Series I Savings Bonds May 15, 2000January 28, 2017 I can understand why people aren’t buying Treasury Inflation-Protected Securities (TIPS). As described Friday, they’re new; there aren’t many choices on holding periods; buying and selling them require brokerage fees unless you can wait for the infrequent Treasury auctions and hold to redemption; and the inflation adjustment is taxed as income each year even though you don’t actually get it until you sell. Also, you can only buy them in $1,000 increments. So what if we add about 50 more years of familiarity; let you choose any holding period you want between 5 and 30 years (and you don’t have to decide now); eliminate any need for brokerage or any other fees; not tax either the interest or inflation adjustment until you redeem the bonds — and let you buy them in $50 increments? Will that make you happy? Welcome to the new world of U.S. Savings Bonds. In 1998, one year after introducing TIPS, the federal government introduced a new form of Savings Bond called the Series I (for inflation, not the Roman numeral) Bond. If you buy one today, you are guaranteed an annual return of 7.49% for the first six months, with the rate adjusted every six months to the sum of 3.6% plus the rate of inflation. And you can buy one online with a VISA or MasterCard card within the next 10 minutes, even allowing 5 minutes to finish this column. (There’s no surcharge for using a credit card, so, if you have that kind of card, you get the frequent flier miles — equivalent to an extra 2% tax-free return!) U.S. Savings Bonds started as war bonds paying miserable returns. Patriotism made up the difference — that, and the fact that small savers had no alternatives. There were no money market funds, and the interest on savings accounts was fixed by law at a ceiling that ranged between 1.5% and 3.5% in the Thirties, Forties and Fifties. (Christmas Clubs paid 0%.) Today, we’re not at war and alternatives abound, so the Treasury has had to be more competitive. And it has been. The 7.49% yield on Series I Bonds should be of interest to just about any small saver. A few key facts: Series I Bonds are dated the 1st of the month of purchase, and earn interest from that date (so buying late in the month makes sense — you get three or four weeks’ free ride). They can’t be redeemed until the bonds are six months old. If they are redeemed before they are 5 years old, the last 3 months of interest is lost. But at today’s rates, holding them for just 2 years and then redeeming them will probably outperform most 2-year CDs even after losing the last 3 months’ interest (especially if you pay state income taxes, since Savings Bonds are exempt from these). They stop earning interest after 30 years. The interest is accrued monthly (compounded semi-annually), and you can, if you wish, elect to pay taxes on the growth without waiting for redemption. That could make sense for bonds in the name of a child in a low tax bracket. Little or no tax would be due each year; and, by satisfying the tax man on a pay-as-you-go basis, no tax would be due at redemption. These are such a terrific deal that the government limits calendar year purchases to $30,000 for each Social Security number. If you’ve got much more to invest, you might want to take another look at TIPS, which are currently promising over 4% plus inflation (but with that rotten tax to pay each year on the inflation adjustment, even though you don’t receive it). A small additional advantage for seniors: Seniors are required to pay taxes on up to 85% of their Social Security benefits if their “provisional income” exceeds certain amounts. Many have learned to their annoyance that tax-exempt municipal bond interest is included in calculating provisional income, and can thus bump up the taxable portion of the Social Security benefit. Savings Bond interest, however, is NOT included in provisional income until you actually redeem the bonds (unless you elected the pay-as-you-go approach mentioned above). A possible advantage for tuition payers: Normally, the tax on Savings Bond interest is deferred as it accrues, taxable in full when you redeem the bonds. But if someone at least 24 years of age buys a Savings Bond and then, years later, spends the proceeds upon redemption for college tuition, fees, and books (personally or for a dependent), the interest can be entirely exempt from taxation. Say you’ve got a 13-year-old and are frightened by the short-term prospects for the stock market. It is worth considering that a tax-free 7% might be pretty hard to beat (of course, if inflation drops, the return on these bonds will drop, too; but the converse is also true). Unfortunately, the exemption is phased out for higher income taxpayers, and there are several confusing restrictions, so you’d better check the rules carefully if you’re really counting on this one. Note that you CANNOT hold the bonds in the name of the child and get this benefit (the owner, remember, must be at least 24 on the date of purchase). By the way, if you redeem savings bonds and put the proceeds into a 529 qualified state tuition plan, that is considered a qualified higher education cost itself and will exempt the interest on the bonds from taxation if the other requirements are satisfied. A final word or two: TIPS and Series I Bonds are attractive for small savers. They’re totally safe and protect against inflation. TIPS would be good for a retirement account. Otherwise, Series I Bonds probably make more sense. Large, high-tax-bracket investors might prefer municipal bonds — after all, munis are tax-free, not just tax-deferred. Then again, they don’t currently pay as much as TIPS or Series I Bonds, and if inflation rises, muni-owners will fare worse than TIPS- or Series I Bond-owners. (If inflation falls, muni-owners will fare better.) We started this discussion looking for a safe place for 5-year money. For many savers, Series I Bonds fill the bill. And you’ve still got 5 minutes left to buy some. (You can buy as little as $50 or up to $500 online at one time.) Check out savingsbonds.gov. You can stop at any time before hitting the PAY button. Just find out how easy it is. And see if you can figure out who those people are on the different bonds. That’s Martin Luther King, Jr., on the $100, but who are the others?
