Year: 2000

You might think that $1.70 is worth about $1.70, or that a rose by any other name smells as sweet — but already I am confused. As sweet as what? (Why did that man never just come out and say what he meant?)

So let us review:

1. When tiny little Calton Homes (CN) had what appeared to be about $1.70 in cash and no liabilities or expenses or operations, no one wanted it at $1. Who wants to pay a buck a share for $1.70 in cash, the market’s reasoning seemed to go, when at the very same time you could buy some dot-com with no appreciable cash for 2000 times earnings?

Well, I wanted it — for two reasons. First, I liked the odds. Sure, the owner could screw it up and lose that $1.70 in cash, but he had more than 11 million reasons not to. His own shares. Second, I liked the simplicity. In a complicated world I surely do not pretend to understand very well, a company with essentially no expenses or operations or liabilities and just a big pot of cash is the kind of company I feel marginally able to form an opinion about.

And what could account for a thing that appeared too good to be true? Three things. First, CN, despite its American Stock Exchange listing, is just so small and trivial that no self-respecting player, let alone institution, could possibly be interested. Second, the frenzy for New Economy stocks may have made an asset play like this even less interesting than usual. Third, everyone knows that if it seems too good to be true, it probably is — presumably, there was a catch.

And there still may be — cockiness is rarely a winning analytical tool — but let’s continue with the review.

2. Calton put a few hundred thousand dollars of its cash horde into an e-business that it renamed eCalton. Well, now, that’s different! eCaltion! eXcitement! eGads! And the $1.70 in cash that most people wouldn’t pay $1 for was fairly quickly bid up to a high of $6 and change. The message boards had discovered this hot new eCommerce stock — a smart 62-year-old home builder from New Jersey who had entered the dot-com fray — and, well, what dot-com incubator wasn’t worth a billion or two?

By the time CN did reach $6 and change, I had sold most of mine and had recommended you do likewise. My February 11 column was titled, “The Lunatics Take Over – Yippee!”

3. Not long afterward, the stock collapsed, along with the other wing-and-a-prayer eStocks. Today, we’re back to its selling for about 85 cents (well, actually $4.25 after a one-for-five reverse split, but let’s stick with the old numbers for now), and, after a variety of transactions, it still has something like $1.50 a share in cash. Except now it also has stakes in a few Internet businesses as well. And still the homebuilder guy from New Jersey has 11+ million reasons not to screw it up. (Well, 2+ million post-split).

So I’ve been buying again. How bad can it be to buy $1.50 in cash for 85 cents?

Now let’s switch to the post-split numbers. Because of the 1-for-5 reverse split, the price is now $4.25, not 85 cents. And the $33 million or so in cash (based on the last public report I saw) is divided over about 4.3 million shares, not 20+ million, which works out to about $7 each.

And maybe the owner will still find a way to fritter away all that cash and, ultimately, make his, and our, shares worthless. Believe me — it’s been done before.

Having said all this, “if it seems to good to be true, it probably IS,” so please do not invest in this even a nickel that you could not be philosophical about losing. I live in dread of ever hurting you financially.

And please don’t “bid up for it.” As tax-selling season approaches in earnest, I like to think that many of the folks who paid $25 and $30 a share — and that one guy, at the top, whoever he is, who paid $33.75 — will be selling their shares in disgust, for the tax loss, driving the price down even further. That would be good news for us buyers. Yes, CN may be “worth” about $7, because of its cash. But please don’t pay anywhere near that much. What’s the incentive to pay $7 in liquid cash for $7 of cash you can’t actually get your hands on? Especially when, run wrong, CN could blow through that cash in no time?

But who knows: with enormous good luck, maybe one of the little dot-com investments CN’s been making could be a winner. It’s a long shot. That’s what makes it fun.

Yesterday, Allan asked me to tell him — “in a couple of paragraphs” — why I thought stock market returns would be a lot lower these next 18 years than they’ve been the last 18 . . . and what to do about it.

My plan was to do all this in two curt paragraphs. Here was the first:

1. “Why [do you expect] lower returns?”

–Because price/earnings ratios have been expanding for 18 years and interest rates generally falling. This cannot go on forever, and even if it just stopped, let alone reversed, the rates of return would be lower.

I was all set to move on to the second part of the question, and the second curt paragraph, when I decided that . . . hmmm . . . some of you might appreciate a little elaboration.

