Spaceship Earth January 25, 2002February 21, 2017 First they wanted to clean up the water, next they wanted to clean up the air – soon they’re going to want us to clean up our rooms! I’m talking, of course, about fringe environmentalists, who don’t understand that by the time the sprawl and pollution get really bad, we won’t be around to have to worry about it. Or technology will have invented a big vacuum cleaner to make it all OK and reverse whatever seemingly irreversible damage we may have done to the planet’s equilibrium. I am not cleaning up my room. And – while we’re getting all this out there – I am not cleaning, let alone replacing, my home-office carpet, either. It was good in 1977 when I installed it, and it remains good today. To change it would require moving everything out of the office – tons of stuff piled on tons of other stuff – and then, eventually, moving it back in. And for what? To change a gray carpet with a few coffee spots to a spotless gray carpet I’ll be terrified of spilling coffee on? Yes, there may be a trillion microbial mites living in that carpet (what was the name of that book a few years ago that detailed the secret teeming life of your home?), but they’re harmless enough. And I do allow a vacuuming every so often. It is a perfectly good carpet. Just not quite as fluffy as it was when the Dow was 840. Well, who is? And I’m not painting the office, either. It was white; now it’s off-white. What’s wrong with that? (My office is the one room over which, by prior agreement, Charles allows me free rein and free reign.) So no fringe environmentalist I. (Hell, I’m a Harvard MBA.) And no fringe environmentalist our President, either. (Hell, he’s a Harvard MBA.) Nor, for that matter, my Republican investment-banking Harvard MBA classmate Teddy Roosevelt IV – TR4, as he is known – direct descendant of bear-hunting, big-stick-carrying, Panama-Canal-digging Republican President Theodore Roosevelt. No fringe environmentalist he. Teddy is chairman of the League of Conservation Voters. And yet for all my non-fringiness (I am, I have to tell you, no slave to the snail darter), I was struck by the Report Card that the League recently issued grading the President’s first year in office. It is a 34-page Acrobat file, so if Mother Earth is your thing, and 56K is your baud rate, enjoy your weekend (Saturday to download, Sunday to read). Or just check out the overview: Presidential Appointments D President’s Budget D+ Presidential Initiatives F * Energy and Climate Change F * Public Lands and Land Management F * Pollution and Public Health D * Wildlife Conservation F * International Issues F OVERALL GRADE D- I know it doesn’t seem like all that good a record, but there is an obvious solution: More tax cuts. Little ones for the little guy – enough to buy a water purifier or some asthma medicine – but really large ones for the top 1%, because they own the most land, and have the most to preserve. Monday: Back to Personal Finance. At Least a Little.
Amazon; Cow Accounting January 24, 2002February 21, 2017 Lynn Smith: ‘I read yesterday that Amazon.com had earnings per share of $.01 last quarter. Their first ever in the black. The article also contained a bunch of gibberish about ‘pro forma’ profit. Any comment?’ ☞ Yes: Good for them! I’ve been rooting for Amazon from Day One (although I am also rooting for Barnes & Noble, whose web site lately, and anecdotally, seems to me to have been more on the ball). Amazon deserves tremendous credit for innovation and enthusiasm and, especially, for trying to delight its customer. Amazon stock was absurdly overpriced not long ago and I enjoyed making fun of it. It may still be overpriced, but at least it’s got a shot at someday justifying your owning it here. (I don’t.) A year or two ago, it was just complete loony tunes. Robert Doucette: ‘In case you were wondering how Enron came into so much trouble, here is an explanation reputedly given by a Colorado Aggie Professor to explain it in terms his students could understand: Capitalism You have two cows. You sell one and buy a bull. Your herd multiplies, and the economy grows. You sell them and retire on the income. Enron Capitalism You have two cows. You sell three of them to your publicly listed company, using letters of credit opened by your brother-in-law at the bank, then execute a debt/equity swap with an associated general offer so that you get all four cows back, with a tax exemption for five cows. The milk rights of the six cows are transferred via an intermediary to a Cayman Island company secretly owned by your CFO who sells the rights to all seven cows back to your listed company. The annual report says the company owns eight cows, with an option on six more. Now do you see why a company with $62 billion in assets is declaring bankruptcy? Dana D. Dlott: ‘The guys from Enron are not nice. They are simply Familiar. Unlike black inner-city youths who rob convenience stores who seem scary, the Enron guys are the people you went to school with. If a thousand inner-city black youths robbed a thousand convenience stores every day for ten years, they still would not have stolen as much as the Enron executives.’