An Investment That Guarantees You’ll Beat Inflation (Before Taxes, Anyway) May 12, 2000February 15, 2017 I mentioned yesterday that, based on the experience of the years from 1926 to 1999, the safest possible place for money you planned to hold 5 years was a blend of 55% in cash (well, Treasury bills or money-market funds) and the rest split equally between U.S. and international stock portfolios. The worst you would have done in any 5-year period was a “real” rate of return (after inflation but before taxes) of minus 2.35% per year. Losing 2.35% a year for five years turns $10,000 into $8,879. Not too awful for a worst-case scenario. But what if I offered you a deal with a GUARANTEED POSITIVE return of 4.25% per year above inflation, exempt from state and local income taxes, and with no risk of default? Would you turn it down? Well, millions of people just did, in the January 2000 auction of Treasury Inflation-Protected Securities (TIPS). Consider this: over long periods of history, stocks offer real returns of around 7% (after inflation but before brokerage or mutual fund fees, expenses and commissions, and before tax). To get that, you have to endure a roller coaster that periodically cuts your investment in half and requires great staying power. Most people, through commissions, annual mutual fund expenses, bad market timing, big allocations to cash or bonds for safety, and foolish short-selling (I was so dumb!), do considerably worse than 7% after inflation. So why not settle for a completely safe and simple 4.25% above inflation? Why aren’t people falling in love with TIPS? I have some theories: (1) They don’t know about them or understand them. Okay, let me solve this one first. TIPS are sold in auctions by the Treasury in multiples of $1,000 and then trade regularly until maturity. The bidding is for the cash yield (as I said, the last auction produced a 4.25% yield). This yield is paid on the face value of the bonds semi-annually (2.125% per six months for the January 2000 10-year TIPS), just like other Treasury notes and bonds. The difference is that the face value is adjusted automatically for changes in the Consumer Price Index for Urban Consumers (CPI-U). So both the face value and the interest payments are going to go up with inflation (and down with deflation if we should have it, though never below the original face). Your real return to maturity is guaranteed. (2) They think the government might change the way the CPI is calculated. I understand this fear, since many believe that the CPI-U overstates inflation by 0.5% to 1.5% per year, and there is now an alternate CPI-U being computed that supposedly is more accurate. People who are suspicious of everything the government does are convinced they will switch to the alternate method and reduce the returns of these bonds considerably. But even my libertarian friend, the estimable Less Antman, who says, “I wouldn’t trust a government report that said the Sun was going to rise in the East tomorrow,” says that can’t happen, because THERE IS SPECIFIC LANGUAGE IN THE LAW FORBIDDING IT. The rules for TIPS say specifically that any change in the computation of the CPI-U that reduces reported inflation from the old method requires the yield on these be increased to compensate. (3) The periodic increases in face value are taxed immediately, even though the face value isn’t payable until the bond matures. It’s true, it’s a bummer, and it was probably a mistake for the Treasury to design it this way. Unfortunately, if you buy a 30-year TIPS, after 1 year you’ll be taxed on a cash flow you’re not going to collect for another 29 years. There are two points to be made here. First, if you hold TIPS in retirement accounts, this is not relevant. The appreciation won’t be taxed until withdrawn anyway. Second, the premise of this discussion was that we were looking for a safe 5-year return — not 30. The effect of being taxed a few years early is not that significant. (It could even save you money if you’re headed for a