Before I knew it, millions of perfectly good electrons had been sacrificed to this end. So lengthy was my elaboration that it broke the server (apologies if you got a stale Q-Page delivery or saw an endless unformatted version) and, once it was finally fixed, put a large percentage of you to sleep and caused at least one of you to be late for work and lose her job. For this I am profoundly sorry.

So today — briefly — Allan’s second question:

2. “What should we do about this, particularly those of us who are planning to retire soon (‘don’t’ may be good advice but it is so depressing!)”

–Don’t.

Oh, OK, go ahead and retire if you’ve really thought it through. But there are strong arguments for working a bit longer — or transitioning to semi-retirement, enjoyably supplementing your income as a consultant or part-timer or running a bed and breakfast as you rock on the porch.

Argument one is that retirement kills. Staying busy, needed and involved (although not necessarily drawing a paycheck) keeps you healthy.

Argument two is that we have a shot at living a lot longer than most people used to, so prudence suggests that we should earn some more, while we can, to provide for those extra years.

In playing with retirement “calculators,” it all comes down to the rate of return you guess you may earn on your money. If you assume 15%, you can retire by Tuesday and live comfortably off your investments for another 100 years. But I would urge you to assume something much more modest, like 5% (to net out the effect of inflation), or even less when you need to plug in an “after-tax” return. Perhaps this will prove too conservative. Wonderful! I’d much rather you be annoyed with me because you have too much money supplementing your Social Security 20 or 30 years from now, rather than too little.

Beyond that, here is some very general, brief advice. Obviously, one size does not really fit all. But . . .

1. Especially as you grow older, a portion of your assets should be someplace relatively safe. That’s one reason I like Series I Savings bonds — they are backed by Uncle Sam, they protect you from inflation, and they grow tax-deferred. Visit savingsbonds.gov.

2. You might want to add to that a portfolio of fairly long-term high-grade municipal bonds, especially if you live in a high-tax state. If you buy “GOs” — general obligation bonds — you won’t have to worry about becoming an expert. They will be safe. And these days, municipals offer a good rate of return for people in high tax brackets. The only risks are, first, that interest rates will rise — leaving you wishing you had waited to get the higher return. And, second, that interest rates will fall — and your bonds will be called in early. So carefully check the “call” provisions of the bonds you buy. If you do buy municipal bonds, you can always sell them (at a loss, if rates have risen, at a profit if rates have fallen). But plan to hold them to maturity, because selling municipal bonds usually subjects you to a haircut. Your broker will likely offer you a fairly rotten price because he knows you have little convenient way of shopping them around to others. As for buying municipal bond funds, I would skip that. Why give up some of the income in annual expense fees? If you buy GOs, there’s no need to pay for diversification — they’re safe.

3. But even though you are retiring one day . . . and even though I doubt the next 18 years will offer nearly the same stock market returns as the last 18 . . . keep a good chunk of your dough in stocks — the simplest, best way for most people being though index funds (both US and international). And if you can, plan to keep adding the same $1,000 a month or $2,500 or whatever you’ve been adding all along. Because even if stocks don’t do spectacularly, there’s a good chance that, over the long run, they will do well, as they always have. And if you keep investing monthly, dips and crashes just help you buy shares cheaper.

4. Keep your riskiest investments outside your tax-sheltered retirement plans, and your relatively safe, high-dividend investments (like real estate investment trusts) inside. (And never put things that are already tax-deferred or tax-free inside a retirement plan. E.g., buying a municipal bond inside an IRA would serve to turn its tax-free interest into income you ultimately had to pay tax on at withdrawal. And buying an annuity, which is already tax-deferred, inside an IRA, is just wasting the tax-deferral of the IRA on something that’s already tax-deferred.)

5. Think twice and then three more times before buying annuities. (But if you have TIAA-CREF annuities, don’t be alarmed. They’re pretty good.) I’ve written about this several times before. Click here for one of my more succinct renditions and here for a wordier version.

There is surely more to say about this subject, but I don’t want anyone else losing his job.

Allan Sleeman: “EIGHTEEN LEAN YEARS? Just got around to reading the column where you allude to this. Did I miss something — Oh God, another Senior Moment! — or have you just joined the reversion-to-the-mean crowd (non-entities like Warren Buffet and John Bogle)? I would have thought, naive person that I am, that this would have been a major insight to share with us poor peons. But maybe you did do a piece on the expected long-term behavior of the market. If not, I at least would be extremely interested to learn why you are talking about much lower expected returns. Then, of course, I would like to know what sort of advice you would give about what to do about this, particularly to those of us who are planning to retire soon (‘don’t’ may be good advice but it is so depressing!). Naturally I am aware that a number of smart people have written whole books on the subject recently, but please boil it all down into a couple of paragraphs.”

