Author: A.T.

Following up on yesterday’s discussion of this eternal question, Jeff Serenity (well, I’m guessing from his e-address — and hoping! — that’s his last name) notes that the ratio of the S&P 500 to the price of new homes over the past 36 years has never been more favorable for the ‘home’ side of the equation. “In other words,” he says, “it’s never taken so few ‘units’ of the S&P 500 to purchase a new home.”

So maybe this is a better time to buy real estate than stocks (or to buy Japanese stocks than US stocks, but that’s a whole different question/issue). And, Jeff suggests, it could be argued that one way to invest more in real estate, if you can’t actually afford another home, is to pay down a mortgage.

Well, yes and no. You’ve already bought the home; paying down the mortgage will not increase your real estate gains. When you pay it down, it’s not so much like buying more real estate as investing in a bond whose interest rate is precisely identical to the interest rate on your mortgage.

Still, I found the column by Dallas Morning News columnist Scott Burns from which Jeff drew this information to be just as interesting as Jeff did — http://www.scottburns.com/990119tu.htm . Thanks, Jeff! (Seinfeld fans: “Serenity now!”)

Periodically, we take up the question of using spare cash to pay down debt versus putting that same money in the market. See, for example, the March 2, 1999, column in the archive.

I thought this story from Doug Schneller might resonate with some of you as it did with me. Doug writes:

“I graduated from law school (don’t hold it against me) in 1992 with over $78,000 in debt. Being risk-averse, I decided that it was more important to me to be debt-free (especially with no tax deduction on educational loans) than almost anything else. Thus, I began an odyssey (almost finished) of substantially prepaying these loans. In order to get some periodic satisfaction, I tended to try to pay off the smaller loans first (especially when the interest rate was greater), and then move on to the next smallest. I also started to invest in money market and mutual funds (as well as IRA’s and 401(k)’s), but debt reduction has been my biggest concern.

“Had I been investing more in the market and paying down less, I no doubt would have enjoyed greater paper increases in my assets (on a dollar basis, and especially given the tremendous gains since 1993), but I would have had the tremendous psychological burden and uncertainty of debt. I know, in hindsight, that economically I might have been ‘better off’ if I had invested more, especially because I feel I know much more about personal finance. But I don’t think I would change a thing if I had to do it all over again (especially if I didn’t know how good the stock market would be) — psychologically I would rather ‘owe less’ than ‘have more.’ Happily, I have become a disciplined, and regular, saver, so maybe, someday, I will nonetheless ‘have more.'”

Tomorrow: Another reason mortgage prepayments may make sense, even at these low interest rates.

From Neil W: “My wife and I are 50 and didn’t really begin to achieve financial success until our mid-forties. Thus we missed out on the Reagan Era low tax rates and we are scrambling to make up for lots of lost time in saving for retirement. We have been fortunate to benefit from stock options, but that was mainly one grant ending this year and taxes are hitting us hard. By the end of this year, the Clinton tax increase will have cost us about $100,000 in additional taxes. This will force us to retire about three years later (at 60 as opposed to 57). Which leads me to my question: Don’t you find it paradoxical that so much of your ‘job’ work is dedicated to helping people accumulate wealth while your political work aims at electing people who want to take as much wealth away from us as they can get away with? (Full Disclosure: I detest the Right for attempting to control our bodies, but I also detest the Left for attempting to control just about everything else. I am a Libertarian.)”

Well, first I guess I should point out that during the Fifties, when you and I were growing up, the top federal tax rate was 90%. In the Sixties and Seventies, it was 70%. During the Reagan years, the top rate dropped as low as 28% (today, all in, the top rate works out to about 43%), at the same time as the federal tax burden on the average working stiff went up because Social Security taxes went up so much. So the overall federal tax take plummeted if you were making a million bucks a year, but rose significantly if you were making $18,000. The Clinton tax plan reversed some of that. The “earned income credit” for the working poor was increased, and paid for — you’re right — by folks near or at the top of the income pyramid.

