Reader Mail April 28, 1999February 12, 2017 THE DELL SCALE “Am I missing something, or can you ONLY use DELL for the comparison?” → You are missing something, but it’s our fault for making it unclear. After you click SCALE on the menu bar above, click the “ADD MORE COMPANIES” box and you’ll see the option to replace DELL with whatever you want — AMZN for example. Soon, my web wizard will be making this a little more intuitive. FIRE AND ICE “It may be an old book and long out of print, but wanted you to know I just finished it a few weeks ago and really enjoyed it. I buy books by the bagfuls at the annual Goodwill book sale here in Atlanta, and this year got F&I in paperback for only 50 cents.” — Carolyn B. McGough → Well, you overpaid by 50 cents. As you know, the entire book will soon be accessible here for free. (So far, we’ve posted Chapters 1 through 7. Click “BOOKS” above and scroll down to Fire and Ice and click “Excerpt.”) But you did a heck of a lot better than another e-friend of mine, who wrote to say Amazon had located and sold her a copy for $55. LONG-TERM LOSERS “I bought 4 stocks: PSFT, IOM, NAII, and SHG. ALL are down from what I bought them at, and I’m PISSED! *smile* Do most stocks really go up over the long term on average?” — Eric Lewison → Not most risky ones. I only know one of these four reasonably well, and it’s down 80% from three years ago — and headed, a smart fellow tells me, lower still (though who knows?). He has been short the stock all the way down, and what he likes best is that he’s convinced it will fall further, yet never go out of business. That’s the perfect short, because it means he never has to “realize” — i.e., pay tax on — his gain. And that’s important, because gains on short sales, even if you’ve been short 500 years, are always heavily taxed as short-term. If the stock ever does become truly and totally worthless, as many do, then you have to declare the gain. So remember two things about risky companies (and risky stocks — even a solid company may be a risky stock if that stock has been bid up to crazy heights). First — they’re risky! Second, you should not buy them inside your IRA. Because if they go way up, you get no benefit from the long-term capital gains tax break . . . eventually, when you withdraw your profit, it will all be taxed as ordinary income. And because if they crater, you get no tax benefit from the loss. Instead, it simply cuts into your precious tax-deferred retirement fund.