Could Ken Lay Afford an Italian Mortgage? January 23, 2002February 21, 2017 ‘In Italy there are three private television networks and one major government network. The three private ones are owned by Silvio Berlusconi, and guess what? He’s the prime minister, so maybe he has a little influence over the government network also . . . ‘ – Nicholas von Hoffman in the New York Observer Fred Fernandez: ‘I thought you might be interested in a website mentioned in this month’s issue of Smart Money called decisionaide.com that provides a comprehensive set of calculators for evaluating mortgages. I especially liked the ones that evaluate costs of Private Mortgage Insurance and downpayments.’ Dan Flikkema: You wrote: << It’s hard to know what to say about Enron, or the tone to use, because they all seem like such nice folks, and maybe they are. The Arthur Anderson guys seem nice, too.>> ‘I think you’d be justified taking a tone of absolute outrage about this scandal. If you really see the Enron executives and Arthur Andersen as ‘nice folks,’ I’m not sure you grasp how outrageously bad this is. You should listen to the interview with Kurt Eichenwald on NPR’s show, Fresh Air. Listen to Thursday – January 17, 2002 regarding the scandal. The fact that this could happen to Arthur Andersen doesn’t surprise me. I worked there as an auditor for two years (93-95). The culture at Arthur Andersen was one of incredible arrogance. It was a culture totally lacking in self-doubt. From what I have read, Enron was no different. This ‘we can do no wrong’ attitude is the key element in the creation of scandals like this. The Arthur Andersen culture was not one of healthy confidence; it was simple arrogance. Arthur Andersen’s destruction of the audit work papers is really, really bad; incomprehensible actually. Whatever was in those documents must be devastating if Enron and Arthur Andersen chose to defy the SEC and a court order, rather than have their actions come to light. These are not nice guys, Andy.’
Japanese Vampire Tanks Up at Sunoco, Not Enron January 22, 2002February 21, 2017 WON’T SAVE YOU MONEY; MIGHT SAVE YOU SLEEP I have no connection whatever to Brookstone, and normally shun their products as being less cheap than I am, but here’s one to consider: an eye mask that even a vampire could love. It turns bright sunlight into pitch dark, whether because you are sleeping in after an all-nighter, your bed-mate has the halogen reading light on, or you find yourself on an airplane trying to get a really good nap. Yes, you will look like a bit of an idiot. But a well-rested idiot. YEN YEN YEN YEN YEN YEN YEN Japan’s in rough shape. The yen may need to be sharply devalued to save its economy. That would make consumer electronics and Honda Insights even cheaper here – but the Japanese market all the tougher for U.S. exports. WHAT’S THAT SMELL?! John Seiffer: ‘You’ve already extolled the damage the new car smell does to your wallet. Apparently it does damage to your lungs as well. Here’s a comment on the situation.’ ☞ In part: ‘ . . . a recent study by a Japanese public-health institute found that the interior of a representative test vehicle contained formaldehyde and 113 other potentially harmful, volatile organic compounds . . . the emissions exceeded World Health Organization indoor air-quality standards by up to 45 times.’ SUNOCO Jim Batterson: ‘One of your readers today commented about driving past a Mobil station to gas up at Sunoco. Good choice. This is from the Sunoco web page: ‘Each year Sunoco publishes a report detailing our HES (health, environment and safety) performance. This report adheres to the guidelines of the Coalition for Environmentally Responsible Economies (CERES). Sunoco was the first Fortune 500 company to endorse the CERES Principles – a comprehensive environmental code of conduct for corporations.’ Michael Young: ‘While you’re switching gas stations, consider a Sunoco MasterCard. They offer credits of up to 1% on regular purchases (but 1/2% until you reach a moderate threshold, a fact only seen in the very fine print), and 4% on fuel purchases. The credits can only be used for Sunoco purchases, and they’re applied automatically. When they ran a promotion last fall, they were offering an immediate $25 credit when you signed up. It was perfect for me, given that Sunoco was already my usual supplier, and my previous regular card had just bailed on its rebate program.’ ENRON David Smith: ‘Very disappointed in today’s article Andy. You’re capable of much better than mere mud-slinging.’ Paul Berkowitz: ‘Since 1989, Enron has made a whopping $5.8 million in campaign donations, 73 percent to Republicans and 27 percent to Democrats. I guess the $1.5+ million to the Democrats doesn’t count? Remember, sleaze is an equal opportunity destroyer.’ ☞ It is. And I think it’s fair to ask whether Enron got the Clinton administration to make bad public policy. (I don’t think it did, but it’s fair to ask.) But there are a couple of differences which – apart from whatever bias I bring to this – may account for my not focusing on the 27%: 1. The Clinton administration, being history, is no longer much relevant to the discussion of what our energy policy should be. The Bush administration makes decisions every day that will affect our lives. 