Oh, Me, Oh MY, oh. (And What About Ohio?) December 16, 2004February 28, 2017 If you own a home or were thinking of buying one, this analysis from the Economist is worth a read. Not because you should sell and move into the Y; but because, if the Economist is right, you may not want to live in more house than you can afford. And because the economy as a whole would be affected – which is one reason the Fed will struggle to prove the Economist wrong. How that struggle will turn out . . . well that’s what makes investing interesting, I guess. The most striking paragraphs: Calculations by The Economist suggest that house prices have hit record levels in relation to incomes in America, Australia, Britain, France, Ireland, the Netherlands, New Zealand and Spain. In other words, ratios of prices to incomes are now above levels that have proved unsustainable in the past. Taking the average ratio of house prices to incomes in 1975-2000 as a baseline, American house prices are now almost 30% overvalued. Japan provides a nasty warning of what can happen when bubbles burst. Japanese property prices have dropped for 13 consecutive years, by a total of 35% from their peak in 1991 (see chart). Yet the 36% rise in real house prices in Japan in the seven years to 1991 was actually less than the increase over the past seven years in all but one of the eight countries listed above where prices appear overvalued. There are plenty of symptoms of a bubble mentality in the United States, not least the surge in the turnover of existing homes to a record rate of 9% this year. Investors have been buying new properties and reselling within a year in the hope of a large gain. Economists at Goldman Sachs are concerned about signs of excess supply. The rate of growth in the housing stock exceeds the rate of growth in the number of households by a bigger margin than at any time in the past 40 years. It’s worth reading the whole thing. And while I have you hating me, I may as well link you to this, on the Ohio recount. Have a nice day.
China 2.2 cents, Cleveland 2.5 cents The Ultimate in Telephony December 15, 2004February 28, 2017 But first . . . INCOMING CALLS Mel: ‘In a few weeks, cell phone numbers are being released to telemarketing companies. Call 888-382-1222 from your cell phone. It is the national Do Not Call list. It blocks your number for 5 years.’ ☞ This turns out to be an urban legend. Apparently, the cell phone companies do expect to have a directory, but only for those who want to be included, and not until late 2005, and not to be sold to or shared with telemarketers. But hey: there’s zero harm in registering your cell phone anyway, along with all your other phones. And now . . . OUTGOING CALLS I’d love you to use 2speak.com for your international calls, as described Monday, because I own part of it. Calling the Czech Republic for a dime is pretty great, especially if you’re calling from Chile or the China. . . . but in case you live in the United States, as many of you do, it looks to me as if this may be an even better deal (China for 2.2¢ a minute, Cleveland for 2.5¢): Ernie Cornford: “I use a long distance service that has been terrific – OneSuite.com. If you live in a city that has a local phone access number, you pay only 2.5¢ per minute. If you have to use their 800 number, it is 2.9¢ per minute. The local phone number will allow you to call China for 2.2¢ per minute, Chad for 56¢, Chile for 2.9¢, and the Czech Republic for 3.5¢ per minute. The most expensive long distance rate they have is to Inmarsat-Atlantic, West. It’s $12.79 per minute if you have a local number and $13.50 if you have to use the 800 number. (Hopefully, my wife [for 35 years] won’t send me that far away, but if she does, I doubt she’ll call!) I have used OneSuite for about a year and have been very satisfied. It’s not perfect. On rare occasions I have been unable to make an immediate connection or the line has some static, but it is rare. One good feature is that they can give you separate accounts. I use one for my business calls that permits me to print a list with the cost for each call that I can submit for reimbursement. I recommend them highly.” ☞ I just signed up and made my first call. You can set it up to recognize your phone number(s) so that you don’t need to enter a PIN when you call. Just speed-dial your local access number (with some handsets, that can