higher tax bracket, or if receiving that extra taxable income all at once, in the fifth year, would have bumped you into a higher bracket.) Also, if you’re using TIPS in a custodial account for your teenager, the taxation will be pretty small. Nevertheless, the government blew it here. If you own a $1,000 TIPS with a 4% yield and we have 3% inflation, you’ll receive a bit more than $40 in cash but be taxed on a bit more than $70. For the average person in the 28% bracket, that works out to around $20 in tax payments, or 50% of the current yield. If inflation gets really bad, you could actually owe more taxes than the entire yield, with years or decades to wait for recovery (and a probable drop in the market price if you want to sell early). And a footnote to the retirement-account solution to the tax problem is this minor but annoying little twist. Namely, that TIPS, being Treasury securities, are meant to be free of state and local income tax. Yet if you own them inside a retirement plan, they will be taxed, when you withdraw them, like any other retirement dollars you withdraw from the account — as ordinary taxable income. Finally, since I can hear a bunch of you muttering this under your breath, let me spare your having to write angrily to tell me that the government has no right to tax inflation gains in the first place, because they’re not real gains at all! Hey — makes sense to me. I would be perfectly happy to have TIPS designed to adjust for inflation tax-free. That would make them even more desirable, driving down the rate of interest Uncle Sam would have to pay to attract buyers. It might thus not wind up costing Uncle Sam a penny, yet boost their popularity and simplify things. Thanks for writing in to tell me that. (4) There aren’t any 5-year TIPS. Okay, you got me there. They tried, though. The Treasury offered 5-, 10-, and 30-year TIPS in 1997, and the sales of the 5-year notes were so miserable they discontinued them (but the 1997 issues are trading in the market and you can buy TIPS maturing in 2002 through your broker). They only sell the 10-year TIPS in January and July and the 30-year TIPS (too long for anything but tax-deferred accounts) in October. Having started in 1997, that means the earliest 10-year TIPS issued in January 1997 are coming due in January 2007, a little under 7 years from now. Obviously, within 2 years we’ll have a steady supply of TIPS that can be bought on the open market with maturities in 5 years (though they probably won’t still be yielding over 4% once people get wise to these). And except for the commission you’ll pay on sale and the tiny discrepancy that might exist between the face and market value of these when you sell (not likely to exceed 1%, and more likely to be a gain than a loss, anyway), a TIPS maturing in 2007 should be reasonable for a 2005 goal. You’ll have to use a broker to buy a TIPS that is already trading, but can buy new 10- and 30-year TIPS at the auctions directly (even in an IRA) without commissions — or on-line. http://www.publicdebt.treas.gov So far, there’s one mutual fund specializing in them, the American Century Inflation-Adjusted Treasury Fund, which was founded immediately after these were created, but it is a mark of their unpopularity that the fund still isn’t large enough to have been assigned a ticker symbol! It has a 0.51% expense ratio (not unreasonable for such a tiny fund) that is scheduled to drop when people start piling in. Also, I believe Vanguard is launching a bond fund to invest in inflation-indexed securities in a few weeks. It looks like TIPS aren’t going to remain a secret for much longer But before you act on any of this, give me one more day, because there is one other investment that may be even better than TIPS, especially for retirees or those saving for an older child’s upcoming college education. Monday: 5-year TIPS without taxation Oh, and thanks, guys. You bought enough copies to get my book up from 2,797 to 468 as of one this morning. That’s what I call teamwork!
