Author: A.T.

My recent column of “cheap long distance” was ill-advised (so I won’t compound the error by linking to it) for two or three reasons.

For those of you who missed it, that was the column where I basically just passed on to you a piece of junk e-mail I had gotten with one of those “10-10” numbers offering very cheap long distance. “Even if this one doesn’t make sense for you,” I concluded, “isn’t this a good time to haul out your phone bill, try to make sense of it, and find a way to cut it significantly?”

Well, that part I am happy to stand by. But as to passing on the e-mail, Larry Jensen wrote: “Why did you ever publicize this ‘offer’? I don’t care how legitimate it might otherwise be, I would never do business with anyone who spammed my e-mail box, nor do I recommend that anyone else do so. You’ve expressed a principled position that any junk mail you receive goes into your wastebasket, unopened. I would hope you’d have at least as much contempt for those who see the Internet as a free pipeline for invading our privacy.”

And Brooks Hilliard added: “You should NEVER (need I be clearer?) respond to an e-mail solicitation, much less publicize it. There are some very good reasons for this: (a) If you respond to one, you’ll be put on the responsive list, which will increase the amount of spam you receive. (b) It only encourages them.” (Brooks notes the famous old lady who, when asked whom she’d voted for, replied: “I never vote … it only encourages ’em.”) “But (c) the most important reason is that studies have apparently shown that there is a much higher percentage of fraud by spammers than by merchants who advertise in other ways. It makes sense: (1) they’re breaking the terms of service rules of the ISPs they use to send out the spam, so you know they’re not 100% on the up and up to begin with, (2) they have no known address so you can’t send Lenny out to break their face if they don’t deliver, and (3) their e-mail addresses are either fake, untraceable or both (like the bigfoot.com/usa.net address on this one).”

To wit, Tomas Saulys added: “The number in the spam message is 10-10-629. You can confirm that this belongs to a company called CTS/Worldxchange by looking at their web site: http://www.worldxchange.com/products/pennypln.asp. Then read all about them at: http://www.thedigest.com/shame/cts.html.”

This is a bit scary, because these folks get a terrible review. So if you did decide to try 10-10-629, keep a close watch on your phone bill the next few months and jump on any shenanigans fast. Then again, on the same site, AT&T is accused of forgery, so it’s possible the current charges are overdone. But why risk it? Not least because (as several of you were good enough to point out to me), if you go to www.broadpoint.com, you can register for free long distance. That’s right: free long distance.

The catch is that you have to listen (“or pretend to listen,” as one of you put it) to a 15-second commercial for each two minutes of free calling.

After you register and tell them about yourself – so they can gauge what 15-second spots most effectively to inflict – you just dial 1-800-FREEWAY, punch in your PIN, and … free long distance.

I’m sure these ads would get annoying real fast. And I’m not yet clear what happens after the first two minutes. Do you and the party you’ve called BOTH have to listen to the next ad? But if it works from pay phones, I can see it being more than a little helpful when you’re short of a quarter. I’m eagerly awaiting my PIN to try this out.

#

Chances are, you already knew about www.broadpoint.com. It’s the kind of thing that spreads across cyberspace like a flash of light. But some things are too good not to risk repeating. And so I leave you with one more:

5759    Year according to Jewish calendar
4696   Year according to Chinese calendar (years since 2637 B.C.)
——
1063    Total # of years that Jews went without Chinese food

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BUY AND HOLD

“I have a friend,” writes an e-mail correspondent, “who was a stockbroker (prior to that he was a lawyer). He later made his fortune as his own full-time trader of options, and now is the CEO of a software company. So he’s no idiot. He recently said, ‘I set up little stock portfolios for my children. After I bought the stocks for their portfolios, I just let them be, and didn’t touch them. For my own portfolio, I actively bought and sold stocks, and watched the market closely. AND I’M AMAZED TO SEE HOW MUCH BETTER MY KIDS’ PORTFOLIOS HAVE DONE THAN MY OWN.’ More evidence that the buy and hold strategy seems to be a good one.”

A.T.: Yep.

VARIABLE ANNUITIES

An amazingly expensive way to translate what would have been lightly taxed long-term capital gains into more heavily taxed ordinary income at withdrawal. And yet they still sell like hotcakes — including a not inconsiderable number that get bought for … hold on to your hat … IRAs, which are already tax-deferred. As reported last year in The Wall Street Journal, “17% of the $627 billion in variable annuities are in Individual Retirement Accounts.” The only thing dumber would be buying low-interest, tax-free municipal bonds for an already-tax-sheltered IRA.

EXTROVERTED ACTUARIES

Q. “Do you know the difference between an introverted actuary and an extroverted actuary?”

A. “The extroverted actuary looks down at your shoes when he’s talking to you.”

OK, that was a cheap joke. And not true, either.

