Technology. In fact, change is encouraged here (which is not always a good thing). This is not always true in other cultures. Many cultures discourage change. It’s my belief that only those cultures that encourage constant change and freeflow/abstract ideas can excel in software design. Software is always improving and to improve on an idea requires the ability to think abstractly. U.S. citizens are encouraged to think differently, and act independently – a key ingredient in innovative software engineering. Sure, cultures that do not have these traits can still write software. Programmers can be given direct tasks and will write programs specifically following the instructions they’ve been given. But truly innovative ideas in software engineering will only come from those cultures that encourage people to think abstractly. I must say that I am not familiar with India’s or Israel’s culture. It may be that these cultures already have these attributes and therefore may excel in software design. But I do know that the U.S. has this great advantage. I hope all this doesn’t sound racist. By no means is it meant to be. From Heshy Shayovitz: I tend to agree with the reader who wrote that in the future technology companies will have most of the operations outside the US. Recently I was speaking to friend who’s developing a program for the health care industry. He told me that usually when he hires programmers, they leave after 6 months. He spent a lot of that time training them, so now they go to another company for a few thousand dollars more. So what has he done about it? He has a programming team in – yes you guessed it – India. He says that he pays them the equivalent of what he would pay a US worker in benefits (health care, etc). I’ve heard various variations of this. So what does this seem to point to? Maybe something similar to what happened in the automobile industry – some foreign country(ies) will take the industry away from the US. Maybe India. You never know – they are now a nuclear power. On a similar note: I don’t believe that there will continue to be a shortage in qualified technical people in the US. Even though universities aren’t graduating enough “computer people,” lots of programmers I know didn’t major in it. Actually some friends have come over to me to ask me which computer courses to take (I’m a computer consultant), so they can get into the field. In addition, once the Y2K deadline passes, some of those programmers will have to go elsewhere. And what do we (and the Indians) do once the software largely learns how to program itself?
How Much Liability Coverage Should You Carry? July 21, 1998February 5, 2017 Joe Robinson: I imagine that the roaring bull market has made a number of your readers rich (on paper anyway). I would like to see some discussion of how this affects the limits your reader should maintain on our automobile liability insurance (i.e. involvement in one accident where your reader is found at fault, and he could “lose the farm”). As a fledgling engineer nine years ago, I bought insurance with 100k/300k limits on liability. I thought this was too high of an amount, but was assured by the agent that it was considered the “minimum” for a professional to protect his assets. Now with rising medical costs, a wage-earning spouse, a house nearly paid for, and a stock portfolio generally rising with the market, I wonder if this is enough. A.T.: How rich you are has relatively little to do with the limits you need, Joe. If you had only 15 cents but wanted to protect it, then — in theory — you’d need as much coverage as if you had $15 million. Why? Because liability coverage isn’t geared to your net worth, it’s geared toward compensating people you hurt. So if they require $600,000 to patch them up (and replace their lost wages, compensate them for their pain and suffering, and so on) — or win it in court — you need $600K of coverage no matter how high or low your assets. As a practical matter, though, it’s rare that a plaintiff in one of these cases tries to go beyond the insurance. If you have a $20,000 net worth, they’d take the $100K and probably (probably!) not try to get the rest. But if you’re a rich doctor or lawyer, they’d expect you to carry more, and if you didn’t, might well sue you for it and go after a portion of your future income, to boot. So in that sense, the more affluent you are, the more coverage you need. The 100k/300k coverage you refer to will pay up to $100,000 per person, with a maximum of $300,000 per accident even if you’ve mowed down an entire tour group. Since you do have assets to protect, you should have $250K/$500K coverage plus at least a $1 million umbrella policy. Umbrella policies are usually cheap and cover you not just for jumbo auto liability claims but for other non-professional liability as well — like serving your guests tainted sushi (assuming you did it accidentally) or failing to clear the ice off your front steps. (Thud.)