1. “I would be interested to learn why you are talking about much lower expected returns”

Because price/earnings ratios have been expanding for 18 years and interest rates generally falling. This cannot go on forever, and even if it just stopped, let alone reversed, returns would be lower than they have been.

Right? If people are willing to pay $12, say, for each $1 of corporate earnings — 12 times earnings — and if those earnings are rising at 9% a year, stock prices will also rise at 9% a year. But if as the earnings are growing the multiple people are willing to pay is also grow, say to 30 times earnings, stock prices will have grown at a much faster than 9% rate. But now, say, the expansion in multiples stops and they stay steady at 30 times earnings. With 9% earnings growth, you are back to a world where stocks also grow at 9% a year. Unless the multiple people are willing to pay should actually begin sliding back down again. Then, even with 9% earnings growth, stock prices could actually fall for a while, or at least rise less quickly. And what if corporate earnings didn’t grow 9%, but only 5%? Or actually slip for a while?

I don’t know where earnings are going — up, I imagine, in most years. But I do doubt that the stock market multiple will rise much further, and would not be surprised to see it contract. So the big fun — 18 years of rising multiples — would seem to me to be over.

Obviously, there will be ups and downs in all of this. Obviously, “the market” is many markets combined into one. Lots of stocks have never come close to being richly valued, while others have been bid to crazy heights. Obviously, some of the adjustment to more moderate returns has already occurred. (The NASDAQ is down about 20% from its high, the Dow off nearly 10% . . . even as earnings have been growing . . . so some of the moderation in multiples has already occurred.)

There are some fantastic forces that bode well for the future, and could argue against “reversion to the mean.” (Reversion to the mean is the notion that when things have been rising above average for a long time, they will eventually rise below average for a while until, overall, the traditional average is restored. It’s a law when it comes to flipping coins, but only a strong suspicion when it comes to the stock market. “Mean,” meanwhile, for those of you who were doodling that day, is the same as “average.” Median is the one that’s different. [If you have 10 people earning $20,000 a year and one earning $20 million, their median income will be $20,000 — the mid-point person’s pay — but their average/mean income will be $1.84 million.])

What are these fantastically positive forces?

• The peace dividend, which allows the world to spend less on nonproductive things (like hiring young people to leave assembly lines making things and employ them, instead, killing other young people or blowing up factories). The U.S. used to spend 6% of its GNP on defense, now closer to 2% — a huge swing. Russia used to spend 25% and must be spending less now. I don’t have global numbers, but they are a lot lower than in decades past.

• Freer trade and ever broader acceptance of free-market economics. Remember Ec 1 and the laws of comparative advantage? No? Well, free trade enriches all its participants over the long run — both Mexico and the US are better off because of NAFTA — even though it can cause short-term pain to specific people (if, say, it cost you your job) or companies (if, say, it put yours out of business). Same with free-market economics. Free market economies are more prosperous than controlled economies. (That said, enlightened regulation is absolutely necessary to make these things work. The anti-trust mechanism is indispensable to a successful marketplace, as are the Securities and Exchange Commission, the Federal Reserve, the Federal Trade Commission, and on and on. In trade, we need to be leaning on our trading partners, gently but persistently, to lift their workplace and environmental standards, as we have lifted our own.)

• Technology. It’s beyond magic, what’s going on these days, and should be reflected in greater productivity and prosperity.

These three argue for raising “the mean.” Maybe the average performance of the stock market — traditionally about 9% a year when you combined dividends a price appreciation (and before you adjusted downward for inflation) — should be permanently higher.

But I doubt it. Or at least not dramatically. Even a 1% increase, in the first place, is dramatic. A dollar growing at 9% becomes $5,529 after 100 years — but $13,780 growing at 10%. So it would be a huge thing, really, for “the mean” to have risen from 9% to 10%.

And maybe it has.

But it sure hasn’t risen to 15% or 30% or any of the crazy numbers some people have come to expect from the stock market.

And for all the power of peace, free trade and, especially, technology, there is a flip side. Can we be sure the world will always be so relatively peaceful? What would a little cyber-terrorism do to e-commerce and productivity and consumer confidence and corporate earnings? Not to mention potential military conflicts and arms races sometime in the future. And little issues like global warming — and inflation.

