Author: A.T.

Last week I passed on a bad experience one of you had with priceline.com, but asked you to send me your good experiences. (A company with a market cap that’s approached $25 billion ought to have quite a legion of fans.) It may be more a testament to the small size of my readership than anything else, but to my surprise, I got just one response, albeit a very good one. It’s from Tony Spina, who writes:

“I used priceline.com to buy three roundtrip airline tickets from Detroit Metro Airport to Houghton, Michigan, with short notice for a 100% discretionary trip. Best price I could find using travelocity.com, nwa.com, etc., was $900 each. Priceline accepted my first offer of $250 each. All went perfectly. I was happy — except next time I will start at a lower bid. While priceline will not let you make more than one bid for a certain trip on a given day, the way it keeps track of this is by the credit card number. Use a different credit card each time and you can bid repeatedly for the same trip at gradually escalating prices.”

Houghton, Michigan, as best I can tell, is in Northern Wisconsin (which Michigan appears to have won in a war I never heard about, possibly with the aid of Canada, which also seems a more likely home for Houghton). The airport you are looking for is the Hancock/Houghton airport. Tony saved $1,950 with priceline, paying $750 instead of $2700. Not that he would actually have gone for $2,700. So what really happened is that priceline made his trip possible.

This won’t work for travelers who have to be someplace at a specific time — you are committed to flying any time on the day you specify, and can’t back out of the deal if you don’t like the time — or routing — priceline finds at your price. But for the right kind of flier (or hotel guest or car buyer or mortgage applicant), priceline can be a real money saver.

1. Buy a used car. “I recently got a chance to put into practice one of the lessons from your book,” writes Tom Grady. “The $28,000 1999-model-year car that my wife had her heart set on was also available as a ’98 lease-return for $17,400. I’m sure my teenagers will put the $11k we saved to good use.”

What an easy way to “make” an extra $20,000 or so before tax! (To keep $11,000 after tax, you may have to earn an extra $20,000. And even if you’re combined tax bracket is not that high, remember: Not only is the car cheaper, so are the finance payments, if you have to finance it, and the insurance premiums, if you insure it for collision and theft.) That “new car smell,” as you must by now be very tired of hearing me say, is the most expensive fragrance in the world.

2. Buy a cheap watch. I was reminded of this today when I looked down at my wrist and realized — oh, my Gosh: I am wearing a watch. For decades I enjoyed not having to do so. Now that I am, temporarily, at least, attempting to pass for a grown-up (I have this dollar-a-year job with a well known political party), I have begun to wear a watch.

I have three of them, actually. One is a Denver International Airport watch, given to me free by the Denver International Airport when I was out there on a junket. Where you may have Mickey circling the dial of your watch, I have what appears to be a 727 circling the Denver airport, waiting hour after hour to land. So far, it has never run out of fuel.

My other two precision timepieces are from Absolut vodka. One of these I got as a party favor at a benefit luncheon. I am not a big drinker, but I like the Absolut ads, and love the Absolut watches, which look expensive and surely cost Absolut (which donated them to The Worthy Cause) twenty bucks apiece. Made in China, which as you know has become the Geneva — indeed, the Schaffhausen — of cheap Asian watch fabrication. One of the cool things about the face of the Absolut watch is that it has no numbers. Just a silver “Absolut” from the center of the dial out to where the “3” might ordinarily be. And into the silver edge of the watch-casing, running around in a complete circle, are engraved the 12 letters: A-B-S-O-L-U-T-V-O-D-K-A. All this with a stainless steel mesh metal band, with the only catch being that the clasp does not catch very well. The clasp quietly unclasps and by the time you realize it, your cab, plane, sloop or rickshaw has long since disappeared. So I lose these watches. Which is why I have two. After I lost the first one, I called The Worthy Cause and asked if I could buy three more. “Buy?” they laughed, sensing further Worthy Contributions someplace down the road. They sent them to me free, and I have thus far lost only one of them. Leaving me two.

I have saved a minimum of $2,000, and by some lights $10,000 or more, by wearing cheap watches. Charles, needless to say, scoffs. His watch is a proper status watch. It costs $300 to clean, which seems to need doing fairly often; it produces near panic when mislaid; and it tells precisely the same time as my own.