WEBS and ADRs July 20, 1998February 5, 2017 WEBS’ SITES “Could you point me toward more information concerning WEBS? I currently own shares in the Vanguard Asia Pacific index fund, but one of your columns got me thinking that I would be better served by simply buying WEBS for the same countries that VPACX covers. One more question: can you tell me an easy way to find the net asset value for closed end funds?” – Josh Kloepping A.T.: WEBS — which are baskets of stocks designed to represent the market of a particular country — all trade on the American Stock Exchange. Their three-letter symbols all begin with EW (Japan is: EWJ). Barron’s lists the NAV and discounts/premiums of closed-end funds each week. ADRs “How do I go about buying foreign stocks? I am somewhat new to this. I am interested in Adidas AG, from Germany, which I am told is traded as an ADR on the New York Stock Exchange. I don’t understand what ADR means, or what to do to buy.” – Bill McSorley A.T.: ADRs are American Depository Receipts. To buy, just call any broker. That’s the point of ADRs: to make it easy for U.S. investors. They trade just like U.S. stocks, in American dollars, and typically represent one or two shares of the foreign stock. A depository institution like J.P. Morgan holds the actual foreign shares and takes care of paying out the dividends. Alternatively, you can instruct your broker to buy shares “on the Frankfurt” or on whatever exchange your foreign stock actually trades. Many brokers aren’t set up to do that — and will charge you more for the trouble if they are. This is what you’d need to do with a stock for which there are no ADRs. Alternatively-alternatively, if you were rich, you could set up a brokerage account in Germany or Uganda or wherever and do your trading via your local German or Ugandan broker. But this is, at least for now, difficult and impractical for most people; your account wouldn’t be covered by SIPC insurance or other U.S. regulatory oversight; you’d have to check an extra box on your Form 1040 about maintaining an account overseas; your balances wouldn’t automatically be swept into a money market fund to earn interest; you wouldn’t be able to see your account on-line — and I’ll bet they’d charge you a lot more than $8 a trade.
Reader Mail – Andyday July 17, 1998February 5, 2017 I had proposed an eighth day of each week that only I would get to enjoy. The rest of you would be frozen; I would have a chance to catch up. Jeffrey Schwarz: Do you think one day a week would be enough? Would you, like me, wake up that day and say “Hey, everyone’s frozen! I can take my time about this” and then loaf around and accomplish nothing? A.T.: There is that risk. Vincent DeHart: Gee, Andy, but unfortunately for you, the eighth everyone-else-is-frozen-but-me day of the week already exists, but you’re unaware of it because you are among the frozen. I’d let you in on it, except, you know, liability and nondisclosure and all that. I’m truly sorry, but look upon the bright side. The price I pay is aging over twelve percent faster than everyone else. A.T.: Who said anything about aging faster? This was not part of my plan. Russell Turpin: “You would have Monday, Tuesday, Wednesday, Thursday, Friday, Saturday, Sunday but then, while you were frozen, I would have Andyday. Is that too much to ask? (And no, I would not mess with you while you were frozen.)” Oh, but you would! You would use that extra day to do investment research, putting the rest of us a little bit behind you, or to rest from the exhaustive research that you do the rest of the week, putting the rest of us that much behind in our sleep, or … Well, almost regardless of what you did, it would give you just a bit of competitive advantage over everyone else. You may not think of this as messing around with the rest of us while we are frozen, but these changes to the social environment are important. As long as it was just you, it wouldn’t be that bad. The overall social environment would remain much the same, except that your edge would be that much more. You seem a nice fellow, so I really don’t mind your being just a bit ahead of the game. With my luck, though, John Travolta will be the first celebrity to buy an extra day each week, and I never cared for him. The big problem with this is that celebrities tend to pass these secrets around amongst themselves. No, Andy, I don’t completely trust even you with something *this* big. First, you would tell Warren Buffett (and who could complain about that?), but he would tell that smarmy investment banker friend of his, who would tell both his mistress and his boyfriend, and soon everyone would have it except for those of us who are neither famous nor bedding the famous. The celebrity gap would become just a mite wider, and it is already quite wide enough. So I’m sorry: you can’t have an extra day each week unless the rest of us get one, also. It falls under the one-pants-leg-at-a-time rule. A.T.: Well, excuse me! Who ever said anything about Travolta, or selling these days? Buffett already has one anyway. From Sue Hoell: You already have Andyday. It occurs when others are sitting in front of their TV sets focused on ballgames. They are essentially frozen, while you and I have an opportunity to catch up.