Under Six! August 16, 2002February 21, 2017 Fixed-rate 30-year mortgages have fallen a hair under 6% for the first time in something like 40 years. MSNBC reported a 5.95% average rate. Just by way of perspective: from 1880 to 1965 – 85 years – there was never such a thing in this country as a home mortgage at more than 6%. (And didn’t Hamurabi’s Code impose the death penalty for charging interest above 6%? My memory’s a little less clear on that one.) So, far from being all but impossible, sub-6% mortgages are actually just the way things ‘always’ were. Yet something tells me it won’t remain this way for 85 years this time. Not the worst opportunity to refinance – perhaps with a 15-year loan at a 5.7% rate. Later this weekend or Monday: Andy learns to press clothes. (If he had ever learned to pack properly, he wouldn’t have needed to learn to press clothes.)
Health Notes August 15, 2002February 21, 2017 EIGHT GREAT YEARS Today is our eighth anniversary. I’m stuck out West asking people for money for the upcoming election, but that’s OK, because it’s part of a process. At some point a majority of Americans, and their representatives in Congress, will decide that a gay couple that’s been together eight years is entitled to the same economic rights and benefits as a straight couple that’s been together eight years. (Indeed, the straight couple gets these benefits even if they met yesterday.) And that a society that wants to encourage stable, responsible, loving relationships should recognize them. BUT WILL GRAPEFRUIT KILL ME BEFORE OUR NINTH? Kerry Moskop: ‘If you’re still taking Lipitor … well, nibbling on them … grapefruit is a ‘no-no.’ My Lipitor prescription container has a big, red warning label: ‘Do not eat grapefruit or drink grapefruit juice at any time while taking this medication.’ I don’t know if it’s because grapefruit counteracts the beneficial action of Lipitor or the two, work together, do something dastardly to you.” Vince DeHart: “From MedicineNet.com: ‘Grapefruit juice inhibits a special enzyme in the intestines that is responsible for the natural breakdown and absorption of many medications. When the action of this enzyme is blocked, the blood levels of these medications increase, which can lead to toxic side effects from the medications.’” ☞ I quit taking Lipitor when I discovered this conflict. I decided grapefruit and exercise were better for me than Lipitor and its potential side-effects. I was also offended by a slick brochure the manufacturer sent out trying to help me with a friendly warning never to split the tablets. Ostensibly, this was for my benefit. In fact, I believe, it was for theirs. At Drugstore.com, a year’s supply would have cost $678 if I had bought the prescribed 10mg size, versus $269 if I bought the 40 mg tablets and cut them in quarters. I PAID THREE GRAPEFRUITS TOO MUCH John Seiffer: “I usually go lower than you on Priceline.com. In Dallas I get 3-star hotels for $30. One time I was at the DoubleTree and asked if I could extend the stay at the Priceline rate of $30, saving them some fee I imagine they must be paying Priceline. They said no, so I went back on Priceline to extend the stay and got the same hotel for $30. They did let me keep the same room.” PHILIP MORRIS: ALWAYS LOOKING OUT FOR YOUR HEALTH Speaking of companies that have only your best interests at heart, the New York Times reported yesterday that Philip Morris and others in the 1980’s and 1990’s successfully pressured drug companies to dial back their marketing of nicotine gum and skin patches that help people quit smoking. TAKING GRAPEFRUIT WITH A GRAIN OF SALT Mike Kozlowski: “You should have tried the salt on the grapefruit. Someone told me about this, and I was very very skeptical, but: It’s good! It doesn’t taste salty at all; it just brings out the grapefruit’s taste more. Delicious.” EAT WHAT YOU WANT I became famous in our family (with just one sibling, it was hard to be an unknown) for the simple observation to my indecisive cousin – age five at the time, like me, and unsure of a piece of Thanksgiving dinner – “Michael! If you want the ham, eat the ham. If you don’t want the ham, don’t eat the ham. But let’th not asCUTH it all the time!” It is vaguely in that vein that this bit of Internetiana could be read, forwarded by Eric Loeb. You may already have seen it: The Japanese eat very little fat and suffer fewer heart attacks than the British or Americans. The French eat a lot of fat and also suffer fewer heart attacks than the British or Americans. The Japanese drink very little red wine and suffer fewer heart attacks than the British or Americans. The Italians drink excessive amounts of red wine and also suffer fewer heart attacks than the British or Americans. CONCLUSION: Eat and drink what you like. Speaking English is apparently what kills you.
