Author: A.T.

My good friend Clint is the man to call if your sewer is backed up (he’s one of Mr. Rooter’s most promising franchisees) . . . he built me an outdoor shower once as a house gift (others bring Zabar’s coffee or salmon, for which Charles and I are very grateful; Clint brought pipe and a soldering gun) . . . and, I now discover, he likes bees.

His apiary philosophy has always been: I don’t bother them and they don’t bother me. Plus, he and his friend eat a lot of honey. So last year he called and ordered 4 hives.

Bee hives — unless this whole thing was an elaborate put-on — are quite inexpensive and are delivered by mail. Mail order bee hives. (“The Post Office calls real quick when your package arrives,” Clint tells me.) Each hive costs only about $50, if I remember this properly, and contains around 20,000 bees. One of which — the Queen — is in her own separate little compartment. Properly tended, each hive will ultimately house 80,000 bees.

“What happens to the bees when they die? Where do they go?” I asked Clint.

“The other bees throw them out of the hive.”

OK.

“And the honey?”

Far from dripping down to some clever collecting pan, as I had expected (isn’t gravity what moves maple syrup to market? And isn’t maple syrup right next to honey in the food chain?), the bees apparently put it upstairs, above their living quarters.

“How do they know to do this?” I asked.

They just do, apparently. And this year Clint expects to get about 100 pounds (jars?) of honey from his four hives.

“They sell them by mail?” I asked again, not quite ready to let this go.

Not only that, you have a choice of buying them in either the one-pound or the two-pound size. (This is exclusive of the weight of the apparatus they come in — it’s just the bees.)

Even the unflappable Clint had apparently asked, bemused, when he ordered them: “How do you weigh bees?” After all, aren’t they airborne much of the time? Do you whistle real loud to get their attention and then say, “Now everybody, just SIT DOWN for ONE SECOND!”?

Clint says the woman he was ordering from did not find the question amusing and just ignored it.

And now you are wondering — and I am going to dispel that wonder — what you do when it’s time to separate the honey from the bees. Basically, in this case, you call the same man you’d call for any other tough, potentially unpleasant job: Mr. Rooter.

Clint and his friend don the stuff you see in the movies — though Clint doesn’t worry about doing it too carefully (“I don’t bother them and they don’t bother me”) — and they do that maneuver we’ve all seen on the Disney Channel.

Themselves.

And this last time — with 80,000 bees buzzing around him until the bell sounds to signal the end of the fire drill and it’s OK for the bees to go back into the building — a bee actually stung Clint for the first time in his life.

No big deal, he said. (This is a man who rides his bike 20 miles to a yoga class. A little bee sting is not something to get all excited about.) Except that he began to feel funny and swell up and his doctor said to get to the Emergency Room right away and he now has to carry one of those “bee pens” with him wherever he goes, to inject himself in case of emergency, because it turns out Clint is allergic to bee stings.

Does this mean he and his friend will be auctioning off the hives on E-Bay? (And would that make them e-bees?) Will he revert to buying his honey at the Safeway like everyone else?

Hardly. Clint remains yoga-calm in his apiary philosophy. And I think the bees — with the obviously exception of that one socially maladjusted terrorist worker bee — sense it. He doesn’t bother them, and they don’t bother him.

As soon as I get off this airplane (I’m writing this on a computer at 37,000 feet, which is almost as amazing as the way bees make honey), I am naturally going to the Internet to find bee-hive mail order sites. I am not suggesting any of you — let alone I — go out and order bees. (I’d like to hear what the condo association would have to say about that.) I just marvel that there is a whole world out there beyond the pavement. And someone who actually knows how to unclog sewers. And what a phlange is. (I could look that last one up, but I like to retain the mystery. Spell check tells me it’s actually spelled “flange.”)

Craig Daniger: “Hurry up with the next chapters!”

Thanks, Craig. Glad you’re enjoying it.

OK — Here’s Chapter 8. (You already have Chapters 1, 2, 3, 4, 5, 6 and 7.) This is the chapter about the nuts and bolts of the cosmetics business, circa the 50s and 60s. For example:

“Note the dynamics of ‘economy sizes.’ In 1962 you could buy three times as much Revlon Velvety Nail Enamel Remover for sixty cents as you could for thirty-five cents. But you weren’t hurting Revlon; the extra two ounces, including the larger package, cost a mere 3.3 cents. The markup on the extra two ounces was even greater than on the first ounce.”