3. Buy and hold. The way to make money in the stock market is not to trade in and out. That takes time and eats up commissions (small ones if you use a deep discounter, but still). It chips away with spreads (a stock that’s “16 bid, 16-1/8 asked,” costs one-eighth of a dollar — $125 for each 1,000 shares — more than it fetches). And it subjects you to a very rotten tax deal: high ordinary income tax rates on your short-term capital gains in years when you emerge with a profit, but an annual limit of just $3,000 in losses that may be written off against ordinary income. So if you made $100,000 day-trading in 1999 you might have to pay Federal and state taxes of, say, $40,000. But then if you lost $100,000 in 2000, only the first $3,000 of the loss would reduce your taxes — saving you about $1,200 in this example.

(Yes, the remaining $97,000 in losses would be carried over to cancel out gains in future years, and to cut your taxable income by another $3,000 each year, until exhausted. But the day could come that gains weren’t such a foregone conclusion. There was, for example, the 16-year stretch from 1966-1982, over which the market actually fell, leaving relatively few people with gains at the end of each year.)

In short: heads, the tax men win; tails, they lose very little. Better, for the most part, to buy and hold — sometimes even until after you die. That way, under current law, income taxes need never be due on the capital gains that have accrued as of the time of your death. (I told you to wear your seatbelts. But did you listen?)

Tomorrow, a Fourth Way to Save Money: Priceline.com (the Good Experiences)

Newsflash: “Isn’t it time,” writes Midwest attorney Steve S (why are people afraid to use their names when praising the administration?), “that someone gives Clinton credit for the Kosovo strategy? For two months all you heard were naysayers opining that the strategy was flawed. But it’s worked. There have to be some friends of the White House remaining in the press who could observe that a two month war, without American casualties and total victory, is a pretty efficient, wise strategy. Of course, you may want to wait for Milosevic to sign the dotted line, but with Milosevic’s preliminary acceptance, someone ought to give Clinton some credit.”

Yup.

And remember the $40 billion Mexico bail-out that was ridiculed as a disaster? (It worked, and we’ve been paid back on schedule with interest.) And remember the push for NAFTA that any idiot (who listened to Ross Perot) could see would lead to a “giant sucking sound” that would send our unemployment rate soaring? (Unemployment is at a 30-year low, and it’s not just millions of low-wage jobs that have been created, but high-wage jobs as well.) How about the first Clinton budget, designed to get interest rates down and jump-start the economy? It got not a single Republican vote. A dud, they said. But down came interest rates and up went the economy. And what of the conventional wisdom among his critics that the President couldn’t possibly be taken seriously as a leader abroad? Tell it to the solidly unified 19 members of NATO, or to Tony Blair’s government, or to Gerhard Schroeder’s, among others, that credit the Clinton vision with significantly helping to guide their own.

It’s galling to those who dislike the President, and I don’t mean to rub it in. But in most respects, he and his team have done a terrific job. Average Americans’ lives are better as a result, and we investors haven’t done too badly, either.

It began with his choice of Vice President (contrast Al Gore’s substantive initiatives to “reinvent government” with whatever it was that Dan Quayle did in the same office), and runs page after page after page. From the Family Medical Leave Act to a streamlined and far more effective Small Business Administration to an active S.E.C. that has vigorously pursued the interests of the small investor to 100,000 more cops on the street and community policing and the Brady Bill to a tough line on Joe Camel to the third largest expansion of the national park system (behind only the two Roosevelts) to peace in Northern Ireland to an end to welfare as we’ve known it — just page after page after page.

And each page just makes the loyal opposition angrier. My friend Joe Andrew, chairman of the Democratic National Committee, has taken to calling the G.O.P.”the Grumpy Old Party.” They find a cloud in every silver lining, he says.

I don’t want to enrage those of you who get furious when I write things like this. And I certainly am proud to count among my friends many thoughtful Republicans . . . though most of them are dismayed that their party has been co-opted by a leadership far right of center. But I do think it’s worth noting that things are actually pretty good. We face lots of challenges and dangers ahead. But for most Americans, on balance and on average, things have rarely been better. And I don’t believe it all just happened by accident.