be as simple as a single key press) . . . then use OneSuite’s own speed-dial to call one of your 50 most frequently-called numbers. You could be talking to Chappaqua or China by touching three keys on your telephone handset. Cheap and easy. There are no bills to pay because you pre-load your account with a whopping $10 of credit (or more, if you choose) . . . enough to keep you on the phone to Hong Kong for about seven and a half hours. One nice thing about OneSuite is the minimal commitment involved. Ten bucks. And your habits needn’t change much, just the way you dial and what you pay. An increasingly popular alternative that’s a bit more of a decision is vonage.com. Bob Fyfe: “For $14.99/month you can make 500 minutes of outgoing calls. All incoming calls are free. International rates are outstanding. For example, Czech Republic is 6¢ a minute; China, too (and just 3¢ in Hong Kong). Chad is $0.28 or $0.32 (vs. your $0.75). Again, there is a monthly fee so it’s not apples to apples. For $24.99 you get unlimited calling in the U.S. and Canada.” ☞ I know folks who are happy with Vonage. It’s amazing the way you can take your phone number with you when you travel. But you need a broadband connection wherever you use it. And puzzling through all its – very neat – features and options requires more thought than just using OneSuite to make your calls. Meanwhile, especially for those of you in Malaysia, but perhaps even for those of you in Maine, expect some great new features from 2speak shortly. (One of you sent me information on a company that, for $999, offers “free calling for life.” I’m not posting it here because I worry that your life could be longer than the company’s.) Tomorrow (which you should feel free to read today): sobering words for anyone who owns real estate – or is thinking of making an offer on some.
Flying Your IRAs to Costa Rica First Class December 14, 2004February 28, 2017 PRICELINE GOES FIRST CLASS If you haven’t checked it lately, you’ll see that priceline.com lets you pick specific flights (or, as before, name your own price and take your chances) . . . and now, with its ‘Advanced Search’ option on the airline page, you can: Specify coach, business, or First Class Specify “non-stop” Specify an unrestricted ticket that can be exchanged or cancelled with no penalty Search flights by specific airline and flight times I’m not sure this will save you any money over booking directly through the airline itself or any other travel site. I haven’t had time to play with it and compare with, say, American Airlines or Expedia.com. But it’s a handy way, if nothing else, to get a quick idea of the airlines that fly where/when you want to go, and the prices they charge. WHY YOU SHOULD FLY COACH ANYWAY Georgia Wong: “It just shocks me that a chunk of Americans don’t have enough retirement money (or any). I know at least six people who are close to retirement but aren’t ready financially at all. One person (sixty-ish) has no money and the other five have little resources. According to this CNN/Money article, the average Social Security check is $900/month. Not a lot to live on, especially if you live in an expensive, metropolitan area like San Francisco.” ☞ One more reason Americans retire to Mexico or Costa Rica. SO SET UP THOSE ROTH IRAs! Krikor: “I have a Roth IRA that is currently invested in the Vanguard Index 500 fund. Knowing the need to diversify, I’m thinking of putting some money into a foreign fund of some kind. I’m a bit confused about how these things work, though. Is the Roth IRA something that I created through Vanguard, or is it the collective name for any post-tax money I invest and earmark as ‘Roth IRA?’ In other words, if I buy shares of another fund for a Roth, will they set up another IRA at that company, or will they know about my Vanguard shares?” ☞ You can have separate IRA accounts at more than one place, contributing to them as much or as little as you want, so long as all your contributions, combined, don’t exceed the overall contribution limit each year. (Note that even if you’re married and filing jointly, an IRA belongs to an individual, not a couple; so if each of you contributes to the max, you can stash away double the money.) CHEAP AT HALF THE PRICE Les Rosenbaum: “I ordered 10 copies of your new book to give as presents. I found them for $9.83 each, no shipping charge, at Textbookx.com.”
