Year: 2002

It was 43 years ago this day, or this week anyway, that Mr. Little assigned us to write a short essay on ‘Spring’ for our Seventh Grade English class. I remember this in part because I was so stymied by it – what on Earth would I have to say about Spring? What could I tell Mr. Little that he did not already know? Spring has sprung, the grass is green, it’s time to get things really clean. In choosing the season that has the most meaning, towards Spring, I must say, I am most likely leaning. For Spring, it’s well known, is a time of rebirth. And it’s also a time for a real thorough cleaning.

Sure, I can be flip about it now, but at the time all I could think of was flowers and birds are really sissy things like that, and I could think of no way to give Spring an edge.

But mainly I remember this assignment because of what happened next. The day after we turned in our essays, Mr. Little called on one of us – I think it was Lloyd Guller – to read his essay, which had won an A, and Lloyd read 100 words on the life and times of one Ed Spring, someone he had made up for the occasion. I was outraged, but Mr. Little thought his little tactic deserved an A for imagination.

So here’s my essay:

It’s Spring! (Though not in Bolivia.) A good time to buy ski equipment on sale. I don’t think we ever should have gone off Daylight Saving Time in the first place. The TIPS that mature April 15, 2032, with a 3.375% coupon and a face value that rises with inflation, were selling for under 99 yesterday. Not bad for a retirement plan. The end.

Robert Doucette: ‘In a recent piece on the PBS News Hour you talked to a lunch-time bookstore audience about diversifying investments and a lot of them were emotionally opposed to it. William Bernstein’s book, The Intelligent Asset Allocator, gives a convincing argument. It graphs the risk/reward curves for pure portfolios and mixed stock/bond portfolios, and shows that adding a little bit of bonds significantly reduced the risk of an all-stock portfolio with little effect on the return. Would this convince people to reallocate their 401K, or is this whole area too complicated? I am concerned that there will be a movement to protect people’s 401K retirements that will have the government setting allocations.’

☞ People will put too little into stocks when they’re cheap and too much into stocks when they’re dear. Nothing is likely to change that. The government certainly can’t, and I don’t think it will try.

I do think, however, that it might be in order to outlaw, or at least make it more difficult, for people to keep more than 20% of their 401(k) in their own company stock.

By ‘make it more difficult,’ I mean, for example, requiring people to read and sign a form that would make a really good case, in an engaging way, against doing this. It could conclude with this question:

Why do you want to bet more than 20% of your retirement fund on your own company stock?

[ ] a) I want to show that I am a loyal employee. [This is an admirable sentiment, but a terrible way to invest. Don’t do it!]

[ ] b) Well, look how well the stock has done in the past! [Yes, but what matters is how it will do in the future. Very often, the stocks that have done best in the past do worst in the future. Your company is doubtless a fine one, and it may do very well. But do you really want to put all your eggs in one basket? For years, doing that looked so smart at Enron, so smart at Lucent, so smart at so many others. But what a mistake!]

[ ] c) This is a terrific company with exciting plans! [How many companies do you think tell their employees that their prospects are dim and they have no exciting plans? Yet can everyone can’t be above average. And what if your company really is more exciting than almost any other, but the company’s stock price already reflects that?]

[ ] d) I want to bet my entire future on just one company, no matter how reckless everyone says that is – and by an amazing coincidence, I have decided that the absolute best one stock in the whole world is . . . my own company!

Not long ago, I subjected you to a column about Arianna Huffington and David Brock, two former right-wingers who now say that they were, well, Blinded By the Right (Brock’s title) and have become pretty ardent opponents of the right. Brock’s book argues that there really is a vast right-wing conspiracy, and that he should know – he was a part of it.

‘Now, you may find a left-wing columnist or commentator who has recently seen the light and proclaimed himself a convert to the vision of Tom Delay and Trent Lott,’ I wrote in that column. ‘I can’t think of one. If you do, send me their names, which I pledge to report.’

Some e-mails arrived, but just a few.

Michael Dokupil: ‘If there was ever an equivalent to David Brock it is Tammy Bruce’s new book, The New Thought Police: Inside the Left’s Assault on Free Speech and Free Minds. She is a pro-choice, lesbian activist, and former head of the LA chapter of NOW. I think that you owe it to your readers to at least point out that it exists. Per Amazon: ‘From rigid speech codes on college campuses to the knee-jerk use of such labels as ‘racist,’ ‘homophobic,’ and ‘hateful’ in an attempt to socially ostracize people with opposing viewpoints, speaking one’s mind today has become increasingly dangerous. What makes this book’s thesis especially powerful is that the author is a progressive . . .”