2. In good measure, the sleaze here comes from our campaign finance system. Clinton/Gore and the Democratic Party have called for passage of McCain-Feingold campaign finance reform almost from the beginning. The Republican leadership, to the great consternation of Senator McCain, staunchly opposes it. The Enron situation might give campaign finance reform enough oomph to make it through. (Democratic incumbents are not thrilled with abandoning a system that favors incumbents. But a lot more D’s than R’s have signed on to do it anyway.) 3. I don’t think anyone imagines that Ken Lay or Enron played a significant role in crafting the nation’s energy policy under Clinton/Gore. I do think some imagine they played a significant role in crafting it under Bush/Cheney. Having said all that, I was not thrilled with Friday’s column, either. (Except Andy Borowitz’s part, which I thought was very funny.) It’s hard to know what to say about Enron, or the tone to use, because they all seem like such nice folks, and maybe they are. The Arthur Andersen guys seem nice, too. But an awful lot of shredding was going on, even after – well, especially after – Arthur Andersen knew the SEC had launched an investigation of Enron. What we do know so far is that the company reported large and growing profits and found ways to pay no taxes on those supposed profits. And that the guys at the very top made out like bandits, while the rank and file employees made out very badly. And to me this just echoes the theme. We should spend the projected surplus largely on cutting taxes for the best-off. Not because we favor the rich, but because it’s good for America. We shouldn’t rush to shut down offshore tax havens. We should stimulate the recovery with, among other things, a $25 billion retroactive tax cut to companies already awash in cash, like IBM (and $254 million to Enron), not because we favor our big-money contributors, but because it’s good for America. We should drill in ANWAR but cut the budget for alternative-energy research in half not because the oil industry wants it, but because it’s good for America. Well, I don’t think it is good for America. To the extent the Clinton/Gore administration favored big-money contributors to the detriment of the country as a whole, that’s rotten, too. I just think the record shows that, while there may have been isolated instances I don’t know about, the clear theme of the Clinton/Gore administration was precisely the opposite: it was to RAISE (sensibly, not punitively) the top tax brackets for the best off, leaving unchanged the taxes for the other 95%, and to concentrate much of our effort instead on the average guys and gals in the middle and at the bottom – raising the minimum wage, raising the earned income credit, enabling every high school grad to afford college, launching Americorps, cutting the budget to bring down interest rates on mortgages and car loans, passing the Family and Medical Leave Act, seeking (unsuccessfully) to join the rest of the First World in covering everyone with health insurance. That kind of thing. The theme was different, the balance was different. And maybe it was just luck – or maybe it was a sell-out to the labor unions, who advocate for the average guy rather than the top 1% – but it sure seemed to work. In negotiations on the economic stimulus package, the Republicans wanted that $25 billion retroactive corporate AMT repeal; the Democrats wanted to aim tax cuts at people in greater need, who might actually spend the money and stimulate the economy. All of which you may deem a maddeningly roundabout way of saying that I’m not much worried that Enron unduly influenced the Clinton administration’s energy policy. But I do agree with you that it’s fair to ask (and agree with David Smith that this was not my best work).
Enron January 18, 2002February 21, 2017 From the Borowitz Report January 17, 2002 Breaking News U.S. MISSILE HITS ENRON FILE STORAGE FACILITY Intended for Tora Bora, Smart Bomb Destroys Company Documents Instead A so-called ‘smart bomb’ destined for Tora Bora changed course suddenly last night and hit a file storage facility of the Enron Corporation located on the outskirts of Houston. ☞ Look, I’m sure no Enron expert, but what do we know about Ken Lay? First, that he got enormously rich from Enron. Second, that he filed for the largest corporate bankruptcy in history. Third, that he may have been grossly negligent or else the greedy mastermind of a huge white-collar crime. Is this the guy you would look to as a key advisor to set the nation’s energy policy? Advising on things like energy deregulation and, perhaps, what actions the Federal Energy Regulatory Commission should take – or not take – to keep California electricity prices from shooting to the moon? (The FERC was legally empowered to impose short-term emergency caps but took no action.) Maybe the nation’s energy policy – e.g., cutting the budget for alternative energy research in half, to the presumed delight of the oil industry – should now be revisited? And perhaps not in secret? One might even ask, ‘What did Ken Lay and Enron hope to gain from their six-figure gifts to the various Bush pursuits? And did they gain any of it?’ This is a company that went to elaborate lengths to pay zero income tax in 1996, 1998, 1999 and 2000 while reporting ever-rising profits. That would suggest a healthy dose of good old-fashioned self-interest. Is it possible they put up $300,000 for the Bush Inaugural, and flew George and Barbara Bush to the inaugural, just as a matter of patriotism? If so, might it not have been at least as patriotic to pay a little income tax?