Russia, China, Chile, Chad . . . This Diamond Fake is Really Rad Tuvalu? December 13, 2004February 28, 2017 SELL RUSSIA I first suggested shares in the Templeton Russia Fund (TRF) in the fall of 1996 – so long ago the archives don’t even go back quite that far. Then I suggested taking our 140% profit in July, 1997 . . . and then maybe buying it again, and then maybe taking another profit, and round and round. So for the record, someone way smarter than me on these things thinks this is a good time to get out of Russia (I won’t say his name – don’t want the czars putting dioxin in his pudding) and suggests putting that money into the Korea Fund (KF) instead. So I did. Apart from any geopolitical issues, there’s this simple fact: TRF is a closed-end fund selling at nearly a 5% premium to its net asset value (so you pay $1.05 for each $1 of assets it owns), while KF is selling at a more reasonable 9% discount (so you pay 91 cents for each $1 of assets). Before you get too excited, closed-end funds generally should sell at a discount, for reasons I argued here. Still, this guy knows his stuff. I’ll get back into TRF someday – Russia is not going away. But for now, my money, or a small portion of it anyway, is on Korea. DIAMONDS! Karen: ‘This is WAY better than cubic zirconia in appearance; lasts longer; and is indistinguishable from diamond on the common tests. Plus, they grow the crystals right here in North Carolina.’ ☞ Remember, though, it will only really dazzle if you take the money you saved and use it to fund a Roth IRA. CALLING CHINA, CHILE OR CHAD So Charles is in China, and we gab and gab and gab for 10 cents a minute. It’s still in beta – and if you should get a bad echo or something, which occasionally happens, don’t write me for your dime back (full disclosure, we own part of this little start-up) – we’re not set up to refund your dime. And Chad actually costs 75 cents a minute. But Chile is less than a dime, and the Czech Republic is just a dime also. We are working to extend the service to countries that do not start with ‘CH.’ Caution: Don’t let your kids start playing with this and accidentally call East Timor. That’s $3.49 a minute – or $3.77 if they’re calling East Timor from Uzbekistan. (But what are your kids doing in Uzbekistan?) The most expensive route I could find is $5.40 a minute, Tuvalu to East Timor. MOVIE OF THE WEEK Guy calls to order a pizza and . . . well, see for yourself. It’s a short clip . . . a bit ahead of itself to be sure . . . somewhat alarmist . . . but it makes you think. Click here.
Sell Apple, Eat a Strawberry December 10, 2004February 28, 2017 The market is high, given the huge problems we face. Bill Gross’s December letter is well worth the read. The dollar will continue to sink – especially against the eventually-to-be-revalued Chinese Yuan. The price of imported goods will rise. And sooner or later inflation and interest rates will rise here, too. Of course, one of the (few?) justifications for the Dow over 10,000 here is that, relative to the Euro, say, it’s actually fallen to bargain levels, and will get cheaper still. When the Euro was at 90 American cents, buying $10,000 worth of the Dow at 10,000 (say) cost 11,111 Euros. With the Euro at $1.32, the same Dow at 10,000 now costs a mere 7,575 Euros. So it seems to us unchanged, but to the Europeans, it’s 32% cheaper. And if the Chinese can buy IBM’s PC business, who’s to say, as they revalue their currency upward, they may not buy other U.S. assets and shares, driving up their prices and pumping funds into the bank accounts of the sellers, to be reinvested in other shares? Moreover, while it is easy to envision all kinds of terrible scenarios – and there is a real chance one or more may materialize – we should never rule out brighter possibilities. With Arafat gone, the world really might be able to make peace in the Middle East, beginning a virtuous cycle as the seeds of bitterness and terror gave way to the power of hope and dreams. The election in Iraq could take place as scheduled and things could actually begin to get better (even though the CIA seems to think they will get worse). As King Abdullah II of Jordan told Chris Matthews yesterday, no one knows if this will happen. But if Iraq could join the modern world, it would be the beginning of a much brighter future. So there is much to hope for – who among us did not hope we’d be greeted with flowers when we invaded