Monday: Three Money-Saving Ideas

My mention of priceline.com last month evoked a woeful tale. To be sure, one modest snafu hardly invalidates a brilliant business model. But as we lurch into the brave new world of cybercommerce, we look to each other for guidance. Does this stuff really work? How well?

Thanks, therefore, to Graig Ponthier, for the story that follows. (Countervailing anecdotes welcome!) Graig writes:

“I thought I was being very ‘Tobias’ when I decided to get on priceline.com and see what kind of bargain I could get on hotel accommodations for a recent trip. For me, it was only worth spending $40 a night since I could have driven back home instead of staying the night. After shooting for the moon (3, 4, 5 stars), I finally found that my $40.00 got me a suite at a 2-star hotel (with kitchenette, separate living area, etc.) I was pretty excited because of how easy was this. I didn’t even have to call the hotel, just show up and the room would be waiting.

“Well at check-in, I discovered that the room reserved in my named was at a special discounted rate of $65 (which was not a suite and was not a double occupancy as Priceline stated it would be). I explained to them about my $40.00 room and discovered that none of the front desk employees have even heard of Priceline.com. They asked if I had something I could show them that shows this rate. I thought for sure that I was a victim of a Priceline scam, since they already had my credit card number.

“Well, all I had was my bag and my laptop. So, I went up to my $65 room, booted up my laptop, dialed up the server, loaded up my emails to find my confirmation. In pure embarrassment, I brought my laptop down to the lobby, placed it on the front desk as all the other patrons watched and waited. Anyway, they finally did honor the rate but the whole check-in process was a nightmare. Oh well, I guess I still saved some money on the rate. Unfortunately, they got it back at the hotel bar.”

HE’S NO TAX EXPERT . . .

“I’m no tax expert,” writes Darren, “but I thought shorting stock did not allow you to declare capital losses. Am I confused by the fact that you have to pay ordinary income tax when making a capital gain as a result of shorting?”

Yes, you are confused. Any gains or losses you realize when you close out a short sale (by “covering your short”) are reported as short-term capital gains or losses. You could have held this short position for 30 years, but when you cover it (by buying back and returning to their rightful owner the shares that you borrowed and sold short), your profit is treated as a short-term gain or loss.

Speaking of short sales, some of you know I have for years been high on Amazon.com as a company but short its stock. The Internet will be great long-term for consumers, but possibly not for investors. Did you see this week’s Barron’s cover story? AMAZON.BOMB, as it was titled? The same day it came out, I found myself with a Titan of Industry who — not knowing of my interest in Amazon, or of the Barron’s cover story — offered me a wager. “I’ll bet you,” he said, “that Amazon never turns a profit.” Should he prove to be right, market historians will surely look back in amusement at the $36 billion market cap the stock sported last month, or even the $19 billion or so it commanded at the time of the Barron’s story.

HE’S NO FERMAT . . .

“I was all set to write the Secret of Wealth, which had just come to me in a flash … but then I got so distracted waiting for the elevator, and so bemused once I eventually got IN the elevator, the Secret snuck back off into the ethos, like a dream you know you had but can’t remember.”

Or so I told you last week — evoking this (from Doug):

“That happened to me once. Of course, I couldn’t admit it as easily as you did. You should say something like ‘The Secret is too big to fit in the margins of this notebook’ and then die dramatically before anyone can ask you about it.” — Pierre de Fermat

WANT TO BUY A FLYING CAR?

“Amazingly,” writes Bob Price, “this isn’t another ‘beat the market in a few minutes’ email from me. Since you ignored all of THOSE, I got the hint. Check out www.moller.com/faq. Neat stuff.”

Chances are you won’t be buying, or flying, one of these cars any time soon. But — like the dream of beating the market with a few minutes’ work each week — the dream of leaping over traffic on the way to the beach never dies.

But first a joke.

“Do you know what DNA stands for?” asks Steve Mohanan?

Scroll down . . .

“National Dyslexic Association”

Sorry.