It cost me even more than it cost you, but I thought it was fair. I mean, I type my little fingers to the bone. But even though I pay a lot in taxes, I’m not sure the guy who buses my table at the restaurant or the doorman who gets me a cab in the rain or the nurse who changes my sheets (I’m fine, this is just an example) or the teacher who earns $27,000 — all of whom pay far less tax than I do — is really the one with the cushy deal.

But apart from issues of fairness . . . have you calculated how much you’ve saved from lower mortgage rates, etc., brought on by the balanced budget produced in part by the higher taxes? And the rise in stock and bond prices that resulted? Tax rates were lower during the Reagan and Bush years, but the Dow was around 2,500 much of that time.

I appreciate your frustration, but there are other sides to this. Most middle class or wealthy people can hardly say they are poorer as a result of the last several years.

And philosophically, I do believe that the future, in this complex world of ours, “won’t just take care of itself” if everyone were a libertarian and fended for himself. I think there are areas where we serve our own long-term self interest by acting in concert, as a community. Public education, clean drinking water, health insurance for the poor and elderly, Social Security, safety standards, some government sponsored basic research and so forth.

Everyone agrees there’s a lot of bloat in government (if corporate raiders are to be believed, there’s some in private industry, too). Fighting it is a never-ending battle. But one of the achievements the current administration can be proudest of, I think, is all the “reinventing government” that has gone on. When you get into the nuts of bolts of it, you find that much of it is real.

From Bill Frietsch: “Please discuss pros and cons of Master Limited Partnerships such as Lakehead Pipelines (LHP). This seems like an ideal growth and income stock since it’s return is almost 8% and most of that is not taxable. I realize that taxwise, some of the return is considered a return-of-principal which will up the capital gains when sold, but I intend to hang on to it. It propably won’t be sold until my estate is settled and then my heirs won’t have to pay any capital gains. I also realize that the tax reporting is cumbersome, but it seems like the advantages outweigh this disadvantage. Would appreciate your take on this.”

I don’t know anything about Lakeland Pipelines specifically, but I do think master limited partnerships can be interesting. I’ve done well with them myself.

But let me explain some of the shorthand in Bill’s question.

First off, at least under current law, capital gains are not taxed to your heirs when you die. So while it’s a sort of extreme tax-avoidance measure (“I’d rather die than pay 20% of my Yahoo profits to the government!”), it is something to be aware of if you’re hoping to leave money to your kids. (If you’re planning to leave it to charity, it doesn’t matter.)

But that’s true of anything, not just stocks like LHP. Indeed, stocks like LHP are not, as Bill infers, strictly speaking stocks at all, although quite a handful of them trade on the New York Stock Exchange — they are master limited partnerships, and very much like Real Estate Investment Truss in most respects. Basically, they own oil pipelines or timber (or real estate, in the case of REITs) and they pass through to you, the limited partner, almost all their revenue each year. Some of that revenue is considered “a return of capital,” not profit, and so is not subject to current income tax. Instead, if you paid $2,500 for 100 shares at $25, and get $200 back, half of which the general partner informs you is a “return of capital,” you pay tax on only $100 of that $200 — but are supposed to “lower your tax basis” on the purchase from $2,500 to $2,400 . . . and then more in subsequent years as you get more returns of capital . . . so that when you eventually do sell your shares, if you do, you figure the gain or loss not on the original $2,500 you paid, but on your adjusted “basis” at the time of sale. I.e., the gain you pay tax on gets bigger as your basis shrinks.

In theory, this is swell. In the first place, you defer the tax on that $100 (or eliminate it altogether, unless they change the tax law, if you die before you sell it). In the second, you convert what would have been taxed as ordinary income into an ordinarily-more-lightly-taxed capital gain.

In theory. In fact, if you actually did all the accounting for that $100 properly — well, it’s really not worth it. (If you’re buying $2.5 million of this thing, not $2,500, then maybe it’s worth it.) Indeed, I put most of my shares of this kind in my tax-deferred retirement account, to avoid the hassle. And when I’ve owned them outright, I’ve sometimes just ignored the tax advantage and treated the entire dividend as a dividend, rather than deferring the portion that is, technically, a “return of capital.” I don’t know if this is legal, but as it results in a higher, not lower, tax bill, I can’t imagine the IRS will come after me demanding I accept a refund.