Technology is dazzling. But, as has been often noted, things like “electricity” were not trivial themselves. Radio and television were pretty big deals, too. Yet even with those astonishing economic shots in the arm, the stock market used to provide about a 9% annual return.

So, yes, I think large segments of the market have probably gotten ahead of themselves, and that even after the substantial correction earlier this year, which has helped to right the risk/reward ratio somewhat, people should be prepared for a less spectacular 18 years in the U.S. stock market going forward than the 18 we have just enjoyed.

2. “Then, of course, I would like to know what sort of advice you would give about what to do about this, particularly to those of us who are planning to retire soon . . . ”

My advice is: Come back tomorrow.

Jerry J.: “I’m looking for a place to put around 15K for a year or two when I’ll most likely be using some of it for a down payment on real estate. My question is which would you recommend, the Series I bonds you recently touted in your column or an index mutual fund such as Janus Fund(JANSX) or Vanguard Index Trust 500(VFINX). I’m leaning toward the mutual fund option at this point but I wonder how aggressive I should be considering that I’ll most likely want access to some of the money within a relatively short time period.”

The stock market is (always) a bad place for money you will need in a year, or even in three. Of course, the less you’d be disappointed if you couldn’t buy the real estate you’re saving up for, the more risk you can afford to take.

You lose 3 months’ interest if you cash in Series I bonds before 5 years, but especially if you live in a high-tax state, they could make sense anyway.

Dana: “Should one calculate one’s net worth as the amount one would have if one liquidated all of one’s assets (minus one’s liabilities of course)? In other words, after the tax bite. Or for calculations of net worth, should one treat stock ownership as the present balance on one’s brokerage account without adjustment? Please don’t use my last name if you use this. It’s a dopey question.”

There are two ways to do this and I’d do both.

The first and more common is to count everything, with no provision for capital gains taxes. It’s a bigger number and thus more fun. And if you were hit by a car, there’d be no capital gains taxes, as your heirs could write the basis up to the value at the time of your demise.

The second, and more realistic, number would exclude both the taxes you’d have to pay to cash in your chips, and also the items you really couldn’t easily part with, like your house and your car and your clothes.

This latter number gives you a sense of your readily realizable net worth (although some of it might not be so readily realizable, if you own, say, some nonmarketable securities or a minority share in some business).

Of course, should you ever need to liquidate your assets, it might well be because things were rotten in Denmark — meaning, in this case, the economy — in which case the realizable market values of your assets might be lower than they are today.

But leaving all that aside, it’s fun to have a sense of your net worth — and the first step in making it grow.

First, extravagance:

Thanks to Tsvi, who let me know about the Jewish couple that won the lottery. Perhaps you read this? They bought a magnificent mansion in East Hampton and filled it with the finest art and contemporary furnishings. Then they decided to hire a genuine English butler through one of those agencies. They even flew to London to interview the candidates before choosing one.

The day after the butler’s arrival in East Hampton, they instructed him to set up the dining room table for four — they were inviting the Cohens to brunch.

Then they went shopping.

When they returned, they found the table set for eight.

Why, they asked the butler, when they had specifically instructed him to set the table for four, had he set it for eight?

“The Cohens telephoned,” he explained, “and said they were bringing the Bagels and the Bialys.”

I thought you should know this.

Now, parsimony:

Click here to read about a guy who grabs used soft drink cups and pop corn containers off the movie theater floor, washes them out in the restroom, and then goes to the counter for “his” free refill. (Thanks to John Bakke for alerting me to this by Michelle Singletary in the July 2 Washington Post.)

You can never be too rich or too thin, but you apparently can be too cheap. (I had not known this.)

Pete C: “I am thinking about buying some I-Bonds and went to savingsbonds.gov. I used their Savings Bond Calculator to calculate the value of a $500 I-Bond issued in June and redeemed on 6 months later. The Calculator told me the bond would accrue $9.20 in interest. To my simple, (seemingly) straightforward math mind, that means the bond would have returned 1.84% of the principal in a six-month time period — an annualized return of 3.68%. However, isn’t the annualized return supposed to be 7.49%, the current posted rate for I-Bonds? Help please, I don’t understand.”

–Redeeming Savings Bonds before five years have elapsed, you forfeit three months’ interest.

Robert Pistey: “While searching for 20-30 year level premium term life insurance, I discovered John Hancock’s Marketplace website (jhancock.com). They appear to offer the most competitive rates, offering a 20% discount for ordering through the net as well as a 5% discount on the first year’s annual premium if paid by credit card. I’ve also found that calling the toll free number and mentioning the word ‘Internet’ will get you all the discounts without having to type in the information. The rep will take it over the phone.”