And now, if you keep scrolling down, you will eventually come to the Q-page button near the bottom of this page. (See it?)

I tell you this for three reasons:

First, you might want to use it to get this column delivered to you on a schedule of your choosing. I wouldn’t, because I use AOL, and right now with AOL Q-page has to send the page as “an attachment.” That’s a pain. Plus, why would I want to have my own column delivered to me? But you might, and you might not use AOL.

Second, you might want to put the Q-page button on your web page, if you have one, or your company’s web page, so your visitors are sure to see it. Why make them request it “manually” each time? Why risk their forgetting to come visit? To “Q-page” your page, just click the little line just below the Q-page button and follow the instructions from there.

Third, some of you have been following the development of this small company, in which I hold an interest. This is the latest development. (Also: we’ve moved to our own dedicated server.) What I find most remarkable is that until we reached abroad and hired a 22-year-old Bangla Deshi on a contract basis — Nayeem is his name, and, no, we have naturally never met him — all of the programming for this enterprise was done by my brilliant young friend Marc and his canny canine Looe down on South Beach. (You can see Looe on the Quickbrowse website. We do not ourselves know what Nayeem looks like, but he writes clean code. And at 22, everybody looks good.)

The world has come a long way since the Seventies when a friend of mine, more into Daily Variety than Foreign Affairs, asked of “The Concert for Bagla Desh” — a record you may recall that featured a little girl on the sleeve, designed to raise money for that flood-ravaged, impoverished nation — “What’s with this Bangla?” Yes, she was an appealing little girl, he allowed. But how was it that an entire record album had been produced on her behalf? Who was this little girl? What was the angle?

Nayeem had not even been born by then; Steve Jobs and Steve Wozniak had just about the only two personal computers in the world; and a phone call to Bangla Desh cost . . . well were there any phones in Bangla Desh?

And now Nayeem is writing code that will enable Quickbrowse and its sisters, Q-search, Q-people and Q-page, to assist millions of people around the globe to use the Internet a little more effectively. Or so Looe seems to be dreaming, as he snoozes at Marc’s feet. Looe has been working like a dog.

Tomorrow: Short-Sale Tax Treatment, and More

QUICK $15 — TODAY ONLY

“Fatbrain.com sells computer/tech books and — don’t ask me why — Andrew Tobias books. Follow this link to save $15 on an order of $15 or more: www1.fatbrain.com/offers/tryus/?/from=jae795 . Valid through May 28. You are welcome to reprint this message if you wish, but please say ‘a reader from Lewisburg, PA’ rather than using my name.” — John Stephens, Jr.

Thanks, John. (I can’t vouch for fatbrain.com, having more of a swisscheesebrain.com myself, but I did visit the link, and it would appear that if there’s a $16 book you want today, it will cost you $1 plus shipping.) (Also, I’m kidding about the guy’s name. I just made up ‘John Stephens, Jr.” to see if you were paying attention.)

AND SPEAKING OF BUYING BOOKS ON-LINE . . .

R.T. Schoen (his real name), had this to say about My Three Astonishing Panelists: “Yes, yes, but are you still short AMZN?”

Yes, yes. I am. Some. But I’ve taken a lot of tax losses. The psychology of the thing is that if you short something high enough, it’s easy to stay short as it bobs up and down around and below your entry price. But if, like me, your timing was awful, and you shorted it after it was up eightfold but before it was up twenty-fold, it’s very tough not to take some losses and reduce your risk when you have the opportunity … even if you would never normally buy the stock at this price. (Largely irrational though it is, buying-to-cover is psychologically different from plain old buying.) Also, to its credit, Amazon continues to do a great job — but that part I never doubted. I still think it’s way ahead of itself and risky, though a bit less so at $114 than at $221.

It’s simply not clear yet just how much profit there is to be made in this intensely competitive field. Amazon certainly has as good a shot at it as anyone on the horizon, and has used its inflated stock to take big pieces of other, related companies like drugstore.com. But at $18 billion, Wall Street is assuming an awful lot will go right. It is valuing AMZN as highly as it values fat old profitable behemoth Sears. Both currently are valued at about $18 billion.