Buy in bulk. It’s better for everybody.

Speaking of which: Last month I went to the Sharper Image web site and saw they had auctions. I put in to buy the super deluxe roll-on airplane suitcases they sell for $289 or more. The bidding was up to $90 with several days to go, so I bid $130 — for 3 of them — never expecting to get even one. Got all three for $100 each. I now glide effortlessly through the airport and have half my Christmas shopping done.

In my April 30 column I said that if Bill Gates had invested merely one-millionth of a penny at 5% a thousand years ago, he’d have had $15 billion today. Of course, he has a lot more than $15 billion, but that is not the point. The point is: Could that possibly be correct? Could I possibly have calculated that right?

Sheepishly: no. Thanks to John Ebert for pointing this out. “I think you meant ONE-BILLIONTH of a penny,” John writes. And indeed he is right. I was not overestimating the power or compound interest but, rather, underestimating it — a thousand-fold. Had Bill invested the millionth-of-a-penny at 5% as I posited, he’d have $15 trillion today, which actually is more than he has — indeed, it is actually about double America’s gross domestic product.

It all comes back to Mary Poppins, doesn’t it? (“When you invest . . . your . . . tuppence in the bank . . . safe . . . and . . . sound . . . Soon that tuppence . . . safely . . . invested in the bank . . . will comPOUND!”) HOW CAN YOU LEAVE THE TV ON WHEN YOU’RE NOT WATCHING IT AND WASTE PENNIES OF ELECTRICITY THAT COULD BE WORTH BILLIONS TO YOUR GREAT-GREAT-GREAT-GREAT GRANDCHILDREN?

(In case you missed it, this all pretty well ties into yesterday’s column.)

Larry Jensen: “Your April 30 column played with the long-term power of compounding. I have another example that might temper this ‘astounding’ power:

“Suppose, while the three wise men were travelling to Bethlehem, a fourth wise man stayed home and deposited the equivalent of just one dollar in a trust fund for humanity. Suppose the trust fund earned a very modest return of 2.16%. (I’m choosing this rate for convenience. Using the Rule of 72 — or some more complicated math with exponentials — 2.16% will double your money every 33.3 years, or three doublings per century.) After two millennia, that dollar would have doubled 60 times, to the mind-boggling total of 1.15 billion billion dollars, or about $230 million for every man, woman, and child on the planet!”

[My own calculations show that the Rule of 72 is not completely precise, and that, over 2000 years, small discrepancies can magnify. It actually comes to 3.6 “billion billion” dollars, and change.]

“But it’s reality-check time. While I don’t know of a source that lists the net worth of the planet, it’s reasonable to guess that it’s not nearly $230 million [let alone $600 million] per person. That clearly implies that one dollar has NOT been able to remain invested, compounding at even this tiny rate of return, for the last 2,000 years. Consumption, inflation, depreciation, wars and disasters — what a physicist would simply call entropy — are processes that have been more than able to dampen the powers of compounding over the centuries.

“Something to remember when Wall Street implies that everyone will be able to retire a millionaire by investing just a few dollars each week.”

Larry believes that to have a comfortable, secure retirement, it will be necessary to save and invest more than a few dollars.

“As a late Boomer,” he concludes, “I remain concerned that the great bull market of the Eighties and Nineties will turn into an equally long bear market, when money starts flowing out of private retirement accounts at the same time that Washington is called upon to redeem, out of current receipts, all of the IOU’s that are piling up in the Social Security trust fund. I also worry that the philosophy of ‘soak the rich’ will find ample opportunities to penalize me for my thrift.”

These are reasonable worries.

Our hopes for avoiding that equally long bear market are: continued peace (well, relative peace) combined with continued astonishing technological advance spreading increasing productivity and prosperity throughout the globe (free trade and market economics being imperatives if this is to happen) — and, ultimately, 500 million middle-class Chinese and Indian 40-year-olds, mere teenagers today, who will by then be eager to buy our shares of Coca Cola and Gillette in hope of financing their retirements.