–Click here to get a quote. A 30-year-old nonsmoking male in good health might pay a flat $570 a year for 20 years for $1 million in coverage (until, say, the kids are largely grown).

Before you buy, do some comparison shopping over at Quicken‘s insurance page. (Interestingly, entering the same healthy 30-year-old male here and asking for the same $1 million with a flat premium for 20 years yielded a John Hancock quote of $1,000. Just goes to show the importance of “shopping” — even within the same company.)

The bad news is that many of the dot-coms that have not yet gone broke have begun thinking about making profits, which means that fewer and fewer will be able to send you free sneakers. (That was my favorite one — I didn’t even have to pay for shipping or register with anything more than my address. I have no recollection which dot-com gave them to me, but they came! They fit!)

The good news is that there are still some deep pockets out there.

So, where the last free Palm Pilot I told you about required a $10,000 deposit in a money market fund, this free Palm — courtesy of a Citibank dot-com subsidiary — seems to require just $1,000 in a new account. (You actually have to use the account, which may involve some fees, but check it out — the “rules” begin at the bottom of the page this link takes you to.)

That nice little find comes courtesy of my Kansas librarian e-pal Allan Tanner, who is a muggle with a tale. I hereby declare this Allan Tanner Day and offer you that tale. It’s about a dot-com you gotta love — I do — even if you don’t necessarily gotta love its stock.

Allan writes:

“My daughter, who will be a freshman at Reed College in August, ordered the new Harry Potter book from Amazon.com. She received it Tuesday. Today she received an email from them saying they had promised to send it by Federal Express so that she, as one of the first 250,000 customers who ordered it from Amazon.com, would have it last Saturday. Amazon.com apologized for missing this delivery date, and said they were refunding the entire purchase price and shipping. That’s impressive.”

Indeed it is. I have been rooting for Amazon (the company) from Day One.

Here’s the message Amazon sent Allan’s daughter. Can you imagine something like this coming from, say, the folks who administer the dreadful General Motors MasterCard? Not in a million years.

Greetings from Amazon.com

This message is regarding your recent order for “Harry Potter and the Goblet of Fire.”

As you may already be aware, as a special bonus for the first 250,000 customers who pre-ordered the fourth Harry Potter book, we offered a complimentary upgrade to FedEx Saturday delivery whenever possible. However, we received well over 300,000 pre-orders for this title and unfortunately omitted a small percentage of eligible orders by accident.

We are very sorry that your book was not shipped via FedEx Saturday Delivery. Your order was one of the first 250,000 pre-orders placed on our site, and your address did fall within the FedEx Saturday Delivery range. Unfortunately, due to an error in the program we used to process addresses for this upgrade, your address was mistakenly deemed ineligible.

We realize how eagerly all of our customers anticipated the release of this book, and we hope you will accept our sincere apologies for the disappointment caused by the delay in shipping this title to you. To help rectify this situation, we have decided to refund all of our customers affected by this oversight for the cost of this book and the shipping fees incurred on this item.

Again, please accept our sincere apologies for any disappointment this may have caused. If you have any other questions or concerns, please don’t hesitate to contact us. Best regards . . .

It will be interesting to see whether all this good will that Amazon is building up is worth the $12 billion-plus the company is selling for.

And speaking of e-giants, you saw that Yahoo made 12 cents for the most recent quarter instead of the dime Wall Street was expecting — and that that unexpected extra $10 million or so in profit caused Wall Street to add $10 billion or so to Yahoo’s market value yesterday. Yahoo is currently gushing profits at the rate of 48 cents a year (four 12-cent quarterly profits), and you can buy ownership of one of those 48-cent profit slices for a mere $125. Of course, the idea is that the quarter billion a year in profit Yahoo is currently making (48 cents a share times 543 million shares) is peanuts compared to what it will be making in a few years. And that may be. Call me old-fashioned, but I think it’s still a pretty dicey gamble, and remain short a few shares. (Do not try this at home! If I had a dime for every dollar I’ve lost shorting stocks, I’d be rich!)

Tomorrow: A Good Site for Cheap Life Insurance

I like to think the estate tax will be changed so that only estates above $5 million are taxed. That would eliminate the estate tax on almost everyone, and the big advantage would not be social policy — I think the estate tax is good social policy — but tax simplification. So much energy, intelligence and angst now go into avoiding estate tax! It’s nuts! You could replace all that revenue with a small excise tax on cars above $35,000 and homes above $500,000 (all this tied to inflation) and be done with it. (I know, many of you would rather not replace the revenue at all, but that’s a different discussion.)