(There’s one other nasty tax twist — see below.)

Maybe it’s time I explained what a “return of capital is?”

Nothing’s quite this simple in reality, but say you started a company that did nothing but buy 1000 acres of land at $1,000 an acre that you operated as a camp ground. You had shareholders. And every year, you’d pay out dividends from the profits you made letting folks come pitch their tents and buy bottled water from your little store. (And bug spray! This is your ace in the hole.) But then one year you actually sold 50 acres to some nut who was willing to pay $3,000 an acre to pitch his tent permanently. That’s $150,000, and you distribute it along with the bug spray profits to your partners. But is it all profit? No, $50,000 of it is merely a return of your original capital — the $1,000 an acre you paid for the land.

It gets a lot more complicated with depreciation and depletion and one thing and another I don’t pretend to understand, but as a shareholder in a master limited partnership (MLP) or real estate investment trust (REIT), you will be sent all the information you need to give your accountant to do your taxes.

(The final tax twist, or should I say nightmare, is that even within a tax-deferred retirement plan, certain kinds of income above $1,000, EVEN THOUGH RECEIVED WITHIN THE UMBRELLA OF YOUR IRA OR WHATEVER, are taxable. This is nuts and should be changed, but — and I did not even know about this until after writing this column originally — there’s no arguing with the tax code. The name of this problem, or at least the way you are supposed to knuckle under to it, is Form 990-T — Exempt Organization Business Income Tax Return. If one of your MLP’s paid you more than $1,000 in “income not substantially related to its business purpose,” then you owe tax on the excess, and the trustee of your retirement plan may notify you, as mine did me.)

From Robert Morse: “The auto insurance companies in Masssachusetts in their infinite wisdom have decided that, because they could not get a rate increase of the size they wanted, they should lower the safe driver credit from 15% to 5%. And now they plan on doing away with it completly. I know you had an initiative in Ca. to pay for auto insurance at the gas pump. Since gas is relatively low priced now, this same idea may fly in Massachusetts. We have always had high rates here. Please help, and let me know if there is something I can do here to get the ball rolling.”

Pay-at-the-Pump might be a problem in Massachusetts. Too many people live within a short distance of other states and could just run across the border for gas.

But it would be very easy to solve the problem even without Pay-at-the-Pump, if only the lawyers would allow it. (They won’t.) Namely: just adopt the Michigan law. It’s been working fine for 25 years. People in Michigan have vastly better protection against serious injury than you do, yet pay lower premiums. This is possible because in Michigan the incentives to invent or exaggerate personal injury are removed (which makes a huge difference) and because lawsuits are greatly reduced.

Massachusetts actually has the worst of both worlds. All you need to be able to sue (the “threshold”) is $2,000 in medical expenses and lost wages — which gives people an incentive to build up that much in expenses. An MRI, a series of chiropractic visits . . . it’s not hard to do.

It used to be even lower. From 1971 to 1988, the “threshold” was $500. Then it was raised to $2,000 to try to cut down on all the lawsuits and fake claims. And guess what happened? The following year, the average number of doctor’s and chiropractic visits after an auto accident jumped from 13 to 30.

And still the good people of Masshachusetts, half of whom have PhD’s, haven’t been able to figure out that the personal injury lawyers, who will do anything to avoid going to a pro-consumer Michigan-style system, have bamboozled them on this issue. Understandably, the lawyers want the system just the way it is. It works great — for them. And by and large, they write the laws.

The first set of people I aggravated Tuesday were those of you who get angry when I don’t stick to financial topics.

To them I say — sorry. Read no further. Come back Monday.

The second set were those who thought I was too easy on at least a couple of Republicans. Sure, Senator McCain is a very fine man — and major kudos for his stands on tobacco and campaign finance reform. But, they asked, how about his voting to end a woman’s right to choose? against hiring new teachers and repairing public schools? against the Family Medical Leave Act? against equal rights for gays and lesbians? against the program that’s put nearly 100,000 more cops on the streets?