Minty Fresh Breath — $2.99 January 17, 2002January 25, 2017 WALGREEN’S V. SCOPE A lot of people think of Walgreen’s only when it comes to buying shirts. But what about their mouthwash? I have risked social ostracism to do extensive testing and can report that Walgreen’s $2.99 ‘Compare to Scope’ Mouthwash™ tastes just as good as the $5.69 bottle beside it, and I am no more unpopular than I was when I was using the name brand. INDIANA’S 529 Peter McCann: “I’m taking your advice and trying to pick 529 plans for my nieces and nephew. I’m curious why do you suggest the Indiana 529 plan. There is a 3.5% sales load. Correct me if I’m wrong but that’s a pretty heavy jockey.” ☞ You’re right. This was dumb. It was a mistake to suggest the Indiana Plan. I relied on a forthcoming book that plugged it, without checking directly myself. But when I did check, I saw the load – or the chance to avoid the load and pay too-high administrative fees for six years. You know how all traces of Stalin disappeared from the Soviet Union when he was discredited, years after his death? Just try to find any reference to the Indiana plan in my archives. EXXON, ONE LAST TIME Parks Stewart: “I’m a member of the loyal Republican opposition and I’m really wrestling with this domestic-partner benefits issue. (Where do we draw the line? What about people living together and not married? For how long to qualify? Was I a domestic partner of the two ladies I lived with for a time – separately – before I got married? How’d this get so messed up?) That said, I join the boycott out of support for you.” ☞ Thanks, Parks! Fair questions. I think the answer is: Continue to require a marriage license . . . except for employees denied the right to get one (i.e., inter-racial couples until 1967 in Virginia, and gay couples in 50 states today). For them, in jurisdictions like Vermont and New York City and San Francisco, where you can legally register your domestic partnership, require that. Elsewhere, the employee would just attest to it. Kevin Kroeger: “Believe it or not, we have something we actually agree on!! I think Exxon’s decision to rescind Mobil’s ‘domestic partnership benefits’ was a poor one. Your example of two weeks v. 10 years is an excellent one. But I do have a sincere question: How do we as a society ‘institutionalize’ domestic partnerships? Then the application of ‘domestic partner policy’ becomes black and white in my mind and this whole Exxon/Mobil debacle becomes moot. Perhaps this already exists and you could enlighten me to its existence/ application.” ☞ Vermont is the only state that permits same-sex civil unions, and it led to a huge battle in the normally tranquil state. Many others states have acted preemptively not only to forbid civil unions, but to assure that civil unions entered into in other states will not be recognized in their own. Dan Stone: “Why would the effect of a ‘stock boycott’ have to be infinitesimal when the effect of a product boycott would not be? And if one’s portfolio is diversified, how much does one lose when one decides not to profit from culprit corporations? We shouldn’t own companies whose products we would boycott.” ☞ Selling XOM could be right for you, even if you’d have tax to pay on your gain. It certainly “feels” right. I just don’t believe it would do any good. The shares you sell won’t disappear; they’ll just go from your hands to less caring hands (less likely to be raised when this comes up for a shareholder vote again next year). With a consumer boycott, millions of people might participate – people like to battle injustice – and that could lead to a small but noticeable drop in sales. Management, and gas station owners, would notice that. And they might get quiet pressure from big Wall Street shareholders who don’t see the point of alienating a segment of the population. I don’t own Exxon. But if I thought there were a big profit to be made, I might buy it and use that profit to do something useful . . . like promote the boycott.