Where To Put Money You’ll Need In 5 Years May 11, 2000February 15, 2017 Hey, wait. I just noticed that my book has slipped to, like, #2,797 on Amazon. This is embarrassing. Sure, one of the customer reviews gives it only one-star, but he was reviewing the Spanish translation. Please, everybody: buy my book today as a graduation gift for somebody, or for Father’s Day or something. Got to get my book back into triple digits. (Avoid the Spanish edition.) And now back to our regularly scheduled programming. It’s important to know that the stock market is likely to outdo “safer” investments over 20 or 30 years. But not all goals are that far off. And even for distant goals, most people will not be able to handle a grinding stock market decline without feeling an overwhelming urge to abandon their plan. Someone with a 30-year “rational” horizon may have a 5-year “emotional” horizon. (Day traders appear to have a 5-minute horizon, but day trading has nothing to do with investing.) This last is particularly unfortunate, as investment types and styles often seem to cycle in and out of favor over periods of 3 to 5 years, so that investments that underperform over a 5-year period might overperform over the next 5. If you are saving for a specific goal that is approximately 5 years away (a house down payment, perhaps), you probably want to minimize the risk of a terrible loss without giving up too much potential gain. We all know that high returns without risk are fantasies. But by diversifying over different asset classes, we might not have to give up too much. Consider — in real, inflation-adjusted terms — the worst 5-year results of the 20th Century for stocks, bonds, and cash investments. With appropriate thanks to Charles Ellis for providing this information in his excellent Winning The Loser’s Game, the worst compounded annual real rates of return over 5 years since 1901 have been: Stocks: -11.62% (that is, losing 11.62% a year) Bonds: -10.48% Cash: – 7.78% The worst 5-year stock return would have turned $10,000 into $5,392 of purchasing power. The worst bond return turned $10,000 into a not much better $5,749. The worst return for cash cut $10,000 down to $6,670 (the cash was still there, and even grew with interest, but inflation cut its value). Interestingly, these worst 5-year periods were not clustered around the 1929 crash, as you might have guessed, but 1915-1920. World War I ignited severe inflation. A basket of goods that cost $100 in 1915 cost $197 in 1920. That killed the stock and bond markets, as sharp inflation always does. But it also slashed the value of Treasury bills (which are what financial types like me mean when we refer to cash), because rates did not float back then as they do today. Today, if inflation ever came roaring back, the yield on Treasury bills would roar back, too. (Then again, these “worst” numbers are before tax. So after inflation and tax, you’d still be losing money at a significant clip, after tax, in Treasury bills, if inflation roared back, even if not quite as fast as in 1916.) So do you still think stocks are too risky? Well, OK. But the figure for stocks can be improved considerably by not limiting the investment to U.S. securities. When the U.S. market crashed between 1929 and 1932, non-US investments suffered a much smaller drop and a faster recovery. When Japan crashed after 1989, the rest of the world did quite well. Any investor in any country will be safer by splitting his investments between domestic and foreign securities. I asked my pal Less Antman — known to regular readers of this column as “the estimable Less Antman” — to determine the performance of a stock portfolio split evenly between large U.S. stocks and large foreign stocks. According to his calculations, using data going back to 1926 (so that the crash of 1929 is included), the worst 5-year real return was -6.56%. Not great, to be sure, but a lot better than the -11.62% compounded annual loss when invested in the U.S. market alone. In this example, $10,000 would have shrunk to $7,123. Diversifying your stock portfolio globally increases safety. But I wouldn’t be too thrilled to lose $2,877 of my original $10,000 stake either. With hindsight, Less reports, a blend of 55% cash, 45% global stocks (US and foreign), provided the “best” worst 5-year return: negative 2.53%, which only reduces $10,000 to $8,797. In other words, from 1926 to the present, the worst you would ever have done with that blend in any 5-year period was to lose about $1,200 in real purchasing power. That’s a much better “worst” than just owning U.S. stocks and nothing else. A reasonable way to approximate such a blend would be to put half of the funds needed in 5 years into a money market or short-term bond fund, and split the other half between the Vanguard Total Stock Market (U.S.) Index Fund and the Vanguard Total International Index Fund. Or perhaps do it a third, a third, and a third. But if it’s safety you seek, forget all this. There’s a much simpler way. Tomorrow: An investment that guarantees you’ll beat inflation (before taxes, anyway) And still my book sits at #2,797. How about your dry cleaner? When was the last time you ever brought him something besides dirty shirts? Your dentist? Dentists are notoriously bad investors.