☞ Well, but I largely agree with Tammy Bruce. I think it’s terrible when a speaker is shouted down, and I think political correctness is a scary thing . . . although political politeness and sensitivity make a lot of sense. But the point is, according to Amazon, Tammy Bruce is still a progressive. She hasn’t renounced a woman’s right to choose and my guess is she doesn’t favor drilling in our national parks over promoting hybrid cars. So it doesn’t sound to me as if, having been an outspoken progressive, she has now switched to being an outspoken conservative. Yet that’s just what – in reverse – Arianna Huffington and David Brock have done. (Incidentally, for those who agree political correctness can be carried too far, check out a good nonprofit group called FIRE.)

Michael Axelrod: ‘There have been a number of people switching from the Left to the Right. I don’t know what you mean by ‘recently,’ but here are a few that come to mind: David Horowitz. He was one of the founding editors of the ultra-left Ramparts Magazine in the 1960’s. Now he is a Bush supporter. His parents were communists, and he freely admits to being a ‘red diaper baby.’ Ronald Radosh. Another RDP who has converted to the right. Author of several books on communism and the American Left. Bernard Goldberg, author of Bias. He might not realize it (yet), but he has made the crossover from being a Liberal to a Conservative. Eldridge Cleaver. Author of Soul on Ice. Black Panther 1960’s radical left revolutionary. Became a Conservative and supporter of Ronald Reagan. Michael Novak. Not recent, but certainly a convert. The whole New York Neocon crowd are all ex-liberals. The above are just a few that occur to me, there are lots more.’

☞ Well, yes, but by this standard, I guess I, too, have moved significantly to the right. As has, for that matter, much of the Democratic Party (and all of its leadership).

For one thing, times have changed. There is less need now for the sort of radical protest that led, in 1965, to passage of the Voting Rights Act (not to say we’re where we need to be on race – or even on voting rights – but we’ve clearly come a long way) or that fueled the anti-war movement. In the Sixties, the left was all against ‘the war’ (and rightly so, in my view). In 2002, much of the left is all for it (again, rightly so).

For another thing, we’ve learned from experience. There’s no shame in that. Quite the contrary, I think. (And we’re not the only ones. The Bush team seems to have learned, for example, that butting out of the Mid-East peace process, wasn’t such a good idea, after all, and is now, thankfully, butting back in.) We now know, having tried it, that programs like welfare can have terrible unintended consequences (while others, like the Peace Corps and AmeriCorps and, for that matter, the GI Bill and the Marshall Plan and the S.E.C. and Fanny Mae, to name just a few, can work rather well). Many traditional liberals have come to embrace the importance of market economics and free trade and fiscal prudence, while retaining their concern for the ‘little guy’ (known in an earlier era, I believe, as ‘the meek’) and for the environment.

It’s a balance. Conservatives care about these things, too, but place the fulcrum further to the right. If the continuum runs from cradle-to-grave nanny state save-the-snail-darter-at-any-cost at the left edge to sink-or-swim no-government-except-for-the-military-and-the-police-to-protect-what-we-got at the right, my view is that the Democratic leadership has by now found a pretty good balance in the middle, while the Republican leadership has bumped up against the wall.

Which is a too-long way of saying that 1970’s left-to-right conversions don’t count! At least not as counterpoints to Arianna Huffington and David Brock. These were folks who just a few years ago attacked the Clinton administration mercilessly, both on personal grounds and ideologically. And now, in effect, they are saying they were wrong.

To me, the counterpoint would be someone who’d been a strong voice on the left or center-left – an Anna Quindlen or a Paul Krugman or a Frank Rich or a Michael Kinsley or an Eleanor Clift – doing an about face.

Have you heard one of them – or anyone like them – saying, ‘I was wrong! I now see that Jesse Helms and Trent Lott and Tom DeLay have the right vision for our fragile world. Of course we need to drill in ANWAR and slash alternative-energy research. Of course we need to preserve the gun show loophole. Of course our top priority should be tax cuts for the top 1%.’

I have not seen columns like that.