Tomorrow: free long distance (in case you’re the last to hear), and an apology for passing junk e-mail on to you.

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“I found the www.companysleuth.com that you recommended particularly helpful. The ‘short interest’ feature it offers on all NASDAQ stocks is particularly useful. My question for you relates to investing in American Depository Receipts. In many cases the performance of a company’s ADRs diverges from the stock price in its home market. For example, Colt Telecommunications quoted on the London Stock exchange has had a significantly different performance the past six months from its ADRs, traded here on NASDAQ. How come?” – Brian Riordan

A.T.: First of all, what’s an ADR? From a U.S. investor’s point of view, it’s a convenient way to buy shares in some big foreign company without having to open a brokerage account over there or persuade his U.S. broker to call up the Finnish Stock Exchange, or whatever. Often, each ADR will represent more than one share of stock in the underlying company. (That stock is held by a custodian, like J.P. Morgan, which takes care of things like getting you your share of dividends.)

That’s the basic idea. And the basic answer to your question is: nevva happen.

ADRs never perform much differently from their underlying securities. The minute they began to diverge in any significant way, international arbitrageurs would jump in and grab the profit to be made from the difference, thereby bringing them back in line.

It is possible for there to appear to be a major discrepancy, however, for one interesting reason: ADRs declare stock splits at times that are totally unrelated to stock splits in the underlying securities. As I say, one ADR doesn’t necessarily equal one share of the underlying foreign security. Especially because London securities sell at much smaller unit prices than U.S. securities, a common ADR might equal 10 shares of the London stock. If the London stock happens to declare a 2-1 stock split, the ADR will simply equal 20 shares of the London stock instead of 10. In the U.S., stocks rarely go over $100 per share without a split, so when an ADR goes into triple digits, the U.S. sponsor may well declare its own 2-1 stock split, and suddenly an ADR only represents 5 shares of the London stock instead of 10.

ADRs are a safe and convenient way to invest in the shares of overseas companies, and any apparent differences in performance should be explainable as (1) currency fluctuation, (2) minor effects of different closing times of exchanges, and/or (3) stock splits in both countries. Comparisons of ADRs with their securities consistently show correlations exceeding 99%.

HOUSEKEEPING NOTE: Currently, an alternative route to this column is www.andrewtobias.com. As of February 1, that will be the ONLY way to reach it. To keep reading, please adjust your bookmark. Also, please note my new e-address: atobias@andrewtobias.com.

I am driving with a (very) expired license to the place where you get your driver’s license renewed. I knew it was expired, not because the state sends out a notice every six years as you’re about to come up for renewal — apparently, they don’t do that in my state — but because the woman at Hertz who asked for my license as I was leaving the lot … just yards from freedom … looked at it and told me it was expired. Indeed, it wasn’t even close. (I guess I hadn’t rented a car in a while. And when was the last time you checked the expiration of your own license?)

I now have added a reminder in Managing Your Money for March 20, 2004 — HEY! YOUR DRIVER’S LICENSE EXPIRES IN 30 DAYS! — but I had not been so organized in 1992 when I got it the last time.

Couldn’t this be done by mail? I called the place listed in the phone book and got a recording explaining that “appointments are available” but not allowing me to talk with a human.

Still, remembering how horribly long it had taken to get the license in 1992 (or was that the 1986 nightmare? I could swear I had been able to renew in 1992 by mail), I was thrilled at the notion of “an appointment.” I pressed “two” to schedule an appointment (or whatever I was supposed to press) and got a dial tone instead.

I called back and this time got a recording that said they were open only Tuesday through Friday, and another that gave me directions to the location nearest me.

I decided not to try for an appointment, as I really had to get the license because I had to get to Kinko’s because … well, I’ll get to that … and that I would just drive very carefully to the location nearest me, about ten a.m., figuring that most people have to work for a living and that they would have queued up about seven a.m. when the office opened. (The driver’s license place is open only four days a week and not on weekends in order to make it as inconvenient as possible for the average taxpayer.)

Uncharacteristically, I followed the directions perfectly and arrived at the location nearest me without a hitch. In the window was a large sign outside an empty storefront announcing that this location was permanently closed, with directions to another one, which did exist. (Might a private company have updated its phone message to avoid sending people to a nonexistent location?) In fact, it not only existed, it was mobbed.

Outside, there was a crowd of people, and several government employees were slowly sweeping up what appeared to be the remains of a few square yards of safety glass — someone had perhaps driven his car into the window, out of frustration, or perhaps there had been a small bomb that exploded — but I ignored all that because I had only one interest: getting in and getting it over with, so I could get on down to Kinko’s.