Yes, you can say this is sensible: Sears is stuck with all those bricks and mortar. AMZN is the future of retailing. Like a money-losing automobile company versus a profitable buggy manufacturer in 1902. (Don’t hold me to the exact year.)

But wait. How about 1990, say, when almost no one, least of all Wall Street day traders, had any inkling of on-line sales? Back then, Sears had a market cap far lower than the $18 billion valuation it sports today. Throughout the Seventies and Eighties and most of the Nineties, Sears was valued lower than Amazon is today. Yet Sears had a fairly large share of the country’s retail sales. Let’s assume AMZN one day soon will, too. Will its profit margins be so much higher than Sears’s were? And will the barriers to entry in retailing be greater or lesser than those that, partially, protected Sears? It would seem to me that the barriers to entry for on-line sales are a lot lower. And that on-line price competition will be even more intense, because it’s so much easier to go “from store to store” to hunt for the best buy. No need to move the car.

Also, as has been endlessly pointed out, investors in the pioneering automobile companies wound up not being the ones who made a lot of money.

None of which is to say AMZN will not eventually grow into this remarkable market cap, let alone to knock the great job AMZN is doing. Yes, you can buy what it sells cheaper if you simply click a different URL. But AMZN is always likely to provide the best, or near-best overall on-line shpping experience if you don’t mind paying a bit more.

So, yes, I’m still short. But even less than before. Given my knack for bad timing, that probably means it has a lot further to drop.

Have a good weekend!

Some of you, against all reason, are actually annoyed when I am late with one of these daily columns.

I am flattered but perplexed. We are all so swamped! My favorite thing is Saturday’s New York Times because it is just two sections. And there is no Wall Street Journal Saturday! Yay! (There is no Wall Street Journal Sunday, either — but there is SUNDAY’s New York Times.)

Anyway, here’s my excuse. The dog did not eat my homework, but the elevators in the hotel I was staying in last night were so unbelievably slow, I just didn’t have time to get everything done.

Which is a shame, too, because I was all set to write the Secret of Wealth, which had just come to me in a flash — a rare moment of clarity perhaps divinely inspired at the hotel check-in desk — but then I got so distracted waiting for the elevator, and so bemused once I eventually got IN the elevator, the Secret snuck back off into the ethos, like a dream you know you had but can’t remember.

Oh, well. At least I remember every detail of the elevator. (I say “the” elevator, because it seemed as if only one of the eight hotel elevators was actually doing anything. Lines were forming for this elevator that stretched outside the hotel, down Commonwealth Avenue, over the B.U. Bridge, and well into Cambridge. The other seven elevators, I concluded, were faux elevators — trompe l’oeil elevators.) And the detail I remember most was way up at the top, above the red-dot L.E.D. display of the floor, a little rectangular plaque that read “Elevator Beeps for the Seeing Impaired.” This was to inform the seeing impaired — specifically those who could not read the red dot L.E.D. display but could read this little plaque — that the elevator beeps signified the floors being passed. Lest they, or anyone else, think that these beeps — beeps we have all surely come to know by now, as they are hardly exclusive to this hotel’s elevator — were some form of uniquely uncreative, annoying, Muzak.

The other remarkable, distracting thing about this elevator was that — this is true! only the part about the line across the B.U. bridge may be a bit exaggerated — the L.E.D. display was off by two floors. When the doors opened on 7, the L.E.D. display said 9. When they opened on 8 — and with just one elevator, and huge crowds packed into it, naturally there was someone getting off or on at every floor — the display said 10. And so on, consistently, hour after hour, all the way up to my high floor. So there should have been a second little square bronze plaque next to the first: “Kindly subtract two.”

So, no, the dog didn’t eat my homework. But there will be no column today. In place of the empty space you see here, please click Archives, and pick one of the hundreds of columns you may not have read previously. (Perhaps even one related to your money! I do try to do one of those occasionally.)

Or do what I do when there’s a little less to read: Rejoice!