72 VESTAL VIRGINS

Trudy Karlson: ‘Did you read in the NY Times (Saturday March 2) that new translations of the Koran suggest ‘vestal virgins’ has been mistranslated? Apparently, in Arabic it just requires an additional diacritical mark, and the original scribes were writing about 72 ‘white raisins.”

☞ Oh! That’s different. Never mind. No one’s going to kill himself to have his way with a few dozen raisins. Let’s get the word out.

PUMPING THE MONEY SUPPLY

Joe Devney: ‘For several weeks after the September 11 attacks, I kept hearing that Alan Greenspan had helped the stock markets recover by ‘pumping liquidity into the system.’ Nobody ever said what that meant. The friends I asked weren’t sure, but suggested that it might refer to the series of interest rate cuts over the last year. So how does one ‘pump liquidity into the system?”

☞ Well, ‘one’ doesn’t – but the Fed can. It goes into the market and buys Treasury securities, paying for them with money it creates out of thin air. This increases the money supply, and when the supply of something increases, its price tends to fall. (If diamonds were as plentiful as blueberries, they would cost just a penny apiece.) The ‘price’ of money is the interest rate you pay to borrow it. The more plentiful the supply, the cheaper it will be to borrow, and the lower interest rates will be – at least short-term interest rates.

(Long-term rates are a tougher nut for the Fed to affect, because the market is not stupid. The market knows that, however plentiful money may be today, it could become scarce tomorrow. And it knows that easy money could ignite inflation. No one wants to hold a long-term bond at a low interest rate if inflation is around the corner. So the Fed’s power to cut interest rates mainly applies to short-term interest rates – even though, in many respects, long-term rates are a lot more important.)

Chances are, the Fed is done pumping liquidity and cutting interest rates. A good thing, too, as we had gotten fairly close to zero . . . like a plane coming in heavy and fast and managing to stop just a few dozen yards short of the end of the runway. Good job, Dr. Greenspan.

BOROWITZ REPORT

March 15, 2002
Breaking News:
IN LATEST MIX-UP, BIN LADEN RECEIVES MINNESOTA DRIVER’S LICENSE

☞ Ah, bureaucracy.

THE RELIGIOUS POLICE

From the BBC:

Friday, 15 March, 2002 – Saudi Arabia’s religious police stopped schoolgirls from leaving a blazing building because they were not wearing correct Islamic dress, according to Saudi newspapers. In a rare criticism of the kingdom’s powerful ‘mutaween’ police, the Saudi media has accused them of hindering attempts to save 15 girls who died in the fire on Monday. . . . According to the al-Eqtisadiah daily, firemen confronted police after they tried to keep the girls inside because they were not wearing the headscarves and abayas (black robes) required by the kingdom’s strict interpretation of Islam. One witness said he saw three policemen ‘beating young girls to prevent them from leaving the school because they were not wearing the abaya.’ The Saudi Gazette quoted witnesses as saying that the police – known as the Commission for the Promotion of Virtue and Prevention of Vice – had stopped men who tried to help the girls and warned ‘it is sinful to approach them.’ . . . The school was locked at the time of the fire – a usual practice to ensure full segregation of the sexes. The religious police are widely feared in Saudi Arabia. They roam the streets enforcing dress codes and sex segregation, and ensuring prayers are performed on time. Those who refuse to obey their orders are often beaten and sometimes put in jail.

☞ My own conception, as some of you will remember from December 28, is that religion would serve us best if in the back of our minds we all realized that – as inspiring and comforting as it truly can be – religion is trumped by reality. Suicide bombers won’t really be surrounded by 72 Vestal Virgins (or even 72 pissed-off Virginians, as one of the Internet missives you’ve doubtless gotten a dozen times would have it). So when religion would lead us actually to hurt other people (e.g., stoning nonvirgin brides to death, as prescribed in the Bible), or even just to treat them unfairly (e.g., condoning slavery or the subservience of women – ibid), we need to adjust it for common sense and justice.

Which perhaps leads us to . . .

MORE CALICO CATS

We have talked some about our Attorney General, John Ashcroft, whose dad’s church speaks in tongues and who himself is not about to be easily tricked by the devil. His private faith is entirely his own business, as is his right publicly to profess it at Bob Jones University and anywhere else he sees fit. If he wants to spend $8,000 of our tax money covering up a Justice Department statue because a boob is showing – artistic expression (and boobs) be damned – so be it. He is our Attorney General. I just hope he doesn’t get it into his head that the Washington Monument is a phallic symbol, because I’d hate to think what it would cost to drape that.