To them I say — oops! I can see why a lot of people would have problems with that record.

The third set couldn’t understand how I could be such an idiot. In particular on this issue of “diversity.”

Mitchell G: “Why is it that you are logical with money matters, but illogical with politics? Even you must see that your essay was immature and stunted. You wrote — “…you’ve got thirteen white guys.” Why must self-professed minorities see everything through the prism of race? It sadly scatters their position. Racial quotas are wrong. Follow this logic…all men are created equal. No man should have an advantage over the other because of their race, gender, creed, etc… It is just that simple, Andy. Real simple. If you don’t believe that, then by definition, you are a racist, a gender-hater, religion-hater, etc… Which one of those are you? Maybe you are more than one.”

Well, of course, as I said in that column, I don’t believe in quotas. And I sure hope I am not a hater. (I hate waste, but that’s different.) I actually thought I was being not only logical but — well, mathematical. If straight white non-Hispanic gentile males make up 35% of the population, then the chances of all 13 house managers matching that profile, if it were random, works out to one in a million. So was it just coincidence it worked out this way? Is that the logical explanation? Or might it be fair to conclude that the Republican Party does not celebrate diversity with quite the same enthusiasm as the Democratic Party?

Jordan B carries this a step further and makes a valid point: “Understanding that most people are not qualified for the job of House Manager, your calculation does not commensurately reduce the number of straight, non-white people ELIGIBLE for the position. Knowing that you are an intelligent person, I suspect that you have selectively ignored this fact in order to shamelessly further your cause. That’s disappointing.”

In other words, given the pool of congresspersons the Republican leadership had to choose from — where so many of them are straight white non-Hispanic gentile males — the odds of all 13 fitting this profile are nothing like one in a million. Maybe more like one in ten or something. I haven’t done the math.

Jordan is certainly right. (Taken to an exreme, if all congressmen fit this profile, then the odds of all 13 House managers’ matching it would be 100%!) I didn’t selectively ignore this, I just didn’t think of it in this way. My math was reflecting the entire U.S. population, essentially all of whom are eligible, once they turn 25, to serve in the House.

But, OK, then — why do most Republican congresspersons come from that special 35%? Is it really all just superior talent and effort? And in choosing the folks to showcase to the world in this televised trial, why would the Republican leadership choose to go the 100% route?

Democrats make more of an effort to find talented people of all kinds — both because all kinds of people are talented, but also as a way to provide role models and hope and encouragement to people who MAY be black or in wheel chairs or women or Hispanic or Jewish or gay or whatever.

Appropos of which Mike R writes: “Can I ask you a question that I dare not ask in public in this crazy Politically Correct world? Why is “diversity our strength?” Is it Yugoslavia’s strength? How about the Middle East or Central Africa? It seems to me this country has expended tremendous effort, time, and money on affirmative action, sexual harassment, etc. Is diversity good in our military? I guarantee you I would take an all-male force vs. an all-female force. If you watch the NCAA basketball tournament games this weekend, then please tell me where the diversity is on these college teams. Where are the whites and Latinos? Maybe diversity is lacking because the coaches are more concerned with performance than appearances.”

It’s a good honest question. But it has answers. The first thing I guess I’d say is that it is precisely because we don’t want to become a Yugoslavia, riddled with hatred and division and ultimately blowing apart, that we really need to celebrate our differences with humor and love rather than recoil from them with fear and distrust. (And I think we largely do. It’s one of our strengths.) But that isn’t exactly what Mike asked. He probably agrees with that. His question: why do you call diversity a “strength” rather than calling it, say, an “unfortunate handicap” we just need to learn to live with?

But let’s look at it in reverse. Would we be a stronger country if, like Japan, we were almost entirely homogeneous? If we could get rid of the Jews and the Asians, get rid of the blacks and the Latinos, get rid of the gays and the Catholics, get rid of the people in wheel chairs? Would our life be as rich without Michael Jordan? Without Christopher Reeve? Without Gloria Estefan? Would we have been a better nation had we never had a Martin Luther King, Jr.? Would our economy have been quite as successful had Roberto Goizueta not run the Coca Cola Company so brilliantly from 1981 to 1997? Which company would you rather invest in: one that draws from an almost unlimited talent pool, or one that handicaps itself by excluding the talents of certain groups?