Iraq? – and, I think, even more to be worried about. SELL APPLE Suggested here last November 25 at around $4 when the stock was just above 20, Apple’s long-term calls (known as LEAPS) are now around $43, with the stock at 63. Stupidly, foolishly, and reprehensibly, I suggested selling half at the end of March, for little more than a double (what was I thinking?). And later, when the LEAPS had tripled, I suggested perhaps selling a like number of out-of-the-money calls to make for what would have been a likely quadruple while you waited for the LEAPS to go long-term. So if you followed these suggestions, you would have long since doubled half your money and quadrupled the other half, but be sitting here like me, rocking back and forth wringing your hands, imagining how sweet life would be if you had just held on. But while I can make an (uninformed, seat-of-the-pants) case for AAPL at 200 a few years from now, I have to think that if you had the good fortune not to see or act on my earlier profit-taking suggestions, now you surely should. Sell. Yes, the company has no debt and close to $6 billion in cash and marketable securities (so you’re in effect paying ‘only’ $19 billion for the company, not its full $25 billion market cap). And yes it has a great young CEO and a phenomenal brand with fanatically loyal customers. But it earned only $276 million in fiscal 2004, which isn’t such a hot return even on $6 billion in cash and securities, let alone a $25 billion market cap. And if you had adjusted those earnings to account for stock option grants, as corporate America is likely to have to start doing this coming year, the $276 million, I’m told, would have been just $168 million. (And 2003 and 2002 would both have shown losses.) Indeed, you might want to take a small bit of your realized profit from the LEAPS and buy (say) a July, 2005, 75 put, which last traded at $14.80 ($1,480), so that if the stock were $55 next July, you’d have turned your $1,480 into $2,000 . . . and if it were $45, you’d have turned it into $3,000, doubling your money, before taxes, in little more than 6 months. But I’m not doing this (and at least for now missed my chance to do something like it when the stock hit $69), because Apple might just stay where it is or go up. One of my friends, who shorted Apple at a painfully lower price, scoffs at its 2% share of the computer market. But what if those millions of iPod owners not only continued to buy iPod add-ons and next-generation iPods, and all that . . . but began buying Macintoshes and, over the next few years, Apple’s market share rose from 2% (or whatever sliver it actually is) to 10%? Or even 5%? Profits could well rise out of proportion to sales (tripling sales might only double costs), and maybe Apple’s profits jump 10-fold. You could have a $200 stock. I am absolutely, positively, definitely not predicting this. But to me, Apple’s price here, while unattractive, is not necessarily bubblesville. See how hard this is? I own an iPod, I’ve been to business school, I’ve spent at least half an hour thinking about all this, and still I don’t know what to do. I’m very happy having taken my lovely profit and now being off on the sidelines, neither long nor short, watching. (My friend who is short thought Apple, instead of Lenovo, the Chinese firm, should buy the IBM PC business. What a nice little irony that would have been.) COOKING LIKE A GUY™ The work proceeds apace. Like a soufflé (which you’ll find nowhere in my book), it cannot be rushed. Principal photography has begun. (I am having creative differences with the photographer. I need scruffy. I need ketchup stains.) In any event, I present you: Recipe 19 – Sinless Strawberry Sin Step #1: Buy fresh strawberries and a can of fat-free Reddi-Wip. Step #2: Having uncapped and shaken the Reddi-Wip – and marveled that the entire can, at 5 calories a serving, has just 200 calories – grab a strawberry by its green-leafy handle and swivel your wrist so that the berry itself faces mouthward. Step #3: Shuzzle a snowdrift of Reddi-Wip on top . . . eat . . . repeat. Step #4: Once all the strawberries are gone (this being America and you being a guy), invert the Reddi-Wip and place its nozzle in your mouth like a straw. Shuzzle one final crescendo. If there is a heaven, it must be very much like this. YOUR WEEK-END ASSIGNMENT And it will take you only 5 minutes: Bill Gross’s aforelinked December letter.