Where his piousness scares me is where it conflicts with, or might be perceived as conflicting with, his official role.

A possible example is the administration of survivor benefits from 9/11. You may have seen Special Master Kenneth Feinberg on ‘Meet the Press’ March 10. A Massachusetts liberal, Feinberg runs the September 11th Victim Compensation Fund under the aegis of the Attorney General. The good news is that Feinberg will grant taxpayer-funded compensation to a very wide group of victims, even including fetuses and illegal aliens. Apparently, the Attorney General himself made sure that Immigration would not penalize or deport illegal aliens who surface to get this compensation, nor take action against their employers for having hired illegals.

You’ve got to admit that’s really putting compassion ahead of the law.

But one’s got to draw the line somewhere. Where Feinberg draws it – and one suspects this decision may not entirely have been his own – is in granting compensation to gay Americans who lost their significant others in the tragedy. No can do, Feinberg says, if they live in a state that doesn’t recognize domestic partnerships.

#

Friday’s Washington Post reports that Ashcroft has ‘moved in recent months to consolidate his control over the Justice Department’s Civil Rights Division, turning over control of sensitive issues traditionally handled by career lawyers to more conservative political appointees.’ (You can never be too conservative when it comes to civil rights. Under Clinton/Gore, it really got out of hand.) Ashcroft has moved to put his stamp on voting rights, also. For the full story, click here.

Steve Reynolds: ‘Given the current rate for 5 year CDs at my local bank (3.15%) and the current stock market climate, what should a 59-year-old do with qualified cash that will be needed in 5 years? Fixed 5 year annuities are at 5.15% with a 5 year surrender period (no loads). NOW should I buy one?’

☞ The most obvious way to beat your bank is a 5-year treasury note, currently yielding 4.34%, and subject only to federal (not state) taxes. I’d prefer this to the annuity (which after state tax might amount to about the same yield) because it gives you the flexibility to cash out early (with a small profit, no less, as you roll down the yield curve) without a surrender charge.

You could also visit bankrate.com and rate.net to find CD’s that offer much better rates than you’re being offered.

Or you could twist your broker’s arm to buy you TIPS, which would yield a bit more than 3% on top of inflation. You’d have to pay tax on the inflation adjustment each year, even though you didn’t get it, but for such a relatively short period of time, I can think of worse things.

Are you sure you will need all this money in five years? Are will you just begin to need it then, and draw on it for 20 or 30 years thereafter? If the latter, consider a somewhat more aggressive strategy (and buy some TIPS, but for your tax-sheltered retirement plan). Have a good weekend!

That’s an abbreviation writers and editors use: TK. It stands for ‘to kome’ – not because we can’t spell, but because by misspelling it in this way, we assure that it won’t accidentally make it into print. The copy editor (or, now, the spell checker) will surely spy it and yell across the room, ‘Hey Harry – we still have some TK’s in the platypus piece!’

Unfortunately, Harry and I were not able to come up with a clever title before the presses started rolling. So harried have we been, indeed, we nearly forgot to feed the platypus.

FROM THE BERKSHIRE-HATHAWAY ANNUAL REPORT

“In neither the purchase of goods nor the hiring of personnel, do we ever consider the religious views, the gender, the race or the sexual orientation of the persons we are dealing with. It would not only be wrong to do so, it would be idiotic. We need all of the talent we can find, and we have learned that able and trustworthy managers, employees and suppliers come from a very wide spectrum of humanity.” – Warren Buffett

ROTH RAMIFICATIONS

David Maymudes: ‘I haven’t heard much discussion of it, but isn’t the Roth IRA an obvious case of shifting tax revenues from the future to the present, so that we can claim we’re balancing budgets?’

☞ Yes – and the worst part about it is that we’re NOT balancing budgets – we choose to blow the surplus by cutting taxes on those already best off. The only justification, or partial justification, for making Roth IRA withdrawals tax-free is that it may encourage a higher savings rate, and thus enrich us all. But be fiscal policy as it may, from the point of view of one’s own personal finances, a Roth IRA is likely to be a very good choice.

BALTIMORE – OR LESS?