In the meantime, though, click here for Fidelity’s helpful new Estate Tax information center.

I am not endorsing any Fidelity products, per se — nor all the generic strategies, like revocable trusts, that you will learn about. But this is a very handy way to learn the basics of the estate planning game, to find out what QTIPs and QTRPs are, and to get some sense of what you might be up against if, one day, you had to be the executor of a loved one’s estate.

The Amazing Randi came to visit — he was last on my living room couch 23 years ago helping me understand how Uri Geller had driven me, blindfolded, through Central Park. (Geller was blind-folded, not me.)

Randi won a MacArthur Foundation “genius grant” some years ago and really is amazing. He has spent his life debunking frauds and bursting bubbles (Geller possesses no superhuman powers, he could see through the blindfold). He’d come to conjure up an endowment for his institute. (If you’re very rich, please let me know.) Knowing my weakness for stuff like this, he placed on the edge of the table a Bic pen I had just used. He placed it half on, half off — well, maybe 51% on, 49% off, because it didn’t fall. He then stood ten feet back from the pen, at my side, and asked me to concentrate on trying to make it fall off the table. We both concentrated pretty hard for about 10 seconds, and then it began to tilt — like a slow-motion see-saw — until it fell to the ground.

He did this with supernatural powers, I assume, or else by unlocking my own.

I told Randi about Sam, the bartender at the Mayflower Hotel in Washington who does magic. (If you ever have a chance, stop in. He works there most nights from 5pm to 2am. He closes his fist around your $20 bill and opens it to reveal two tens. Then changes it back to a $20 and makes it levitate. Nothing up his sleeve, no strings or wires. It is completely jaw dropping.)

Randi was not impressed, though like any good magician, he would not tell me how it was done. “Go to Tannen’s [Manhattan’s venerable magic shop],” he told me, as he had told me 23 years before, “and you can buy the trick.” (It turns out it’s a trick! The $20 doesn’t really levitate!)

But he did tell me his own bartender story.

Here’s what you do.

Go into a bar with a friend. Ask the bartender if he wants to see some magic. Get him to give you a $20 from the cash register — but to fold one corner distinctively and write down the serial number first.

Now do some magic with the $20 bill. It may take a little while to get through your act, as he serves other patrons their drinks, but you’re in no rush. At the end, make the $20 disappear. (Actually, you are doing this magic with a different $20 bill. The original $20 you slipped to your friend, who has gone down to the other end of the bar to buy a drink with it.)

Now, ask the bartender if he can guess where the $20 is? Can’t guess? It has levitated right back into the cash register! Maybe you jumped over the bar and stuck it in there — real fast — when he was distracted, tell him.

He is skeptical, but looks in the cash register and quickly finds the folded-corner $20, checks the serial number . . . awesome! Whoa! What a great story to tell his girlfriend when he gets off work!

Meanwhile, you leave and meet your friend outside. Your own $20, that you did the magic with, is back in your pocket. Your friend is one rum-and-Coke richer — along with $16 in change from the cash register. (I know: where can you get a rum and Coke for $4 these days?) Everybody’s happy. Hit ten bars in a night and you’ve got one very drunk friend and $160 for your trouble.

This is, of course, cheating, as all magic is. (They use mirrors! They use identical twins! One of the girls really is sawed in half, but her twin is fine!) And you should be ashamed to steal $16, or even the drink, from an unsuspecting bartender. You should try this neither at home nor at the pub.

I doubt very much Randi would ever have done this. His thing is about exposing frauds, not perpetrating them.

As for the pen, this one really was supernatural powers.

(Well, there is also a slim chance that he cheated. Randi had handed me that Bic to jot something down for him. It was his Bic. It’s possible — unlikely, but just possible — that when I handed it back, he switched it for another Bic . . . one that he had doctored, replacing the ink cartridge with some slow-moving molasses equivalent. With the pen upright in his pocket, all the molasses would be at one end, making it heavy. But once laid flat, overhanging an edge, the molasses would slowly even out until the weight shifted enough for the pen to keel over. Nah. Who would go to that much trouble? I say it was supernatural powers.)

Visit Randi’s website. Buy his books. Endow his Institute. He is a force for good and truth and logic.

Tomorrow: Do You Need an Estate Plan? Do Your Parents?