Almost everyone agrees there shouldn’t be quotas. If a preponderance of basketball stars are African-American, so long as it’s based on merit, so be it. And we can laugh about it. Anybody see White Men Can’t Jump?

But it would be crazy for the NCAA not to allow white players, and equally crazy, if you ask me, for the military not to welcome women. “Is diversity good in our military?” asks Mike. “I guarantee you I would take an all-male force vs. an all-female force.” Well, so might I — if we had to choose one or the other. But the great thing is, we don’t. We have a wide and broad and wonderfully diverse talent pool to choose from, and this is a great strength. It is also a great pool of material for comedy and laughter . . . and for a shared sense of good fortune, that we live in a country where everyone doesn’t have to be the same to be welcome, to be appreciated, and to fit in.

Well, as we have recently discussed, when you buy a home, you basically do need title insurance.

Vincent Dovydaitis makes the case: “We purchased our home as part of a new subdivision (had it built to our specs actually). And had been living in it for a couple of years before it was discovered that the original survey for the subdivision was in error. (The surveyor neglected to “close” the survey by returning to his starting point.) It took a little while, but the problems were worked out (my boundaries shifted, some people lost slivers of land that they were reimbursed for, etc.) and I received a new title based on the corrected survey. I forget whose title insurance paid for the paperwork, but in the end the fixes and issuing new titles didn’t cost me a dime. Our local building inspector assured me at the time that this sort of thing happens a lot. (People don’t discover that their house, driveway, etc., is in the wrong place until they or their neighbors go to make improvements). And suddenly you no longer have clear title. Ouch. Buy title insurance — better safe than sorry.”

I agree with that. And I also agree with those who wrote in to say it’s much too expensive. But not because so little of the premium you pay ever gets paid out in claims. Unlike almost any other kind of insurance, with title insurance you are paying mostly to avoid what you’re insuring against. Life insurance won’t stave off death, auto insurance won’t deflect an onrushing drunken driver. But with title insurance you’re paying mostly for the legal research to make sure there normally won’t be a claim against you (though not in the case of careless surveyors).

The problem is that this legal research, and the system of property records down at the county courthouse it rests on, are so inefficient!

Stephen Simcock: “In a recent article, you bemoaned the persistence of the archaic title registration system in today’s digital world. I have some good news. My company is a charter member of the Mortgage Electronic Registration System (“MERS”), an organization which grew out of a FannieMae/Mortgage Bankers Association white paper. Its purpose is to create an electronic registration system for title that is similar to the CUSIP system for securities. [Every stock or bond you buy has a “CUSIP” number — take a look at your confirmation slip next time you buy something.] MERS was developed to cut the phenomenal cost associated with the recordation of assignments in connection with the bulk transfer of mortgage loans and on the secondary market and subsequent transfers of servicing portfolios. [Often, your one little mortgage is grouped with hundreds or thousands of others and gets traded in one big pool — and somebody has to keep track of all of this.] It will make the mortgage industry considerably more efficient, but I believe that it will also revolutionize the title industry. They have asked me to chair their legal advisory group.

“The weight of tradition embodied in real estate law is bone crushing as you can imagine, and many are reluctant to let go of its anachronistic, archaic and arcane systems. MERS has met considerable industry reluctance because it represents such a sea change in the way we do business. ‘My lord, how can we possibly dispense with all of those tens of thousands of assignment documents with their obscure language and nifty stamps?’ The situation has been exacerbated by the recent boom in mortgage refinancings, which has left most mortgage companies struggling to stay on top of current production and disinclined to innovate. We are, however, slowly making headway, and now companies like First Nationwide (us), Norwest and Merrill Lynch have significant numbers of loans on the system.

“I could go on ad nauseam (perhaps I already have) about the inefficiency of our current system, but will stop here. In case you ever got tired of tilting your lance at the windmill of auto insurance reform, however, and wanted to adopt a truly sexy issue (like electronic mortgage registration), I will send you some information.”