Grapefruit August 14, 2002February 21, 2017 I know room service has specific menus, but from time to time I remember that at many finer hotels you can ask for more or less anything. ‘Would you happen to have a grapefruit in the refrigerator?’ I asked. It was past midnight, and I figured I’d be good for a change. How wrong can you go with a whole grapefruit as a late night snack? ‘You want a whole grapefruit? Anything else?’ ‘Just a knife. A whole grapefruit and a knife to cut it with.’ I am staying at a 4-star Beverly Hills hotel, with an amazing down comforter on the bed, a two-line line with modem, tasteful art on the walls, balcony with a view ($84 plus tax and the $5.95 Priceline fee) – so in less than half an hour there was a knock at my door. A whole grapefruit. A knife. A salt shaker (huh?). And a bill for $17.54. I plan to ask about this when I check out in the morning. ‘How can you afford to rent me a beautiful room like that for less than the cost of five grapefruits?’ I will ask. DICK DAVIS #29 – NOW HE TELLS US Item 29: Know The Downside Stock recommendations should include all the bad stuff that can happen, as well as the good. Only then will there be no surprises. But a complete list of the major negatives is rarely included in a recommendation. The only place you can get full disclosure of all the risks is in the prospectus that accompanies a new offering – and then only because it’s required by the S.E.C., and no one reads prospectuses. Think about it. If you’re buying a stock, someone is selling it to you. Why? It’s only by your knowing all the possible reasons for the sale that you can make a truly informed decision. Always seek out the downside; it may take some doing.
The Sun Will Come Up Tomorrow. Or One of These Days. August 12, 2002February 21, 2017 John Mandeville: ‘I think you’re right about dips on the market per Friday’s column. I have had in the back of my mind, ‘when the market goes up, I’m selling and getting out of this rat race for a while.’ Well, as it turns out, everyone around the coffee break table is thinking the same thing. I can just see a continuation of this whip saw action for months and perhaps years to come. What are your ideas for getting the trust of the investor back into the market? Throw the bums in jail? What else?’ ☞ Throwing the bums in jail may help restore some confidence, but the real base that’s needed is a compelling value proposition, where logic and greed overcome fear. Can you believe that great dividend yield? Or at least, Can you believe that low p/e ratio? Hey – I can’t sit it out any longer. If the world doesn’t end, buying shares at these prices has to work out over the long run. (And if the world does end, what difference will it make?) Stocks may have to go a good deal lower for people to feel that way, or earnings next year (or some year) may have to be a lot higher. But the day may come. Then again, it may not. There is a great deal of money sitting on the sidelines; and every week, more 401(k) money needs to be invested. So maybe stocks won’t have to get lower than they did a couple of weeks ago. I truly don’t know – obviously – which is why people like me shouldn’t try to time the market. It’s only at the extremes – either nutty high or nutty low – that I feel confident of the intermediate direction of the market, even if it winds up getting even nuttier first, before it heads back toward sanity. (I say intermediate term because NO ONE can guess the short-term market moves with any degree of success, and the truly long-term direction is always easy to guess – up. Barring the end of the world, of course. But if the world does end, the Dow will be the least of our worries.) If you’re in it for the long haul, I don’t want to encourage you to sell, even though I believe the market could have quite a bit further to fall. Prices have come back to earth sufficiently that they are no longer totally nutty. Here and there, and as tax-selling season kicks into gear, you may even find a bargain. ALL WILL GO WRONG I don’t know Derbyshire’s work well enough to know how deeply his tongue is stuck in cheek. If you read him literally, both here and in one or two other things I’ve read, it’s pretty appalling. One has the sense, though, he enjoys being grumpy and outrageous and politically incorrect. In any event, here’s what one conservative (i.e., Derbyshire) believes. We progressive Democrats recognize the same challenges he does but have a more hopeful vision of meeting them. Deep down, I think Derbyshire is rooting for us to succeed – and recognizes that we might. The sun will come up tomorrow, and it will not be totally obscured by pollution.
Psycho-Shift August 9, 2002February 21, 2017 Here’s the problem with the stock market. Before . . . remember before? . . . whenever it would fall from seemingly high heights, it would shortly bounce back to even higher heights. People learned that dips were buying opportunities, and that became somewhat self-fulfilling. They’d ignore underlying value and just buy, knowing that the market always snapped back and went higher. Well, now what may happen for some months or years longer (I hope not) is that whenever the market rises from seemingly low levels, as it has the last few days, it may shortly fall back and perhaps dip to even lower lows. People may come to believe that these spikes are selling opportunities – and that, too, could become somewhat self-fulfilling. They may ignore value and just sell, knowing that these rallies never last. At some point, of course, they will be wrong. At some point – maybe this even is that point – the rallies will be wider and more sustained than the dips. That is when we will know (looking back on the chart, with hindsight) the bear became a bull. # Thomas Friedman filed another of his compelling New York Times columns the other day, this one from Sri Lanka. But it wasn’t about Sri Lanka, it was about an ailing 63-year-old Egyptian named Saad Eddin Ibrahim, sentenced to seven years’ hard labor for promoting democracy. And it wasn’t about that, either. It was about America’s response – yours and mine – and how such responses are being perceived around the world and what they mean. Click here. MYM 12 DIE-HARDS Martin Fleisher reports that MYM 12, the venerable DOS money-management software package some of us still use (along with our rotary phones and slide rules), works under Microsoft XP. The one problem he encountered – and I have heard this from others – is that it opened in a too-small window. But he quickly discovered that XP ‘defaults to opening DOS programs in a window. You just have to alt-enter out of it.’
Roses . . . August 8, 2002February 21, 2017 Roses are red, Violets are blue. Yesterday’s column Will just have to do. Back tomorrow . . .