It’s also worth pointing out that the pace of productivity growth in the first 1500 of the 2000 years Larry has chosen to look at was essentially nil. And what wealth there was accumulated went mainly into building churches and forts and stuff, not labor-saving machines or research and development. (Well, a lot of R&D in the alchemy department, but this proved to be a long, unproductive dead-end.) But you start adding the printing press and the steam engine and electricity and microchips and suddenly you’re in a whole new ball game. Can investors reasonably expect 15% or 20% a year? (Or, as of late, 10% a month?) No way. Need they expect a reversion to some 2% Dark Ages mean? Not that either. (But might the market at some point drop 50%? Sure. It always used to. And rarely has it been as robustly priced as it is today.)

Have you checked the Dell market scale lately? As of yesterday morning, Dell outweighed the total market cap of Apple Computer, Sony, Kodak, Wrigley, Toys R Us, FedEx, and Homestake Mining . . . combined.

That’s all I have to say this morning. A picture (let alone a blinking, moving picture and our silent “thunk!”) is worth 1,000 words.

Imagine if the music stopped every 30 seconds as you listened to your car radio and, to get the next 30 seconds, you had to reach down to punch a button on the radio console. And then wait 10 seconds. And then again, and again, and again.

Forget that!

Yet isn’t that sort of what you have to do now if you’re searching with one of the 411 “white pages” directories on the web? I use the one on AOL. And it’s terrific. Except that it only gives me 5 names at a time!

That’s fine if I’m searching for Anton Shevarnadze in Iowa City.

But what if I’m searching for Michael Smith (or Mike Smith or M Smith) — in New York?

Do you know how frustrating it is to have to click “next” after each five, and then finger-strum? (You’re supposed to be reading all the ads, which is why they make it so slow, while you wait for the next five.) And then again for the next five? And the next?

My friend Marc has fixed all this. (It was actually his dog Looe’s idea.)

Last month I directed your attention to a new site I have a stake in called Quickbrowse. It’s still in a sort of beta phase, and if you all try it out at exactly the same time this morning it will slow to molasses. (We will shortly upgrade our server.) But BOY has it come a long way in a month.

It’s now three things (soon to be four):

Quickbrowse – for surfing

Q-Search – for searching

Q-People – for finding Michael Smith in New York

Basically, all it really is is a simple tool for building one long — sometimes very long — web page that you can look at all at once without interruption.

The only sensible way to find Michael Smith in New York from now on (whether with the AOL people finder or any of several others) is by using Q-People as your portal to people-finders.

The only sensible way to search for information on Yahoo and Altavista and Lycos and the rest — unless you actually like being interrupted after every 20 “matches” — is by using Q-Search as your portal to seach engines.

And if you like to see the same set of web pages every morning — Dilbert and the sports page from your local newspaper and the Wall Street Journal and, dare I even dream it, this column — the only sensible way to do it is by using Quickbrowse as your portal.

(There’s actually a lot more to Quickbrowse, as my April 6 column tried to explain. You can set it up to email you various “collections” of web pages at specific times each day or week. You can have it send you the special weekend airline deals a minute after they’re posted. You can turn “images off” for faster browsing. And there’s an “Alt-Tab” trick — Ctrl-F6 with AOL — that’s a total snap to use and makes reading on-line newspapers far more efficient.)

We have an interesting corporate structure with Quickbrowse. Looe basically calls the shots and sets the broad strategy. But, being a dog (and of indeterminate lineage), he does not write clean code. Marc does that. David feeds Looe (and cheers on Marc). I feed Marc and David (until we figure out the revenue model, which is presumably to lose an ever-increasing amount of money and watch our stock soar off into the stratosphere).

In the last column I suggested that, given our dim prospects for profits any time soon, we would be willing to sell 1% for $1 million. This was a joke. Three of you, undeterred, inquired about smaller shares.

But we are having fun building this, and encourage you to use it and provide your feedback — to Looe (just click beneath his photo), not me.

Blake Meyers: “I found your calculation of Bill Gates’ income since time began to be quite remarkable. [Click “Gates $$$ Clock” at left, and note that it was broken for a while because we forgot to account for the last split.] However, in discussing this with my officemate, we agreed that the real calculation should include compound interest. After all, Bill is savvy enough that he would put his money in an interest-bearing account, even if he was quite young when time began. Perhaps you could calculate how much he much he would have had to save each year, assuming a conservative rate of, say, 5%, to end up with the little pile of money that he has today?”