In short: There may be hope yet. And one of your fellow readers is right there in the thick of it. Full speed ahead, Stephen! Every home buyer in America will owe you a note of thanks.

THE DOW 12

Jack Prior is looking to see how the Dow would have done had some of its components not been switched for others. (And what’s this nonsense about it unweighted? What the heck kind of way is THAT to run an index? A stock splits two for one and suddenly it’s only half as important to the make up of the index? Well, that’s how the Dow works, and ain’t no one gonna change it.) In the course of doping these things out, he quickly came to http://averages.dowjones.com/home.html . Check it out. It will answer all your questions about the Dow (albeit not make it any more logical) and if you choose the Dow Data tab and then Historical Queries, you can see which 30 stocks make up the Dow Industrials now — and its 12 components in 1898.

From Dickson Pratt: “Are you sure about that “pig in a poke” derivation? As a westerner and gold panner I always thought it referred to the practice of putting pig iron into a poke, or bag, of gold dust to “adjust” the weight.” Well, I got MY derivation out of a book — so it MUST be right.

From Mark Brady (who, I assume, in every other respect found my clickle column to be brilliant): “Polynesia includes New Zealand, Hawaii, Samoa, French Polynesia and few other minor islands. Bali is in Indonesia, where the rupiah (I think) is the currency.” Oops. You mean it’s NOT the pickle?

From Simon: “I think the most ridiculous thing about Mutual Fund Position reports is that even though they are released so late as to be useless, Fund Managers care enough about them to manipulate their portfolios over the quarter end dates to try to make it look like they held the winning stocks during the past quarter. I now deliberately trade ahead of this (general phenomenon not specific information!) by trying to be long ‘winners’ and short ‘losers’ going in to quarter ends.”

For the very short-term trader, perhaps even the day trader, who can somehow live with the commissions and hassle and taxes, this strategy might even work. But speaking of day traders . . .

From Bill Heid: Your comments today on the lure of day trading because of the availability of data are absolutely correct. I started, and ended, day trading last year. I summed up my experience by telling everyone it was intoxicating. I really felt that was the best one-word description of the experience. And then recently I’ve read that some west coast drug and alcohol rehab facilities are now taking in day traders. What a confirmation of my description (yes, I really said it first – ask my friends).

In my view, there are lots of fine Republicans, but they’ve lost control of their party.

All the more reason I’m happy to be the incoming treasurer of the Democratic National Committee. Not only can I help to win back Congress for the Democrats (which, now that so many Democrats support free-trade and balanced budgets, should not scare investors), I can help the Republicans win back their own party.

In my view, it’s Republicans like Los Angeles mayor Richard Riordan who should be running the party, not . . . Well, I won’t name names, but I will tell you that at last week’s Reclaiming America for Christ conference in Fort Lauderdale, one of the speakers described moderate Republicans as “the bane of our existence.” (So you can imagine how they feel about Democrats.)

The Republicans will always have a lot more money to spend, but that doesn’t mean the Democrats can’t win — so long as we raise enough to get our message out.

Part of that message is diversity. The President’s cabinet walks into the House Chamber for the State of the Union and it looks like America. You’ve got your whites and your blacks and your Latinos, your men and your women, your Jews and your gentiles. The six officers of the Democratic National Committee walk into the room and you’ve got your brilliant African-American mayor (previous to his election named most respected judge in his state), your dynamite Hispanic-American congresswoman, your coupla terrific WASPy guys, your coupla women, your coupla Jews, and your gay guy. (Adds to more than six due to overlap.) The thirteen House managers walk into the room and you’ve got thirteen white guys.

This is not to knock white guys. My boyfriend’s a white guy. (And, like all 13 of the managers, gentile.) Nor is it to say the President’s cabinet or the DNC leadership is completely representative or for a moment to suggest any of this should be done based on some kind of formula or quota. It shouldn’t. It’s just that most Democrats genuinely believe that many of the most talented managers are different from the straight white Christian male traditionally pictured in the role. Many Republicans believe this, too. But I’ll bet Republicans outnumbered Democrats 10 to 1 at the Reclaiming America for Christ conference.