I will spare you the details — save two, to set the scene. Detail one: A man, fuming, shouting over his shoulder as he sat down on a plastic chair to wait his turn: “So then what was the point of my making an appointment?!” OK, maybe he wasn’t shouting, but the point was clear enough, and it made me feel bad and good and bad all at once. Bad that the wait was likely to be horrible if even the people with appointments were fuming; good that appointments apparently did no good anyway (as I didn’t have one); bad that I was taking some perverse satisfaction from that.

So there I am, thinking how I would reorganize this. I would add two signs. One announcing a $100 express line — for an extra $100 you could avoid the wait. The other announcing that the free coffee and donuts, as well as the funds to remain open on Saturdays, had all come from the rich suckers paying an extra $100 not to wait. (So don’t hate them too much.) Of course there were no free coffee and donuts, and the place was closed Saturdays. But isn’t this pretty much how the airlines have maximized the value they provide? You’ve got the folks in the back feeling pretty good about a $252 round-trip, knowing that the suckers in the front of the plane will arrive at approximately the same time for an extra $1,106. And you have the folks in the front just so happy not to be squeezed into a middle seat with the folks in back. From each according to his ability (to pay), to each according to his needs. It’s not communism; it’s the invisible hand maximizing happiness! Karl Marx, make way for Adam Smith. (OK, I’ll admit the “to pay” I threw in there is not exactly the way Marx envisioned it. Still.)

And now I am going up to two women in front of a computer terminal to try to get some sense — even the vaguest, most general ballpark sense — of how this process worked and how long it might take. One of the two women was doing absolutely nothing, just looking off into space. The other was doing nothing visible but looking with a concentrated, consternated stare at the computer screen.

Could I ask a question?

No, I couldn’t ask a question — couldn’t I see that they were busy?

Apparently, the computer was not working, and my life was on hold while I relied on these two, or on whomever they relied on, to fix it.

I could go on. Suffice it to say that, actually, the whole thing took only an hour. Once I got my turn — even though no one was willing to give me any sense of what would be involved or how long it might take — they actually managed to get me to read some letters from a nifty eyesight machine, then go to the cashier, hand over $16 and get my photo taken (I look like a mushroom, and will until March 20, 2004), wait what turned out to be a miraculously brief 5 minutes or so, and walk out … free! legal! … into the sunny mid-morning air.

Back in the car and down to Kinko’s.

I have a photocopier at home, but not equal to a task like this. My task at Kinko’s was to copy 1,000 days’ phone records, credit card bills, diary entries and tax returns, among other things, so that the New York tax authorities could determine where I really was each of those days. I may think I live in Florida more than half the year, and they may have agreed last time we did this that I live in Florida more than half the year, but now, unless I could prove otherwise, I live in New York more than half the year.

I will spare you most of these details as well (and I expect no sympathy, as you shiver up North) except to say that a few weeks after receiving my 20 pounds or so of neatly organized materials, the New York tax authorities sent a letter commanding me to copy and send a whole new batch of stuff — my bank records, my frequent flier statements — and requesting that I sign a waiver of the statute of limitations (or whatever they call it) so they will have until May of 2000 to complete their determination of the 1995 return.

If I owe something, I’d like to pay it. But there has to be a simpler way of doing all this. Couldn’t they just put one of those bracelets on my ankles and track my whereabouts that way? Or have me call in once a day and verify the area code with caller ID?

Anyway, Kinko’s has some mean copy machines (and unlike the Florida Division of Drivers Licenses, Kinko’s is open 24 hours a day, 7 days a week), and I was out of there in just a couple of hours.

I arrived home, driver’s license in wallet and Kinko’s poundage cradled in my arms like logs for a fire, to find a postal carrier returning a PRIORITY MAIL package I had left in my box. It was properly addressed and stamped with the $3.20 postage, but, you see, it weighed 16 ounces. (It was a book.) Surely you know you cannot mail something that weighs 16 ounces in a mailbox. Surely you know you must go in person to a post office when one is open and wait in line to hand the package to a postal clerk. Otherwise, how will they know whether it’s a bomb or not?

The details of this insanity — which I even got to bring up to Marvin Runyon back when he was still Postmaster General, to no avail — I will spare you altogether, as I have dealt with them in this space several times before.

It’s a great country and I’m a very lucky guy. But it’s not quite perfect yet. Not every aspect of the government has been reinvented. We still have a couple of months’ work ahead of us.

HOUSEKEEPING NOTE: Currently, an alternative route to this column is www.andrewtobias.com. As of February 1, that will be the ONLY way to reach it. To keep reading, please adjust your bookmark. Also, please note my new e-address: atobias@andrewtobias.com.