Ed Pariser: ‘Smug accounting of the Arab world’s finances by Baltimore Jewish Times publisher Andrew Buerger doesn’t remove the reality of what we are constantly told is ‘the only democracy in the Middle East’ treating its neighbors as sub-humans. As an American Jew, I was one of millions who supported the operations Buerger recites that brought oppressed Jews to freedom. When we were supporting those operations with our dollars and our volunteers, we believed Israel to be a model of fairness, freedom, and civilization. Under Sharon’s regime, we find the current Israel to be arrogant, aggressive, and antagonistic toward their neighbors (who have been in limbo for 35 years). Sharon is now finally culminating his plan to destroy the Palestinian leadership that he began with his provoking visit to the Temple Mount two years ago. I hope that American Jews and fair-minded Israelis (like those servicemen who were recently unwilling to participate in the further destruction of the West Bank) will thwart Sharon’s goal of bringing down the land-for-peace process by denying him any future funds and manpower.’

☞ Maybe so; but Arafat acted with tragic cowardice in not accepting – or at least accepting as a very good base for further negotiation – Barak’s offer to give back 97% of the land Arafat sought. It was Arafat who, thus, assured Sharon’s election. Wouldn’t it be great if – its always being darkest before the dawn – the current nightmare now led the Saudis and others to apply real pressure and incentives for peace?

SIX MONTHS LATER

I am more than a little surprised that the market is higher today than it was September 10. I sure didn’t see that coming. In the wake of the six-month anniversary, I looked back to the September 18 column to see how my five stocks had fared:

I think the market is even less of a bargain here than it was September 10, and certainly less of a bargain than on September 18, but the market has a way of scoffing at me.

I’ve sold my AMR, BA and UAL, and hold the other two – but only because I can afford to play around at this. Periodic investments in index funds, buying and holding, make more sense.

ANOTHER PLUS FOR THE ROTH IRA

Fred Jaggi: ‘Because small increments of income cause large amounts of Social Security benefits to be taxed, many seniors find that the effective marginal rate of tax is much higher once they are retired than when they were working. The marginal rate can be as high as 52% for ordinary income, including withdrawal from an IRA, 44% for long-term capital gains, and 24% for ‘tax-free’ bonds! Click here and here to see how that works. Tax-free withdrawals from a Roth do not trigger an increase in amount of Social Security taxed.’

A POSSIBLE MINUS

Jonathan Edwards: ‘I have argued ever since the Roth IRA was created that Congress will eventually have to repeal this feature. Come 2037 when the Social Security Trust Fund runs out of money, I can’t imagine that the working-age public will let Congress continue to allow baby boom retirees to pay no taxes whatsoever on their incomes, no matter how large.’

☞ Well, there are going to be a LOT of seniors voting in the 2038 mid-term elections, so I’m not certain you are right.

AN OPEN LETTER TO CROWN PRINCE ABDULLAH BIN ABDUL AZIZ AL-SAUD

From: The publisher of the Baltimore Jewish Times, Andrew Buerger
February 1, 2002

Dear Crown Prince:

After reading the excerpts from your recent New York Times interview, I have to applaud your efforts to aid your ‘oppressed’ Palestinian brethren. It’s very sad to see those poor children being subjected to violence and poverty.

And, I encourage you to continue to challenge President George W. Bush, as I often do in my column in the Baltimore Jewish Times.

In the interview, you expressed concern that Mr. Bush wasn’t doing enough to help your Palestinians, your fellow Muslim Arabs. I wanted to drop you a line to suggest ways to help them. After all, my people have some experience in this area.

You probably read that Jews, too, were in refugee camps after World War Two, and we got very little help from governments around the world. Diaspora Jews lined up to donate millions of dollars to help resettle them in safe countries. In addition to money, thousands of volunteers worked tirelessly for years to get the Jews out of danger. This was before our people had a homeland. If you have time with your work schedule, I suggest you read Exodus by Baltimore-native Leon Uris.

Recently, Jews lived in threatening places like Ethiopia and the former Soviet Union, let alone Syria and Yemen. We raised millions of dollars, not from the US Government, but from our own people, and used incredible organizational skill to get them to Israel and the US. In the last 50 years, we’ve been fortunate to have a homeland, but before that we placed Jews in Argentina, Canada and the United states, anywhere so we wouldn’t be “oppressed.” Our people, didn’t rest until every Jew was out of harm’s way.

Former JDC president, Jonathan Kolker, recently said that for the first time in 2,000 years all Jews can leave their country if they choose. It took tremendous work and billions of dollars to reach that goal.