I Broke MuniDirect! January 16, 2002January 25, 2017 MUNI DIRECT Tom Wilder: ‘I noticed your comment Monday on MuniDirect.com. I’ve had an account for almost a year and have to say it’s great. Good luck with your account.’ Stephen Gilbert: ‘MuniDirect looks interesting: a Pomona, California 5% 2024 bond is listed there at 99.968. At Schwab, it’s 100.625. Buying at MuniDirect saves you over $650 on 100 bonds. But wait – it appears that Vanguard’s prices are actually a bit lower.’ William F. McKenzie: ‘I just opened an account with MuniDirect.’ William F. McKenzie a few minutes later: ‘So much for MuniDirect (at least for now).’ MuniDirect: ‘Due to financial difficulties at Municipal Trade, the company which recently acquired MuniDirect, the National Association of Securities Dealers (NASD) has directed Municipal Trade and its subsidiaries to cease all trading until the situation has been remedied. We are working diligently to have this service restored, and we will notify you via email as soon as that happens. At such time, we will process your new account application.’ ☞ Oh, no! It’s working fine for a year and then I write about it and hours later it breaks? CAR LOANS Ken Nemerovski: ‘I had to laugh at your example of the transmission falling out of the car. That really did happen to me three weeks ago. So, as I was making my year-end charitable contributions … right after the holiday gift expenses … I had to come up with $2,400. When the rainy day money is gone, the best solution and softest blow for those of us who hate debt is the home equity line. It gives me control over debt amount and repayment, a low interest rate, and a tax deduction. In my current situation, it’s a life saver!’ Karen Tiede: ‘It’s not that hard to come up with cash for a car if you just don’t stop making car payments when the loan’s paid off. Of course, this assumes you have a loan that could get paid off before the car dies. I drive trucks and have not been in a position to pay cash. Last time I priced them out, I spent $900 more, over the life of the loan, to get brand-spanking new, vs. a truck that already had 50,000 miles. Seemed worth it to me. But once that loan was paid off, I kept the automatic transfer going into my credit union. WAY bigger down payment the next time, meant a shorter term on the next loan. If I’m lucky about this truck holding up, I might even have enough cash on hand to skip the loan the next time.’ INDEXING Eduardo Gonzalez: ‘Does it make sense to put 401K funds in index funds if the plan offers them, or should you stick with the actively managed funds since it’s a tax deferred account?’ ☞ Index! The fees are a lot lower, which means that over the long run, you will almost always beat the actively managed funds. Mike Albersheim: ‘In today’s column you mention to invest in index funds as you have in previous columns. Can you suggest which index(s) to invest in? Does the answer depend on the amount of money to be invested? ☞ No, it depends on which index you think may represent the best value. Which is all but impossible to guess, so I’d normally go with the broadest index you can buy without incurring much more than the two-tenths-of-one-percent annual fee that’s available on many of these. FAMILIES Joel Williams: ‘The ‘pro-family’ people who say that gay relationships undermine the traditional family just do not make sense. Gay relationships can in no way undermine straight relationships, unless you believe that straight men would really, in their heart of hearts, rather be having sex with other men. I think, in fact, that is a hidden assumption among many of the ‘pro family’ types.’ Cyrus Ginwala: ‘Phil Brink misses the obvious cause-effect here. If, in fact, he’s correct that the longevity of your and Charles’ relationship is the exception rather than the rule, this could be BECAUSE society and its laws are so unsupportive of same-sex relationships. Perhaps what we need is GREATER (read ‘equal’) rights for same-sex couples, before trying to measure the relative stability of their relationships.’ David: ‘I would like to pass on some anecdotal information to Phil Brink in response to his comments from today’s column. My brother is gay and has been involved in a monogamous, committed, loving gay relationship for approximately 18 years. I am straight and during that same period, I have been married twice (divorced once) and have had several girlfriends. In my limited experience, at least, gay relationships last longer and are entered into by more committed people than are straight relationships. Discrimination on the basis of sexual orientation is wrong and diminishes our society.’ Muriel Horacek: ‘Long-term same-sex partners, like some of my dear friends, should receive the same benefits as marriage partners, but some companies feel that they then have to grant benefits to heterosexual partners even if they don’t get married. I feel that is wrong. Heterosexual partners can legally marry, so that should be a requirement for them to receive benefits. When (and I don’t concede there’s an “if”) same sex partners are allowed to have a legal union of some kind, then they should also be required to pursue that legal commitment in order to receive benefits.’ THE BOYCOTT BEGINS Bob Fyfe: ‘I drove past my usual Mobil station last night in favor of a Sunoco. But only after checking Sunoco’s website to ensure that I wasn’t jumping out of the pan and into the fire. I wasn’t; they explicitly call out sexual orientation in their non-discrimination policy. That’s $13.75 for fairness, $0.00 for Exxon/Mobil. Now, how about an e-mail address for Exxon/Mobil?’ David Posner: ‘To send e-mail to ExxonMobil, try this link.