Another Rate Cut? August 7, 2002March 25, 2012 There was talk yesterday the Fed might take rates down yet again later this year. There are two pieces to any Fed move. One is economic, the other psychological. Economically, even-lower short-term interest rates might help the economy and help the stock market. All those who borrow at ‘one over prime,’ say, would save some a little money as ‘prime’ – currently 4.75% – fell another quarter or half a point. They might spend that extra money on something. Lower short-term rates would also make stocks relatively more attractive. Even if one hoped for just 5% from a combination of dividends and appreciation – well, 5% looks ever more attractive as your broker pays you, say, 1% on cash balances. But what would a rate cut say psychologically? That the Fed is worried about the economy? That we are running out of room to cut rates? (The Fed’s ‘Discount Rate,’ at which it lends to banks, is now 1.25%, down from 3.25% a year ago. The ‘Fed Funds’ rate, at which banks lend to each other, is 1.75%, down from 3.75% a year ago.) That it is hard to push on a string? That we are headed toward the Japanese experience, where the government rate fell essentially to zero? I don’t think we are headed for these kinds of disasters. But it shows you the kind of delicate dance the Fed must do. (A lot of the problem stems from not having found a way to keep the stock market bubble from ballooning to the size it did. If the NASDAQ was irrationally exuberant at 1250, as Alan Greenspan seemed to think in December, 1996, what was it at 5200 three-and-some years later? I think the Fed made a mistake in not raising the 50% margin requirement – a little-used but venerable Fed lever. Nothing drastic, but a small hike from 50% to 52%, say, or 54%, to send a message . . . and then gradually higher, if needed. It would have been a way of damping down some of Wall Street’s speculative excess without unnecessarily damping down Main Street’s healthy economy.) There are times when a rate cut is eagerly to be hoped for, an almost sure economic confidence-booster; a shot in the market’s arm. This may or may not be one of them. Actually, what might be even more welcome is a time the Fed feels the need to tighten a notch. That will be a signal that the Fed, at least, has turned bullish on the economy.
Summer Rerun August 6, 2002December 29, 2016 I’m sorry, but I think I’ll just run this column every few months until we freeze the tax cut for the top 1% or 2%.
Hotels and Hoffer — in Haifa? August 5, 2002February 21, 2017 HOTELS I’ve mentioned the advantages of Priceline.com when you’re booking a hotel room and you’re sure you won’t have to change your plans. And the advantages of Expedia.com when you might have to change your plans. I look to see what Expedia can offer, then try to do 40% better at Priceline. If I fail, I just go back to Expedia and book there, which still saves a lot of money. But I guess along with Expedia we should add Hotels.com. Although controlled by the same owner as Expedia – which can’t bode too well for price competition – Hotels.com has such clout, according to the latest issue of Worth Magazine, that it can sometimes get you rooms that the hotel itself can’t sell you – and at a significant discount. Like so much of the Internet: great for consumers, not so great for investors. HOFFER David Brudnoy: ‘You know of course who Eric Hoffer was. [Just click if you don’t.] This is prescient – look at the date it was published.’ ISRAEL’S PECULIAR POSITION By Eric Hoffer (LA Times May 26, 1968) The Jews are a peculiar people: things permitted to other nations are forbidden to the Jews. Other nations drive out thousands, even millions of people and there is no refugee problem. Russian did it, Poland and Czechoslovakia did it, Turkey threw out a million Greeks, and Algeria a million Frenchman. Indonesia threw out heaven knows how many Chinese – and no one says a word about refugees. But in the case of Israel the displaced Arabs have become eternal refugees. Everyone insists that Israel must take back every single Arab. Arnold Toynbee calls the displacement of the Arabs an atrocity greater than any committed by the Nazis. Other nations when victorious on the battlefield dictate peace terms. But when Israel is victorious it must sue for peace. Everyone expects the Jews to be the only real Christians in this world. Other nations when they are defeated survive and recover but should Israel be defeated it would be destroyed. Had Nasser triumphed last June he would have wiped Israel off the map, and no one would have lifted a finger to save the Jews. No commitment to the Jews by any government, including our own, is worth the paper it is written on. There is a cry of outrage all over the world when people die in Vietnam or when two Negroes are executed in Rhodesia. But when Hitler slaughtered Jews no one remonstrated with him. The Swedes, who are ready to break off diplomatic relations with America because of what we do in Vietnam, did not let out a peep when Hitler was slaughtering Jews. They sent Hitler choice iron ore, and ball bearings, and serviced his troop trains to Norway. The Jews are alone in the world. If Israel survives, it will be solely because of Jewish efforts. And Jewish resources [2002 note: America has surely helped with resources! – A.T.]. Yet at this moment Israel is our only reliable and unconditional ally. We can rely more on Israel than Israel can rely on us. And one has only to imagine what would have happened last summer had the Arabs and their Russian backers won the war to realize how vital the survival of Israel is to America and the West in general. I have a premonition that will not leave me; as it goes with Israel so will it go with all of us. Should Israel perish the holocaust will be upon us. ☞ Too pessimistic. Peace will succeed because peace has to succeed. But . . . oy!