Buy a Scarf, Sell an Apple, Eat a Strawberry December 9, 2004February 28, 2017 SURELY YOUR MOM DESERVES CASHMERE And what better place to get her a wildly expensive, oversize cashmere scarf – a scarf so large you could sleep in it . . . a scarf so soft you could make love to it . . . a scarf so fashionable you (or in this case, your mom) could walk down the runway – than at Charles’s new shop, which opened yesterday, at 30 Gansevoort Street in New York? Notes for the uninitiated: 1. Charles designed ANNE KLEIN before going out on his own this year. His line is at SAKS nationwide, but some items – like the cashmere scarf and his kick-ass boots – are exclusive to his shop, at least for now, along with furniture he’s designed, 2,000-year-old clay vases he brought back from Korea (which may or may not be 2,000 years old), and more. 2. The shop is open from noon to seven, and at the moment you will have to duck to avoid the construction crews still finishing the façade. We hope to have figured out the cash register by the time you arrive. 3. This stuff is very expensive (hey – so is the rent), but we are talking about your mother. Do you think you were an easy child to bear? To raise? If you could spend two months’ salary on an engagement ring for your wife (I have a better idea, by the way), surely you can spend one week’s salary on your mom. Seriously. It’s a family values thing. 4. The shop is called CHARLES NOLAN (that being his name), and Gansevoort Street is in lower Manhattan’s trendy meatpacking district, where if you come early enough you will see cattle being herded up from the subway to the abattoir, or if you come later you will get a really great burger at Florent. One block south of 13th Street, at the corner of Hudson, which would be Ninth Avenue if it had a number. 5. Coming from Europe to take advantage of the weak dollar? Stay across the street at the four-star Gansevoort Hotel, with its hypo-allergenic duvets. (Prices for the Duplex Penthouse start at $5,000 a night.) I, of course, would offer $120 a night, this being New York – $79 anywhere else – and leave it up to priceline.com what four-star hotel I stayed in. But that’s me. 6. Readers of ultra-longstanding and photographic memory may recall that I have written of a man who bought (himself!) a $1,200 scarf. So in the scheme of things, you’re getting off easy. And . . . it’s . . . your . . .mom. Tomorrow: Sell Apple, Eat a Strawberry
Invisible Buttons – A Neat Bit of Programming December 8, 2004January 19, 2017 ANOTHER USE FOR THE AMAZON SEARCH Gary: ‘Thanks for pointing this out. I’ve found it’s a great way to look up cryptic Windows errors in the Microsoft tech support manuals. Not that I mind paying $70-plus bucks for these manuals to use maybe once or twice, but it sure is handy.’ TWO MORE CHARITABLE GIFT FUND OPTIONS John Bakke: ‘You mentioned the donor-advised charitable trusts at Fidelity, Schwab and Vanguard. I’ve been thinking of setting one up this year, and would prefer Vanguard (where all my investments are) but their $25,000 minimum is out of my range – even though they let you pay it in over two tax years, a little-noticed option. Having done the research, I believe the best one with a $10,000 minimum is actually T. Rowe Price – half the account maintenance fees of Fidelity, plus they have an all-index-fund investment option with low expenses.’ ☞ Half the price is hard to beat, as are low-expense funds. I’m with Fidelity because they pioneered this product and were the only ones with it at the time. I get good service and am happy; but if I were starting from scratch, I might well have gone elsewhere. Why pay double? A NEAT BIT OF PROGRAMMING, IF IT’S TRUE And the only downside is that it is the end of our democracy. Click here (and then here). Then get ready to demand ‘best practices’ in every state in the union: uniform, user-friendly voting machines; an audit trail; polling machine distribution that makes long lines no more likely in poor precincts than in wealthy ones – and so on. You’ve got to question the motives of anyone who would oppose this. Now go click. Don’t miss the part about pressing invisible buttons to assure a 51% win.