Exxon’s Response January 15, 2002February 21, 2017 Mitchell: ‘In your recent discussion of XOM shares and socially responsible investing, in my view, you missed an important part of the moral argument. Owning stock in a company makes you a part owner, and like any other business you might be a part-owner in, you are associated with its activities and sharing in its profits. So my question to you is, is there no company, no business you simply cannot be associated with for moral reasons? Would you refuse to invest in a heroin producing facility or mob-controlled hazardous waste company, even if their financial statements indicated a 200 percent per year profit? How about legal companies that encourage nicotine addiction (and lie about it) or companies that buy off politicians so they can pollute (and lie about it), even if they seem to be a good investment? How about companies that have racist, sexist, homophobic policies? I’m not saying that all investments have to be 100% pure, but as someone once said to me, just because a hospital can’t be 100% germ-free doesn’t mean we shouldn’t encourage doctors to wash their hands. We may have different places we want to draw the line, but don’t you agree that to lay claim to any moral values beyond narrow self interest we have to draw the line somewhere? (As I see it, to a great extent, our moral/spiritual development as individuals and as a society is based on honest, open, discussions of where these lines are drawn and why.)’ ☞ Beautifully put. I would absolutely want to encourage doctors to wash their hands, which is why the stuff that helps, even if in a small way, on the margin, I favor. Boycotting Exxon, for example. Letters to the editor. Contributions to progressive advocacy groups. Active participation in the political process. My question on Exxon and Philip Morris stock would be: does my refusal to own 100 or 1,000 shares in any way encourage the doctors to wash their hands? To me, the impact is so infinitesimal as to be meaningless. I don’t happen to own those stocks, and wouldn’t buy them unless they were really compelling values. But if I felt that they were, I would – on the theory that my added profits could enable me to slightly-less-infinitessimally advance the cause of a more nearly germ-free hospital. I would never buy a new issue of stock or bonds from a tobacco company, because that might in some small way help raise the money needed to build a new cigarette factory. But the tobacco companies (to continue with this example) are awash in cash, so my buying their securities in the secondary market will in no practical way help them – while the considerable profit I once made speculating on R.J. Reynolds zero-coupon bonds, bought at a huge discount long after they had been issued, was a dandy source of funds to finance anti-tobacco activities. I also instinctively set the bar higher for investment in, say, a casino company or a liquor company – even though I think people should be largely free to drink and gamble – than I would in, say, a promising early-stage drug company or solar power company. The last thing we need is another casino. Windmills, we could use. And a little tilting at them never hurt, either. Paul Johns: ‘You might also note the success of Seattle’s Pride Foundation, among others, in using their ownership stakes to work with companies to change their policies for the better.’ Jeff: ‘I think Exxon has been the most intractable of the oil companies about admitting their role in global warming. I mean, all the oil companies are pretty bad, but Exxon/Mobil has been the worst (I think). Unfortunately, boycotts usually only work if they’re widespread. Are there large organizations prepared to publicize this and get a large following?’ ☞ Well, the Human Rights Campaign and others have been pushing this. And with the Internet, and some bumper stickers, it doesn’t take too much for word to spread. Bill: ‘I agree that it sucks. I don’t see any reason to boycott the company, however. I frankly don’t understand why anybody would do business with them. Their fuel prices are always more than their competitors on the other three corners of the intersection. Why do people patronize a place that offers the same product (it really is all the same), the same services (none in most), the same customer service (none in all)? I just don’t get it. Drive across the street and pay less. What a novel concept.’ Phil Brink: ‘Sorry, but I disagree strongly. I understand your concerns for right to visit in the hospital, etc., but I believe the non-discrimination policy is just one step for legitimizing gay marriages/unions. The traditional family is an important structure for stability in society and for raising kids. Please note that I am not for discrimination against a person for being gay. I think there is a mountain of support for the traditional family and its stability (despite the obvious trouble it is in in today’s society). You and Charles are an exception (if equate length with stability) – not typical. That is not reason enough to oppose your position, but I’d like to suggest George Gilder’s book Men and Marriage. Very interesting, and makes the case without simpleminded ‘The Bible says so.’ In fact, he doesn’t refer to the Bible at all, but makes the case based on observations of societies.’ ☞ If preventing Charles and me, and other committed couples, from having equal rights led to the breakdown of society, I might reluctantly see this as a cross we should be made to bear. But I think just the opposite is the result. Encouraging stable, committed relationships is good for society. You say that Charles and I aren’t typical. I think you would be amazed at the number and longevity of same-sex relationships out there. One friend of ours took 10 other couples on a trip to celebrate their 10th anniversary. Three straight couples, eight gay. At seven years, Charles and I were the babes in those woods. One of the straight couples led the pack at 38 years, but two gay professors were close behind at 34. And is it really better for children to grow up in an orphanage than with one or two adoring, adoption-agency-approved gay moms or dads? I haven’t read George’s book; and I like to think that in the 10 years since it was written he may even have changed his mind somewhat, as so many others have. Judging from the back cover and first chapter, he believes that the traditional nuclear family is ideal and should be celebrated. I have no problem with that. But now what do you do about the nice kids of traditional nuclear families who happen to be gay or lesbian? I would say: encourage them to have happy, stable, constructive lives. Would George discourage that in hopes it will somehow keep straight fathers from abandoning their children? I don’t see the connection. He laments silver-haired executives’ divorcing to pursue trophy wives. But how do gay unions encourage that? Joe Porter: ‘I like what Abe Lincoln had to say about treating people equally. When he was running for the Senate in 1858, he referred to the Declaration of Independence, and I paraphrase, ‘If the words aren’t true – that all men are created equal – we should take them out, if they are, we should stick to them” Dave Lazar went to ExxonMobil’s web site and gave them a piece of his mind. (Thanks, Dave.) Herewith, Exxon’s reply: We believe our policy on discrimination is clear and straightforward. ExxonMobil Corporation policy prohibits any form of discrimination or harassment, including sexual orientation, in any company workplace. In support of this position, we have established a comprehensive education, training and stewardship program to ensure this policy is implemented and followed throughout our worldwide operations. We have stated both verbally and in writing that ExxonMobil’s policies against harassment and discrimination apply to sexual orientation. In fact, in Exxon’s 1999 and 2000 Proxy Statements and ExxonMobil’s 2001 Proxy Statement we specifically stated that these policies prohibit harassment or discrimination on the basis of sexual orientation. With regard to domestic partner benefits, ExxonMobil is guided by the laws in the 200 countries where we operate and we provide benefits coverage to spouses – whether heterosexual or homosexual – where a legally recognized spousal relationship exists. We do understand the interest many individuals have regarding this topic. However, we believe that basing employee benefits on legally recognized spousal relationships is the only way the program can be applied in a fair, rational and consistent approach for our 100,000 employees worldwide. As an example, ExxonMobil employees who have their relationships certified in Canada or the Netherlands, which,by law, recognizes same-sex relationships, are provided spousal benefits under the ExxonMobil program. Contrary to many new news media reports, when ExxonMobil was created, we did not take away any former Mobil employees’ domestic partner benefits. They and their partners still receive those spousal benefits. Lastly, please understand that our decision regarding domestic partner benefits is not intended as a political statement – we choose not to take sides on this political issue. It is simply a business decision designed to efficiently, fairly and effectively apply our benefit programs. Exxon Mobil Corporation ☞ This is certainly civil and better than nothing, but it does not tell the whole story. Yes, the Mobil employees who were getting domestic partnership benefits before the merger have not lost them. But any new employees, or any old Exxon employees in such relationships, or any existing ExxonMobil employees who should form committed relationships in the future, are barred from these benefits. So consider two otherwise-identical ExxonMobil employees sitting side by side. The one who was covered by Mobil before the merger is still covered. The one who wasn’t, isn’t. In the words of ExxonMobil, ‘It is simply a business decision designed to efficiently, fairly and effectively apply our benefit programs.’ If you buy that logic, buy their gas. Further, ExxonMobil specifically states in its non-discrimination policy for U.S. employees that it does not discriminate on the basis of race, sex, religion and the other categories specified in federal law. This clearly articulated list does not mention sexual orientation – in contrast to the policies of 299 other corporations on the Fortune 500 that specifically do. It would be easy to add those two words, but ExxonMobil has clearly given this a fair amount of thought – not least because of the proxy resolutions on this topic introduced the last three years – and decided against it. ExxonMobil is not ready to buy the policies Mobil had before the merger. So I am not going to buy their gas.