How Should You Allocate that 401(k)? May 10, 2000January 28, 2017 Picking up where we left off yesterday . . . Several years ago, a brokerage firm promoted put and call options on futures as “limited risk” investments. Their reasoning was that you couldn’t lose more than 100%, while in a futures contract a total loss just begins to scratch the surface of the misery that can befall you. Even so, “losing everything,” as most people who bought these things did, is not what most people think of when they hear the term “limited risk.” Defining “risk” is one of the trickiest and most important keys to good asset allocation. Most of us would consider an investment that will probably become worthless within a few weeks . . . risky. Probably the only thing less suitable for investment than options and futures is lottery tickets (sadly, the primary investment choice of the poorest 10% of the population: many of those who buy lottery tickets spend over $600 per year, yet claim they cannot afford to start a $50 per month mutual fund investment plan that could make them semi-millionaires over their working careers). Here’s a helpful definition by Robert Jeffrey, the estimable Less Antman found in the Fall 1984 Journal of Portfolio Management: “Risk Is the Probability of Not Having Sufficient Cash with Which to [Pay for] Something Important.” This seems a more useful definition than: “Risk Is the Possibility an Investment Will Drop Below What You Paid” (as most do at some point, at least for a while, unless you happen to have bought at a never-to-be-seen-again low). So when you are considering the appropriate risk to take, you need to start by knowing when you need the money and how much you’ll need. If you are saving to make a $20,000 down payment on a house in five years and have the ability to save $4,000 per year toward that goal, you need take no risk whatever. On the other hand, if you save 20% of your income each year toward retirement for your entire working life, but get no growth, you will end up with enough to live on for only 8 years. Perhaps the riskiest thing you can do during those working years is take “no risk” with your retirement investments. Rationally, the most important determination of your risk tolerance is your time horizon. On a daily basis, or even an annual basis, the stock market is a crapshoot. Over the long haul, much less so. But that’s rationally. Neither the market nor its players are entirely rational. Which leads me back to yesterday’s column and the importance of starting where you are. If you have your entire 401(k) in a money market fund, you are too risk averse. But don’t switch it all into stocks tomorrow and then say you’re following my advice. The stock market works best if you’re patient. So you might consider switching a large portion of your 401(k) to stocks — but slowly, through dollar-cost-averaging. Direct your new 401(k) contributions to stocks, and gradually reallocate your existing funds, perhaps a third right away and then some more each quarter. But, with a 401(k), you don’t necessarily want to put 100% into stock funds, even gradually. Don’t feel dumb if you have a portion — maybe 40%? — in some safe, high-yielding alternative. In the first place, because the yield is sheltered from tax, 8% of cash income is just as good as 8% long-term appreciation. Either one will ultimately be taxed as ordinary income at withdrawal. If the markets were incredibly low here and you were 26, I’d beg you to put your entire retirement plan in stocks. But it’s not, and you may only look 26, or be 26 in spirit (I am, myself, 14), so don’t feel dumb having a portion of this money in fixed income if that makes you more comfortable, or if you feel your time horizon is relatively short. (If you really are 26, consider putting 100% of your retirement money in broadly diversified low-expense stock funds, anyway — planning to do so consistently for decades. If the market drops, that’s great — you’ll be getting future shares on sale.) In the second place, if you have enough income and discipline both to fully fund your retirement plan and to set aside some extra money, do your riskiest investing outside your retirement plan. Your long-term gains will be lightly taxed when you sell, and any losses you decide to harvest along the way will help reduce your current taxes. OK. Retirement is not a small thing — with luck, you may be enjoying 30 or 40 years of it. But what about money for which you don’t have such a long-term time horizon? Tomorrow: Where to put money you’ll need in 5 years.
Allocating Your Assets May 9, 2000February 15, 2017 One of you writes: “I find very little advice available on how to select the most efficient mix of bonds and stocks. And once that has been determined, what % should be put into the various categories of Morningstar boxes, i.e.: Large, Mid, Small Cap Value, Growth, Blend. The same for the categories of bonds? Your Personal Fund site is wonderful for the next step of selecting the particular fund product in those categories — but how do you know how much to put in each category?” Well, I think you have them ranked properly: the percentage allocation among stocks, bonds, and cash is probably the single most important factor in determining your results. How your money is then allocated in general terms within the universe of stocks and the universe of bonds is second. Choosing the right specific funds (or individual stocks) is probably the least important issue (though costs do matter). This is too big for one column, but let’s see how far we can get. (The rousing conclusion, Friday, will be Treasury Inflation Protected Securities, followed by Series I Savings Bonds next Monday. But bear with me.) Deciding how much to put into equities and how much in fixed dollar investments is a very personal decision based on both rational and emotional considerations. I’m not too fond of the popular shortcut that suggests you keep 100% minus your age in the equity markets — e.g., 79% in stocks if you’re 21 — because it’s obviously too simplistic. (If you’re married with children, whose age are you supposed to use? Does it matter whether you’re employed? Disabled? The granddaughter of doting, aging, billionaire grandparents?) But how do you go about making this decision? Where do you even start? Easy: START WHERE YOU ARE. It says something about you that shouldn’t be ignored. You won’t stick with any strategy if it doesn’t fit your personality. Also, big changes in asset allocations are normally made for the wrong reason. If you have nothing at all in the stock market and you are thinking of diving in now just because everyone you know is getting rich daytrading (by the way, everyone is lying to you), or because you think you need to make big money quick, then you’re about to make a really stupid mistake. If you’re 100% in the market and you’re thinking of selling everything, you’re probably not making a rational asset allocation decision but attempting to time the market (and, as my friend and sage Less Antman says, “the next inductee into the Market Timing Hall of Fame will be the very first”). No decision that has to be made immediately is going to be a good one. So wait at least 24 hours to decide. Isn’t that a convenient excuse for ending today’s column. Tomorrow: How should you allocate that 401(k)?