Can YOU Beat the Market? December 7, 2004January 19, 2017 But first . . . VEGAS Derek Deer: ‘You missed a fine, fairly cheap, Las Vegas tourist draw. I have been a fish fan for many years and the aquarium exhibit at Mandalay Bay compares favorably with Mystic, CT and Boston.’ Deborah Peifer: ‘Your tale reminded me of a friend’s story several years ago. She and another friend were driving from Chicago to LA and decided, since neither had ever been, to stop in Las Vegas. My friend returned very upset. She had discovered, she confessed to me in solemn tones, that she had a serious gambling problem. ‘What happened?’ I asked, fearing that she had gambled away the car. ‘In the two hours I spent at a nickel slot machine, I lost two dollars and forty-five cents – snap, like it was nothing!’ Gray Chang: ‘Congratulations on your $1 win in Las Vegas! You did better than 95% of the visitors to Nevada. If you want to maximize your chances of winning there, take the entire amount you are willing to risk for your entire trip, and place it on a single even-money bet, and either double your money or lose it all on that single bet. Your chance of coming back a winner will be very good (49% for betting on Pass at craps, or 47% for betting on Red in roulette.) For great advice about gambling, go to wizardofodds.com.’ ☞ Even better advice: don’t. And now . . . WALL STREET Name Withheld to Spare His Mother: ‘After this election I am going to be very disappointed if my investment returns do not exceed the average investor’s by a substantial margin. The way I came to this thought is that my beloved mother (really) has turned into a right-wing hack (agh!) and has at the same time started making statements about her finances and investment ‘strategy’ that are so nonsensical it’s painful. I’ll bet that most Bush supporters would do better with an index fund. (I am leaving out people who truly understand finance but are voting for Bush on religious principle. I respect that because it is internally consistent.) Now the real question is: say you supported Kerry based on logic. Should you dare to forego the index fund and invest on your own? And how should you decide whether you have the smarts to do so?’ ☞ Some very smart people voted for Bush, obviously – Karl Rove and Bill Gates come to mind – but you raise an interesting point. Politics aside, if you tend to be more logical than the average Jane or Joe, can you beat the market? And by enough, over the long run, to justify all the time it would take you to select stocks on your own and absorb all the extra taxes that even a relatively active investment strategy is likely to require? The answer for some, obviously, is yes. Don’t tell me Warren Buffett and Peter Lynch, to take two well known examples, are just lucky. There is a lot to the ‘random walk’ theory of the stock market, which holds that you can’t beat the market because all available information about a stock is all but instantly ‘discounted’ in its price (and what do you know about Procter & Gamble or Krispy Kreme that the market doesn’t know?). But like Burton Malkiel, author of A Random Walk Down Wall Street, I am a ‘random walker with a crutch.’ I.e., I believe it is largely true that you can’t outsmart the market, but not entirely. Which brings us back to your question. Yes, you are likely smarter than most people (you were too modest to put it this way). But you’re not competing with the 98% who may not have your gifts, but, in the main, with the 2% who do – and especially with a small subset of that group who have a lot of information at their disposal and perhaps more time and training than you. (And still they – too – tend not to be able to beat the market.) Plus, the dumbness of the crowd, when it manifests itself, generally makes more for crazy overvaluations than for crazy undervaluations, so to take advantage of the stupidity (unfailingly evident with the benefit of hindsight), you have to short stocks (or at least buy puts), which as I have suggested previously is particularly hard to do successfully over the long run. Indeed, this is one reason why the dumbness of the crowd, when it manifests itself, generally makes more for crazy overvaluations than for crazy undervaluations: smart guys will rush to buy the undervaluations, limiting the extremity of their plunge; but the same smart guys will, correctly, think long and hard about shorting the overvaluations, because shorting overvalued stocks has special perils that buying undervalued stocks does not. So . . . what I have long suggested is to do much of your stock market investing via index funds, but – for the fascination and tax benefits of it – carve out, say, $30,000 or $50,000 of a $250,000 stock market portfolio to invest on your own through a deep discount broker. You will have winners or losers, but will be able to sell the losers to take up to $3,000 in tax-lowering losses each year (excess losses carry over to lower future years’ income); and use the winners (once held for a year and a day) to fund the charitable giving you would have done anyway (easiest: via the Fidelity or Schwab or Vanguard charitable gift fund). THE ROYALTIES ROLL IN Leslie Rosenbaum: ‘I ordered your book a couple of weeks ago from Amazon and just got an e-mail from them informing me that it shipped.’ ☞ Buy three or more and you can select free shipping, too. Surely you have three friends or relatives who like money? Three colleagues or employees looking to save $1,000 a year to stretch their paychecks? What about the grocer who serves you all year long? And the guy with three fingers in the butcher department? How about your kids’ teachers? Shouldn’t you buy copies for them? And that nice man who drills your teeth? Dentists love investing. Buy one for him.