→ Good point. Though the investment choices billions of years ago — even 1,000 years ago — were quite limited. But the power of compounding never ceases to astound. (Me, anyway.) Do you know that if Bill had been born just 1,000 years ago, and if he had invested a mere one-billionth of one penny — not every year, just once — it would have grown by now, compounding at 5%, to $15 billion? Still not as much as he has today, but had he been able to bump the return up just a tiny bit, to 5.2%, he’d have over $100 billion.

This is why it pays to save when you’re young, even if you can’t count on living 1,000 years. (Neither, I think, should everyone NOT count on it — technology is racing along.) And it is also why the 20% and 30% annual returns people have come to expect from stocks . . . or in some cases 20% a month these days. . . are wholly aberrational and perhaps even a little worrisome. Five percent, let alone a mighty 5.2%, only seem low.

Rich Cullen: You wrote about gift certificates [April 12]. Well, the Walt Disney Co. has something like that called, ‘Disney Dollars,’ which is a printed currency that can be used in their theme parks and Disney Stores throughout the world. Of course, people use this currency. But many, especially ‘Disneyana’ collectors, hoard their ‘character cash’. Now how’s that for marketing?!”

George Berger: “My own pet peeve about gift certificates is that most of them have expiration dates. If you don’t use them within a year or two, the company gets to keep your money without rendering any services. I won’t buy them if they have expiration dates.

“A nice alternative I figured out is American Express Gift Cheques. These are basically pretty travelers checks, intended for use as gifts. I recently wanted to give a friend a Harry and David’s Gift Certificate, but since I wasn’t sure she would enjoy Harry & David’s, I instead sent her a gift cheque along with a Harry & David’s catalog. I included a card explaining that I was sending the cheque in lieu of a gift certificate (so as to make it seem a little less like just a cash gift), but explained that if there was anything else she would prefer to buy for herself she could feel free. She ended up ordering from the catalog, but this way she got to keep the change. (Disclaimer: Believe me, it is purely coincidence that I am currently working for American Express as a consultant.)”

Michael Roxborough:  “With the current market cap of etrade [about $12 billion last I looked, roughly triple the value of United Airlines], you could own controlling interest of every listed company on the stock exchange of Thailand. Would you like to own all of etrade or control an entire country??”

→ Well, would I actually get to control the country? Could I make all its citizens buy my books?

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.

There are actually a lot of good things to say about Mississippi, and I don’t mean just Elvis Presley, William Faulkner, and Eudora Welty. There are a lot of awfully nice people. There are the magnolias. There is the Reverend M.C. Thompson, Jr., pastor of the Mt. Nebo Missionary Baptist Church in Philadelphia, Mississippi — a church that was burned by Klansmen in the summer of 1964 and then rebuilt — whose singing could make anyone a Baptist. And there are the good race relations in the state, arguably among the best in the nation.

I was in Mississippi for a brief part of Jesse Jackson’s 8-day statewide bus tour. The service at Mt. Nebo was to commemorate the deaths of Michael Schwerner, Andrew Goodman, and James Chaney, the three young men (two white, one black) murdered that summer as they joined 1,000 students in trying to register blacks to vote.

It is Reverend Jackson’s view that it’s no longer about race in Mississippi. The good people of that state get along just fine, for the most part. It’s about economics. And that affects both blacks and whites.

Did you know that Mississippi is last in education — 49th or 50th — but that its powerful senator, Trent Lott, thwarts legislation that would help build and modernize Mississippi schools and fund more Mississippi teachers? That it’s the poorest state in the nation, but that Senator Lott opposed the hike in the minimum wage from $4.25 to $5.15 and opposed hikes in the earned-income tax credit for the working poor? (Mississippi does have a spectacular new air conditioned ultra-modern prison in Yazoo City — about the best prison facility money can buy — so you can’t accuse the state’s leaders of doing nothing for the people.) The good senator has every right to oppose these things and the Family Leave Act and all the rest. He has every right to associate with the white supremacist Council of Conservative Citizens (the CCC), a group that even the John Birch Society has disavowed, and to write articles for its newsletter. But it was Reverend Jackson’s point that the good people of Mississippi have every right not to reelect him.