Anyway, at the risk of losing half my advertisers, let’s have some fun. With appropriate apologies to those of you who’d sooner give to the devil than the Democrats (believe me, I welcome readers across the political spectrum), how about sending me a check? I officially start March 20. I’d love to hand over a fistful of small checks — no amount is too small — on day one.

In case this notion grabs you, please note that contributions to the DNC are not tax-deductible, and that they can be accepted from U.S. citizens or green-card holders only. Please make your check payable to DNC/Federal Account, please put your occupation and employer in the memo (if you might give the DNC more than $200 in the course of the year), and please mail it to:

Andrew Tobias.com (the “.com” so we know it was from this web site)
Treasurer
DNC
430 So. Capitol St., SE
Washington, DC 20003

Annoying? What will you get in return? Well, OK, how about this? Archives! I was just kidding up above about having advertisers, but I have been working on getting the archives some of you have requested. Indeed, with luck, an early version of what’s to come may be clickable today, up above. (Yes? No? Well if not today, soon.) Anyone who sends a check RIGHT NOW can read them for free. (As can anyone else, but if they’re Democrats, they will feel guilty.)

And I have just one other thought. If 35% of the citizens of this country are straight white non-Hispanic gentile males, then the chance that any one of the Republican House managers would have fit that profile — if it were random — would have been 35%. The chance that all 13 would be? If I did the math right: one-ten-thousandth of one percent. Send me a check.

Contributions to the DNC are not tax deductible. Your contribution will be used in connection with federal elections and is subject to the limitations and prohibitions of the Federal Election Campaign Act. Federal law requires the DNC to use its best efforts to collect and report the name, mailing address, occupation and name of employer of individuals whose contributions exceed $200 in a calendar year.

Hey, the first part of Friday’s column was pretty boring, no? I think I should have started with the “large point,” which I did think was important (thanks to Mark Hiatt, who wrote most of it), and not the smaller one.

So today let me get straight to the point: With the Dow pushing 10,000 and estimates for next year of 13,000 already floating around — all of which may come true (maybe 2000 will be the Hangover Year, or maybe There Will Never Be Bad News Again — or at least not Bad News Of The Type That Is Perceived As Bad, given the market’s current disposition to see the bright side of any development) — yes, this sentence has a second half, I am just getting “straight to the point” in my own annoying way — two ominous signs have just appeared in my mail.

The first was a solicitation to subscribe to Morningstar StockInvestor. This newsletter, they say, will attempt to recommend stocks based on their true value — and to steer folks away from those of the 200 most widely watched stocks that are overvalued.

This sounds seditious, if you ask me. And Morningstar has enough clout that — who knows? — “rational valuation” could become the latest fad.

Nah.

And what exactly is a rational valuation? This is harder to say. But one young man who has done a good job of trying to say it anyway — and quite a few other good things — is Erich Riesenberg. His was the second ominous sign to arrive in Saturday’s mail. For Erich, it seems, has gone to extraordinary lengths to develop a website I was only the 469th person since November to visit — reason enough for you to take a look and get his numbers up. (He must have put 1000 hours into this thing, or, currently, better than two hours for each visitor.) He was writing in hopes I would check it out — www.InvestmentClass.com.

Basically, the site is Erich’s very sensible interpretation of rational investment analysis, the foremost and best known practitioner of which (you may by now be sick of hearing) is Warren Buffett, to whom Erich gives all appropriate credit.

One item of particular interest is Erich’s discussion of the analysis he did when he decided, a while back, to buy stock in Scott’s, the lawn care company.

Reading it, you might say . . . “Gee, this is really work!” In which case you should be in index funds — because it is work. And Erich addresses that issue, too. Most people are not securities analysts. And even most of those who are generally don’t beat the market, or by enough to justify the time they spend trying.

Anyway, getting these two things in Saturday’s mail, the Morningstar solicitation and a letter from a level-headed stranger directing me to his web site, is probably just coincidence and not the start of a full-fledged trend. Still, you have to wonder what might happen to the market if this “rational valuation” stuff actually caught on.

Nah.