Beating the Airport Slots December 6, 2004February 28, 2017 I spent the weekend in Las Vegas where I dropped a dollar at one of the slot machines on the way from my own room to the room where our meeting was being held – a half mile walk – and a second dollar on the way back. This was at the Mandalay Bay, a hotel with 16 species of sharks swimming in its very own indoor Las Vegas ocean, which I never found time to see for real but watched gurgling on one of the hotel TV channels. Are you keeping track? I was down $2 Friday. Saturday, after our meetings, we headed over to the Bellagio for a ‘backstage tour’ reserved for very special groups. Nobel Laureates, say, or Olympic Gold Medalists. Or that elite subset of astronauts who actually walked on the moon. Or, in our case, friends of a Vice President at MGM Grand, which owns the place. I’m not sure I was supposed to keep notes, but I jotted things down in my head: The 3,000-room Bellagio was completed in 1998 on 120 acres at a cost of $2 billion. Hanging above the lobby is a $2.4 million Chihuly, an illuminated ceiling composed of 3,000 large colored glass petals weighing 15 to 30 pounds each. The Bellagio is immense, and perhaps best known for that Chihuly (Dale Chihuly, the famous Seattle glass sculptor) and for the water shows in its 8.5 acre lake. They erupt periodically, rather like Old Faithful at Yellowstone, but a full ballet, set to music, where the dancers are jets of water. With the crack, crack, pop of a fireworks display, only there are no fireworks; what’s being fired into the air are jets of water. The hotel fills the lake with 60 million gallons of water from its three wells, dug to a depth of 12,000 feet. (The lake itself ranges from four feet, if you should fall in at the edge, to 17 feet, if you should swim out to the middle.) There are something like 200 ‘devices’ that shoot water into the air or make it sway and dance to the music. ‘Shooters’ send jets up 110 feet (picture the height of your basic 10-story building) and ‘super shooters’ go twice as high. By New Year’s Eve, they should have installed their latest, ‘extreme shooters,’ that, operating at 500 pounds per square inch, will shoot jets up 498 feet. Higher than the hotel itself. Each water jet shoots up through a cluster of four 500-watt lights that sit just under the surface. Some of the devices make mist. The entire lake can be covered in a low fog in just two minutes. In the summer – given that this is the desert and the temperature regularly hits 115 degrees with no humidity except for this one crazy lake – one imagines the jets of water shooting 200 feet into the air and then, well, just disappearing through evaporation (they check in, but they don’t check out), but our guide assured us it was not that bad . . . though in July and August, they cut the mist effect by 50% to conserve water. The hotel will not say how much of the lake’s water is lost to evaporation each day, but I am guessing a million gallons. A few of you, I hope, will do the calculations and let me know how close I am, and I will report your analysis: 8.5 acres of water surface at desert temperature and humidity, made slightly more profligate by these occasional anti-Newtonian water shows. (What goes up must not all come back down.) The hotel has been retrofitted to funnel all the ‘gray water’ from the guest bathtubs and showers – once appropriately filtered – into the lake, but that measure has not yet been stooped to, in part because, though filtered, that’s still a lot of not quite pure mist to be floating around the deluxe premises (‘Honey? Does something smell a little off to you?’) and in part because 24 of the Bellagio’s 8,300 or employees are SCUBA divers whose sole job it is to maintain the devices in the lake. Control Tower sees a 500-watt light bulb blow? Send in a diver. Or maybe more than one, as this would be one of those rare light bulbs it might legitimately require more than a single pair of fins to screw in. Did I mention this place was large? It has 2,500 slot machines, 81 gaming tables, and 5.5 million square feet of flooring that must be vacuumed or polished every day. We got to visit everything from the employee laundry – each employee gets three complete uniforms, bar coded so that, like FedEx packages, the location of any employee’s bow-tie can be ascertained at any moment – to that security room you see in all the movies, with sharp-eyed operators watching 30 monitors, able to zoom in so close you can read the time on a guy’s watch (7:44pm) or the numbers on his Players Card. It’s all stored on video tape for at least a week. Special attention is paid to, say, the high stakes poker game – yes, they can see your hand – and our operator zoomed in to show us what $5,000 and $25,000 chips look like. (If you should find a couple of these on the floor of the men’s