New Year’s Review January 14, 2002January 25, 2017 Let’s review: You have gotten out of credit card debt (or will, ASAP), and plan to buy your next car for cash – even if that means it has to have been “previously owned.” You are contributing the max to your employer’s 401K, at least up to the amount, if any, your employer matches with contributions of his own. (But you are NOT putting more than 20%, max, into your employer’s stock, and probably not even that much, unless he gives you a special incentive to do so.) Unless your adjusted gross income is too high to qualify ($95,000 filing singly, $150,000 filing jointly), you and your spouse or significant other have each opened Roth IRAs at Vanguard or some such place and will each be putting $3,000 into it this year as soon as you can. (If you’re over 50, you can each do $3,500.) You plan to add the max to it each year, and know that your retirement fund will not only grow tax-free, the withdrawals will all be tax-free. And with more flexibility and less paperwork than with a traditional IRA, to boot. If you have kids, you have set up Section 529 accounts for them, very possibly with the Utah or Missouri plans – which does not mean your kids will have to go to Brigham Young or Missouri State. Click here to choose a plan. Note that the money you invest will not only grow tax-free, it will all be withdrawn tax-free to pay for college or graduate school. Your stock market money – which must only be money you are setting aside for the long run, not money you would need if the transmission fell out of your car – should be invested periodically via index funds. If the market falls – good! You would keep making those periodic investments, adding new shares to your pile “on sale.” Maybe you’d play with a little on the side, through a deep discount broker – perhaps a $25,000 portfolio of five $5,000 speculations alongside $200,000 in index funds – both to keep you from going nuts with boredom and, more to the point, in order to generate a little tax twist. Namely, writing off the losers to lower your ordinary income tax, while riding that one big winner, if you’re lucky enough to have one, for a tax-deferred and ultimately lightly-taxed long-term gain. (Better still, if you’d be giving money to charity anyway, use that winner, once it goes long-term, to fund an account at the Vanguard Charitable Endowment Program if you can meet its $25,000 minimum, or at the Fidelity Gift Fund, if you cannot.) For bonds, forget mutual funds (and forget corporate bonds). Use Treasury Direct. And for tax-free bonds, consider a new service I haven’t tried, but plan to: munidirect.com. See? That wasn’t hard. Now back to the other stuff. (Tomorrow: Exxon’s response.)
But Don’t (Necessarily) Sell Your XOM January 11, 2002February 21, 2017 Finally, the estimable Less Antman (see the invaluable ‘Ask Less’ feature to my left) has a question for me. He writes: ‘First you tell people you’re shorting Yahoo! while I have clients with unvested options working for Yahoo!, and now all the clients I invested in Exxon/Mobil in buy-and-hold portfolios want an explanation. Fortunately, I switched to Chevron/Texaco for more recent clients. But seriously, are you now an advocate of socially responsible investing, or only socially responsible consuming? I remember you expressing skepticism about the concept of socially responsible investing in the past. Have your views changed?’ ☞ No. Selling your XOM shares for moral reasons will do absolutely nothing to capture Exxon’s attention or change its behavior. So if you think it’s a good value, hold on to it and use the dividends to fill your tank – at a competitor. Same with your Philip Morris stock. Hold onto it, and contribute the dividends to SmokeFree Educational Services. (Well, SmokeFree would actually prefer you just take action than send it money. But you doubtless have no shortage of good causes.) It would be different if Exxon or Philip Morris actually needed new capital. They are rolling in capital. And it might be different if you owned 20 million shares. (In that case, I’d say, don’t sell – at least not until you had called management and reasoned with them.) But a boycott is different. If 15% of drivers are either gay or lesbian or enthusiastically supportive of their equal rights (a majority of Americans are generally supportive, but I am talking about folks for whom this is high on the radar screen, like gays and lesbians themselves and their families) – it’s not inconceivable that Exxon/Mobil stations could see a 3% or 4% decline from a boycott. (It would never be close to 15% both because of the special effort Jerry Falwell, et al, would make to switch to Exxon, and because, let’s face it, boycotts are hard to pull off.) And it’s also not inconceivable that some gas station owners could be persuaded that it’s bad business to discriminate against any class of citizens. On the margin, a 3% or 4% drop in US sales is hardly going to bankrupt Exxon. But it could get noticed. Sooner or later, as I suggested yesterday, I’m quite sure the good people of Exxon (and I have no doubt they are almost all good people) will adopt the policies Mobil already had in place before the merger. If it happened tomorrow, that would bring up from 299 to 300 the number of Fortune 500 companies that include sexual orientation in their nondiscrimination policies. A boycott – which in this case requires so little behavior modification, when there is almost always a competitive gas station across the street – could just possibly make that day sooner rather than later.