Little Guy Investing May 8, 2000February 15, 2017 Mike Baker: “I plan to begin a small portfolio, I realize long-term is the way to go and that each time I tinker with trades, I must pay a fee. Is it cost effective to buy, say, $1500 in a company and then add to that a little each month?” It can be. Check out, for example, www.stockpower.com . It puts small shareholders together with big companies that have “direct purchase” and “dividend reinvestment plans” (DRIPs). You can buy shares in BP Amoco, for example, with as little as a $250 initial investment and then in $50 increments — with no fees to buy whatsoever, and only a modest fee to sell. Lisa B: “1. My husband and I are interested in finding a mutual fund that contains Tiffany’s – can you give us some direction?” This is a very strange way to choose a mutual fund. Why not just choose an index fund and buy a few shares of TIF directly? “2. We are also looking for a financial planner — any suggestions on how to go about finding one in our area?” I don’t know what area you live in, but I do know you could save money and perhaps avoid being sold stuff you don’t need by “taking control” yourself. Go to the library and read (or make my day by buying) The Only Investment Guide You’ll Ever Need. Going around the Net: “Only in America do drugstores make the sick walk all the way to the back of the store to get their prescriptions while healthy people are offered cigarettes at the front.”
Reader Mail: Free Trades, Cheap Power, MYM Quotes, the March May 5, 2000February 15, 2017 FREETRADE.COM Thorsten Kril: “There is a much better broker available where trades are free — American Express. You wrote about it yourself some time ago. I have been using it for 5 months now, and it works fine. Fine service — no commission. [Others have reported Amex being overwhelmed, at least temporarily, by all the demand for its no-commission accounts, and not such fine service.] Of course, you need a minimum balance of $25K there for free buys, but on Freetrade you can only buy round lots for free [so small investors do have to pay, just as with Amex]. With American Express, I can take my monthly investment money of a few hundred bucks and evenly distribute it among the dozen or so stocks where I already have a position for free. That’s perfect dollar-cost averaging for me, especially in these volatile days.” LOWER UTILITY BILLS? Jeff: “SmartEnergy.com constantly shops for energy — gas, oil, electricity, etc. — from the cheapest source (which it can do thanks to deregulation), and passes it on to you. All you have to do is enter your zip code and they will tell you if they can save you money — or put you on an emailing list to let you know when they serve your area and can save you money.” Jeff has a small stake in this enterprise, and I’m not recommending it. But it is interesting to take a look. (RELATIVELY) CHEAP ART Craig: “My mom and I were at a Martin Lawrence gallery recently, and she was eyeing an Andy Warhol signed print. (She owns some Warhols that have gone up a lot since she bought them). It was selling for just over $14,000. Back at her computer, we surfed the Internet, and found the same print for sale for just over $8,000. Such is the ease of comparison shopping on the Internet! The owner of that site (artbrokerage.com) says, ‘don’t pay retail.'” I say: Tear off some old magazine covers and frame them as a collage. MYM DOS USERS Well, the easy quote updates from CompuServe seem finally to be over. But . . . Gregory Lawton: “The freeware program authored by Kurt Wolfsberg (YAH-MYM2.ZIP) works quite well. It is available on the CompuServe Moneyforum in the section 18 library. You download portfolio quotes from Yahoo Finance in CSV format, then run a batch file that runs programs to convert the Yahoo CSV data file to compuserve.out. A little bit of extra hassle, but I can’t do without MYM. I doubt that I would be as well off today as I am if it had not been for MYM.” Me neither. Jane Balk: “Thank you for pointing die-hard MYM12 for DOS users like me to the ConvertTrack software, so we can continue to download prices from the Internet to our MYM12 software. It works great. I will use MYM12 for DOS as long as I have a computer that can handle it. I’m not a Windows hater; but nothing gives me the information as fast and well-organized as MYM12.” No sane person, even if he could find a copy, would switch to this dinosaur. But for those of us who already have our lives in it, it works well. NOTES FROM THE MARCH Robert Sartain: “Coolest T-shirt slogan: I can’t even march straight! Coolest hand-lettered sign: If God hates fags, why isn’t it raining? [Those people were there with their signs. It was a spectacularly sunny day.] Coolest story: Saturday night before the march Chris and I were at the Metro Center Metro station waiting for a train to take us back to our hotel. We struck up a conversation with a man carrying a tuba. (A tuba in a Metro station is a great conversation starter.) We talked with him for ten or fifteen minutes, then talked with a bit with a woman who asked us how long we’d been waiting for a train. Here’s where the story gets cool. She is a high school English teacher who was one of several chaperones escorting kids from her school to the march. The TWO kids were the ENTIRE Gay-Straight Alliance in their high school of 350. The kids held raffles and raised money to come to the march, and when they were still a few bucks short, their principal kicked in the difference. She told us of how the kids’ faces lit up when they saw the pride rainbows and balloons at the festival and the march, and how the kids felt so great to be part of a community, not to be freaks or outcasts, at least for a weekend. When someone asks me why I marched, I think of those kids.” Next week: I really, really promise to do the Treasury Inflation Protected Securities column.