room, don’t get all excited. You won’t be able to cash them in. The casino keeps track of who should have possession of them at any given moment. If you show up with one you neither bought nor won, they will know you either found or stole it.) My favorite stop on the tour was the liquor pumproom. The Bellagio takes in $5 million a month from liquor sales (one reason, our guide said, that the property profits now accrue 52% from ‘resort’ activities and just 48% from the house take at the casino). To keep the bartenders efficient and the alcohol portions uniform (one and one-quarter ounces per drink), all the popular brands (except Baileys) are poured not by a bartender tipping a bottle but by his pressing a button on a hose. Press the right button and out comes Absolut or Remy Martin. And now we saw how. Here in this room, neatly stacked from floor to ceiling, were dozens of 1.7-liter bottles of each major brand upside down and attached to a tube, like the drip by your hospital bed. Tubes from this room went to 53 separate Bellagio bars (all but the poolside bars, which are a smidge too far) – 91 miles of tubing in all, all filled with one or another brand of alcohol, terminating in this room at one end (we could touch the actual bottles!) and at a bartender’s thumb at the other. Pfffft, we would hear every few seconds. Pffft. That was the sound of a gambler someplace out on the floor anaesthetizing himself to his losses. (Baileys Irish Cream™ is too thick to flow properly through the tubes, so it is kept out on the bar along with less frequently requested brands.) And soon it was time for me to go off to the airport for my red-eye back East, still down $2. I gamble even less than I drink, but I know this much: the slots give you the worst odds, and the slots at the airport . . . well, forget it. But I wasn’t going to leave Las Vegas a loser, so I bellied up to an appealing looking machine, fed in a single, opted for “one credit” and pulled the crank. I lost 25 cents. And again . . . this time, pulling and holding the crank. Although the crank no longer has any direct connection to the workings of the machine – indeed, there is now a button you can press instead – there is something satisfying about pulling that big arm and holding it for a while, perhaps even until the final BAR, BAR, BAR settle themselves in the middle of your field of vision. Which they did not, so I was now down half my dollar with two credits left and only an hour and twenty minutes before my flight. (I live life on the edge, as you can see.) But here is where the strategy comes in. With a coin, any given toss is as likely to be heads as tails. Even if there’s been a run of 13 tails in a row – and even though the odds of getting 14 tails in a row are just 1 in 16,386 – the odds of the next toss being heads remain 50/50, just like any other toss. But with a slot machine, who the hell knows how they’re programmed? Not me. So I played both my remaining two credits – and won! I pressed the “cash out” button, and the machine started to ding, ding, ding, ding, ding, ding, ding, ding, ding, and people from United to American all the way to US Air looked my way. Nothing clattered from the machine itself, like in the old days, but pretty soon a nice rumpled old man appeared to hand me four very satisfying dollar bills. I left Vegas a winner. If you haven’t been there yourself, you really have to go at least once. It is the best and the worst of America, all wrapped up in one glitzy, profligate package. Mama Mia! (Which was playing at the Mandalay Bay, but I didn’t have time to see it.) Tomorrow: The Odds of Your Beating the Market
And CBS Said: Thou Shalt Not Advocate Inclusion On THIS Network December 3, 2004February 28, 2017 Mark Willcox: ‘You might want to take a look at the add NBC and CBS refused to run, here. Or at the web site of the Church, here.’ ☞ I looked at the ad – and tithed to run it elsewhere. Eric Batson: ‘I am a member of the United Church of Christ and proud to be a liberal Christian. The paragraph attributed to CBS is extremely chilling, because it explicitly states our ad is controversial because it opposes something the Executive Branch of the government advocates. To say you cannot purchase commercial time because your position is at odds with the President’s??? In the UNITED STATES of AMERICA??? WHAT IS HAPPENING TO US?’ AND GOD SAID: THOU SHALT PAY FOR THAT BOOK Dan Albro: ‘After some testing (for which I feel very guilty, thank you very much) using the book, Blinded by the Right, I discovered that you can’t search based on page numbers in all books (e.g., that one), and Amazon has a 50-page or so limit on the amount you can actually look at, so the situation isn’t quite as dire for authors as it might seem. After all, now I’ll have to buy Blinded by the Right to see how the rest of it goes!’