I don’t know much about your finances, but you might be able to tap money from your oil revenue. I’ve seen some of your palaces on TV, which look pretty nice. I thought maybe you could use one of them to house 1,000 Palestinian children just as countless Jewish families took in refugees during the Holocaust. I know that Saudi Arabia isn’t a Palestinian State, but it’s home to some pretty important places such as Mecca and Medina.

Perhaps I could recommend the help of Jewish Federations to review your budget and find funds. They have some of the best ratios around when it comes to percentage of donated money going to charitable causes.

To put the Former Soviet Union emigration in perspective, it would be as if the US were to absorb every French citizen. And the Jewish people are a fraction of the Muslim population. Also search the web for information about Operation Moses and Operation Solomon from 1986 and 1991, respectively, to see the amazing story of how world Jewry brought endangered Ethiopian Jews to Israel.

With all due respect, Crown Prince, why haven’t you done more to help your people? Blaming the US and Israel just won’t work. At an Arab nation summit, you and your colleagues pledged $1 billion for Yasser Arafat’s Palestinian Authority. You never delivered it because of fears of corruption. That was probably wise.

But if you’re concerned about their well-being, you should take the Palestinians out of harm’s way. When things calm down, I’m sure the US and Israel would sit down with their leaders — as they keep trying to do—to create a Palestinian homeland. It would be great, too, if you could talk to your colleagues in Jordan, which is mostly Palestinian, to help out here.

To help your people, I suggest your remind them that Islamic law prohibits murder. I respectfully suggest that you become part of the solution, and not just another complainer. After all, it’s worked for the Jews.

UNEQUAL INCOMES

Eric M: ‘I make $36,075 per year as a program coordinator at a local community college. My better half, a full professor, endowed chair and about to be an associate dean, makes $172,000. He and I are both debt-free except for the mortgage and monthly expenses. What is an equitable division of monthly bill-paying for us?’

☞ Professors make $172,000? Cool! He must be awfully good.

The answer is, of course: I don’t know. There are a lot of ways to do this. But it seems to me that, for your part, you should insist on contributing as much it would cost you if you were roughing it on your own – and that, for his part, he should be impressed by your responsibility and graciously accept. If he then wants to help you in other ways, buying you the occasional car, or helping you to fund your Roth IRA each year, all the better. But if I were you, I’d rather have him feel you’re trying too hard than not trying hard enough.

DON’T WRITE A BLANK CHECK

Stephen Powell: ‘Do you have any rules of thumb about when to use limit orders vs. market orders when buying and selling stocks?’

☞ I almost always use limit orders. The deep discounter I use charges just $5 more – $13 a trade, of any size, instead of $8.

The only time I don’t is when I’m trading just a few shares of a VERY liquid stock. Even then you might have a reason to use limits, but at least you won’t get taken advantage of by a market-maker if there’s a tiny spread between the bid and asked prices, as is the case with highly liquid stocks.

To take two extremes: If I wanted to buy 500 shares of Microsoft, I probably would just buy it. ‘At the market.’ But if I wanted to buy 100,000 shares of some 40-cent bankruptcy speculation, I would unquestionably pay the whopping $13 commission for a limit order instead of the $8 commission for a market order. The extra $5 could easily save me $2,000 or $3,000, maybe more.

Just where to draw the line between those two extremes? When in even the slightest doubt, use a limit order.

The other reason to use them is that stock prices fluctuate. If you’re not desperate to buy this particular stock immediately, it could certainly dip back to the bottom of the day’s trading range (say) and you might save 50 cents on 500 shares = $250. And if you are desperate to buy it immediately . . . well, that alone is often a good reason to reconsider.

Then again, in trying to chisel for 50 cents a share by placing a limit order ‘under the market,’ if you’re buying (or ‘above the market,’ if you’re selling), you could watch the stock just move steadily away from you and never make the trade at all. You put in a $21.30 limit order when the stock was $21.50 and became increasingly loath to pay $22 – now $22.75 – now $23 – now $24.50 – when, if you had just put in a market order, you would have gotten it at 21.50 or $21.75.

Sometimes I do use limit orders this way, hoping to buy a little below (or sell a little above) the current market. More often, I use them just to be sure that I don’t get blind-sided by a sudden move or a greedy market-maker. In those cases, I often put the order in with a little room to spare, so I’m almost sure to see it executed. Ultimately, if you are a buy-and-hold value investor, a few pennies a share won’t make any difference.