I got to moderate a panel in Washington last Wednesday where I was the oldest but clearly the least wise. My three panelists where Meg Whitman, CEO of E-Bay (whose stock had jumped from 8 to 191 in the prior few months), Richard Owen, who heads up Dell On-Line (which currently sells $18 million of computers on-line a day), and Jay Walker, founder of Priceline.com (of which his personal stake was worth, that day, $9 billion). Jay was on the cover of last fortnight’s Forbes as the modern Thomas Edison.

Our audience were several hundred marketing executives from the mutual fund industry. My main function, as I saw it, was to remind the audience — confronted with the terrors of competition and obsolescence — that cocktails would be served immediately following the conclusion of our panel.

Richard Owen, of Dell, a British national with degrees in mathematics and economics and graduate of M.I.T.’s Sloan school, had turned 34 the day before. He is responsible for Dell’s on-line operations, and those operations are currently responsible, in turn, for 30% of Dell’s sales — the aforementioned $18 million a day. “How long,” I asked him, “before it’s 80%?” He gave a “who knows, exactly” sort of shrug, but casually guessed, “a couple of years.” What does this say for brick-and-mortar computer retailers like CompUSA?

Not that Dell sells through brick-and-mortal outlets itself; but what does this say about the growth of e-commerce generally?

Meg Whitman, CEO of eBay, must be about 43. After Princeton and Harvard Business School, she was a brand manager at Procter & Gamble, then a consultant for Bain & Co. (perhaps the most elite of the managing consulting firms), then senior VP of marketing for Disney’s consumer products division, then President of Stride Rite Corporation’s Stride Rite division (one of Stride Rite’s larger divisions, I’m guessing) — you may remember her launch of the Munchkin baby-shoe line — then President of FTD, the flower people, then General Manager of Hasbro’s preschool division (Mr. Potato Head) and now this.

Jay Walker, meanwhile, 42, doesn’t just control priceline.com, he runs an “intellectual property lab” with a dozen young inventors and a dozen patent attorneys. They are patenting business models, like the one for Priceline. Sure, he’s only worth eight or nine billion today — and most of it in somewhat iffy Priceline stock, at that. But this is one smart cookie. I predict he will one day be a very rich man.

As for his predictions, he ridiculed me when I asked him to predict something 10 years out. Ten Internet years, he noted, was like 100 regular years. It’s hard enough to see a few months into the future.

But looking ahead, he did see “a consolidation of the major portals” (huh? I thought Yahoo was already pretty much the major portal). And there was talk of a wall-sized always-on flat screen with multiple entry points — your whole wall would be the portal.

My panelists barely dignified the Y2K problem when I asked them about it (apparently, it’s being adequately solved — or at least it won’t affect them).

Jay kept talking about voice recognition. (Who needs credit cards? he wondered when I asked how people would pay for mutual funds if they bought them on-line as they do computers. In a few years, you’ll just say into the computer — “Computer! Shift fifty thousand dollars from my Chase account number six oh one five nine three triple zero eight into . . . ” — and it will be done.) I allowed as how the guys who can do impressions — “He sounds just like James Cagney!” — will become immensely rich impersonating others’ voices and draining their bank accounts. This comment was brushed aside without even a smile. (“Where did they get this guy,” I could hear my panelists wondering.)

It would be a rough few years ahead for the assembled, I summed up, as I announced, again, that cocktails would be served directly following the discussion. The world is changing fast. Mutual funds will not be marketed as they are today, and Jay may be working on a patent to sell them better even as we speak. Subtext: retire or get to work.

The good news? You don’t necessarily have to be in your teens or your twenties to participate in all this, though it helps. Take Richard Braddock, 57, former president of Citicorp. Jay hired him to run Priceline.com. Maybe one day my partners and I will hire the president of Exxon to run Quickbrowse.com.

Here’s Chapter 10. (You already have Chapters 1, 2, 3, 4, 5, 6, 7, 8, and 9.)

I remember growing up in an “advertising family” — my dad worked on Madison Avenue. Charles Revson was legend. He loomed almost as large on Madison Avenue as Bill Gates does today in cyberspace. Not that he had the same power, let alone the same influence — it was just lipsticks and nail polish he was selling, after all. He wasn’t reshaping the world. But at the ad agencies he terrorized and the magazines he advertised in (and terrorized), he was the topic of conversation.