The Best Thing I’ve Read All Year May 4, 2000February 15, 2017 Sunday, April 30, 2000 By SHARON UNDERWOOD For the Valley News (White River Junction, VT) Many letters have been sent to the Valley News concerning the homosexual menace in Vermont. I am the mother of a gay son and I’ve taken enough from you good people. I’m tired of your foolish rhetoric about the “homosexual agenda” and your allegations that accepting homosexuality is the same thing as advocating sex with children. You are cruel and ignorant. You have been robbing me of the joys of motherhood ever since my children were tiny. My firstborn son started suffering at the hands of the moral little thugs from your moral, upright families from the time he was in the first grade. He was physically and verbally abused from first grade straight through high school because he was perceived to be gay. He never professed to be gay or had any association with anything gay, but he had the misfortune not to walk or have gestures like the other boys. He was called “fag” incessantly, starting when he was 6. In high school, while your children were doing what kids that age should be doing, mine labored over a suicide note, drafting and redrafting it to be sure his family knew how much he loved them. My sobbing 17-year-old tore the heart out of me as he choked out that he just couldn’t bear to continue living any longer, that he didn’t want to be gay and that he couldn’t face a life without dignity. You have the audacity to talk about protecting families and children from the homosexual menace, while you yourselves tear apart families and drive children to despair. I don’t know why my son is gay, but I do know that God didn’t put him, and millions like him, on this Earth to give you someone to abuse. God gave you brains so that you could think, and it’s about time you started doing that. At the core of all your misguided beliefs is the belief that this could never happen to you, that there is some kind of subculture out there that people have chosen to join. The fact is that if it can happen to my family, it can happen to yours, and you won’t get to choose. Whether it is genetic or whether something occurs during a critical time of fetal development, I don’t know. I can only tell you with an absolute certainty that it is inborn. If you want to tout your own morality, you’d best come up with something more substantive than your heterosexuality. You did nothing to earn it; it was given to you. If you disagree, I would be interested in hearing your story, because my own heterosexuality was a blessing I received with no effort whatsoever on my part. It is so woven into the very soul of me that nothing could ever change it. For those of you who reduce sexual orientation to a simple choice, a character issue, a bad habit or something that can be changed by a 10-step program, I’m puzzled. Are you saying that your own sexual orientation is nothing more than something you have chosen, that you could change it at will? If that’s not the case, then why would you suggest that someone else can? A popular theme in your letters is that Vermont has been infiltrated by outsiders. Both sides of my family have lived in Vermont for generations. I am heart and soul a Vermonter, so I’ll thank you to stop saying that you are speaking for “true Vermonters.” You invoke the memory of the brave people who have fought on the battlefield for this great country, saying that they didn’t give their lives so that the “homosexual agenda” could tear down the principles they died defending. My 83-year-old father fought in some of the most horrific battles of World War II, was wounded and awarded the Purple Heart. He shakes his head in sadness at the life his grandson has had to live. He says he fought alongside homosexuals in those battles, that they did their part and bothered no one. One of his best friends in the service was gay, and he never knew it until the end, and when he did find out, it mattered not at all. That wasn’t the measure of the man. You religious folk just can’t bear the thought that as my son emerges from the hell that was his childhood he might like to find a lifelong companion and have a measure of happiness. It offends your sensibilities that he should request the right to visit that companion in the hospital, to make medical decisions for him or to benefit from tax laws governing inheritance. How dare he? you say. These outrageous requests would threaten the very existence of your family, would undermine the sanctity of marriage. You use religion to abdicate your responsibility to be thinking human beings. There are vast numbers of religious people who find your attitudes repugnant. God is not for the privileged majority, and God knows my son has committed no sin. The deep-thinking author of a letter to the April 12 Valley News who lectures about homosexual sin and tells us about “those of us who have been blessed with the benefits of a religious upbringing” asks: “What ever happened to the idea of striving . . . to be better human beings than we are?” Indeed, sir, what ever happened to that? Sharon Underwood’s e-mail is: sundervt@hotmail.com. I had the chance to speak with her yesterday. Her son is doing fine now, the first in his family to graduate from college. If you have friends who think Jesus would have been a Republican — on the side of billionaire Pat Robertson, et al, in opposing Hate Crimes Legislation, opposing the Nuclear Nonproliferation Treaty, and, yes, opposing Vermont’s extension of economic benefits to same-sex couples — please feel free to forward this column to as many of them as you like. Can’t you just see it? Jesus arm-in-arm with the NRA trying to maintain the gun-show loophole? Stumping the Holy Land in favor of a massive tax cut for the rich, while opposing a hike in the minimum wage? Somehow, I think not. Tomorrow: Back to Business. (Probably.)
Real Estate Investment Trusts May 3, 2000March 25, 2012 Ron Heller: “Since I don’t have the resources to buy office buildings and shopping malls, I’m thinking of putting about 10% of my portfolio in REITs. Should I try to pick a couple of good REITs, or go with the Vanguard REIT Index fund?” Either is good. The index-fund route is safer, obviously, because you spread your risk over far more REITs. What you lose buying is Vanguard’s small annual expense charge each year — about a quarter of a percentage point. (You also lose “tax control” — the ability to sell individual losers for a tax loss while using individual winners for your charitable giving. But tax control doesn’t mean much in this case. REITs tend to move fairly modestly, and together, in the opposite direction of interest rates. With a “high-tech” fund, by contrast, one component might triple in a month while another drops 80%. There, tax-control can be quite useful.) Because REITs are largely income vehicles, and most or all of that income is taxable as ordinary income, they are particularly good in a tax-deferred retirement account. There are many kinds of REITs (office buildings, hotels, shopping malls, residential, mixed; equity REITs that own properties, mortgage REITs that write mortgages on properties; regional REITs, geographically diversified REITs). By and large, they should be sensibly valued by the marketplace. I.e., some have better managements than others, but that is reflected in the stock prices. There is the (slim) risk the Internet will bankrupt all physical retail stores and, thus, mall owners, but that is reflected in the stock prices. And so on. I own two REITs. One, Vornado (VNO), is generally considered to have great management and good growth prospects, so it yields “only” 5.4% — $1.92 dividend on, currently, a $36 or so stock price. The other, BF Saul (BFS), is generally considered to have mediocre management and to entail more risk, with less growth in store, so it yields 9.5%. REITs will tank if long-term interest rates rise (and then recover if they fall). They would fare badly in a real estate slump (whether recession- or overbuilding- or Internet-related). Individual REITs could do really badly because of poor management or factors beyond the control of even a good management. But for 10% of your portfolio — why not? Vanguard’s REIT Index Fund symbol is VGSIX.
Historical Quotes (and Dividends!) – II May 2, 2000February 15, 2017 Sorry to be late. We were marching. George H: “I like the Bigcharts site you recommended, too, but for historical quotes I prefer Yahoo’s offering.” George is right. Yahoo! has done a great job with this. It lets you specify a date range over which to view the daily, weekly or monthly closing prices. It shows dividends, stock splits and volume — and then in a final righthand column translates the old price (Intel sold for $86 on January 15, 1974) into today’s terms, adjusted for splits (21 cents). But don’t delete your Bigfoot bookmark. These Intel numbers come from Bigfoot. Yahoo!, when I went to check them, said it had no Intel stock-price data from January 1974. Parks Stewart: “Bigcharts also has historic PE’s, which allows you to see how a stock is being valued respect to where the market has been valuing it. For instance, MSFT never seemed to break a 75 (!) PE. Whenever it got there, it tanked. I waited for one of those p/e peaks to sell mine.”