I won a prize. Not from the Publisher’s Clearinghouse Sweepstakes, although I expect to hear from them any day, but the kind of prize one can only dream about: a tax-free prize. Or at least that was my recollection of the tax code.

Ordinarily, winnings and awards and prizes are taxable. Win $1,000 as “employee of the month?” Taxable. Win the lottery? Taxable. The A.S.P.C.A. raffle? Taxable. You especially don’t want to win that lavish $20,000 Mediterranean cruise, because if you do, and you accept it, you owe maybe $7,000 in taxes (not to mention what you’ll blow on all those needless trinkets you find yourself buying while ashore).

But a “civic” or “literary” prize — a Pulitzer or the Nobel, for example — is different. I did recall that Congress made an exception for those.

And sure enough, they did.

For your prize winnings to be tax-free, you simply have to meet these tests:

1. It must have been won for outstanding educational, civic or literary achievement. (I had written a magazine article.)

2. It must have been won without your trying to win it. I mean, it’s OK to have devoted your life to peace … but if you actually applied for a Nobel Peace Prize or had to have done something specific to win it, like 10,000 push-ups, your winnings would be taxable. (Not only had I not made any active attempt to win this prize, I had never heard of it.)

3. It must require no service on your part; i.e., you don’t have to go around for a year with a crown on your head as a spokesman for something. (My prize — $1,000 — requires nothing of me. It fell into my lap as if dropped by a bird I did not even know was passing overhead.)

Now, as I say, it was only $1,000. And yet the notion of tax-free money … well, to a poet who had won a poetry prize, it might not mean much. Poets’ hearts sing to loftier notes — and they tend not to be in high tax brackets to begin with. But to a financial writer. Ah, the music, the harmony, the peace. Bliss.

Except that there is one other requirement:

4. For it to be tax-free, the money must be assigned to a government agency or charity before you even touch it — and you can’t take a charitable deduction for it. In other words, it is tax-free so long as you never get a penny of it.

Hello? So why did anyone write all these regulations in the first place? I can trim that section of the tax code down to 20 simple words:

“All cash prizes and awards, and the fair market value of all noncash prizes and awards, are taxable as ordinary income.”

I am told that the U.S. is the only country in the world that taxes Nobel prizes. This is not to say you shouldn’t keep trying to win one or that if you do win one, you should be anything but grateful. I wouldn’t even mind the tax bite at all except that the tax writers have teased us so. It takes your average mass-market tax guide hundreds of words to explain (in lay terms) “When Prize Winnings Are Not Taxable.” But really the answer is: never.

#

Incidentally, you quarterly estimated tax filers: Today’s the day your fourth estimated 1998 tax payment is due. Have a nice weekend.

HOUSEKEEPING NOTE: Currently, an alternative route to this column is www.andrewtobias.com. As of February 1, that will be the ONLY way to reach it. To keep reading, please adjust your bookmark. Also, please note my new e-address: atobias@andrewtobias.com.

Yesterday I told you how you could buy books (physical ones) cheaper than Amazon – guaranteed – and earn “bookmarks” in the process. Last week, though, I was touting free books (albeit really old ones, minus paper and bindings). As usual, several of you knew a lot more about this than I did.

Wrote Andrew Tefft: “For more free books, check out the Project Gutenberg web page at http://sailor.gutenberg.org/. This is what I thought your column would be about when I read its title. Project Gutenberg books (including all those you mentioned) are in the public domain and thus can be offered free by anyone, and downloaded free from many places. Comparing the formatting of 20,000 Leagues from Project Gutenberg and 1stbooks.com, they appear identical (file names, line breaks, heading spacing) but half of the last paragraph is chopped off (same problem with all the other ones I looked at) in the 1stbooks version, so I can’t tell if they retained the list of changes added by the Project Gutenberg editor. In other words, 1stbooks is getting at least some of these from Project Gutenberg – but where is the credit for the hard work of those volunteers? Does 1stbooks contribute anything back to the project? If they do, they keep it secret. Someone not familiar with Project Gutenberg is led to believe that the people at 1stbooks typed in or scanned these texts themselves.

“Naturally there someday may be a market for non-public-domain e-texts, but if you’re going to get the public domain ones now, the Gutenberg Project deserves to be supported. Monetarily, by volunteering, or just by spreading the word. Am I just complaining about capitalism at work? Perhaps – but the scores of volunteers helping Project Gutenberg can get a lot more books online than any company is going to be able to afford to do, whether it’s giving the result away or selling it.”

Thanks, Andrew.

Meanwhile, Pieter Lessing writes that he not only uses Project Gutenberg, but that he downloads titles from the Internet “in a form usable by PalmPilots – I carry two full novels on my PalmPilot at the moment – handy while waiting at the carwash!”

In my view, this can mean only one thing. He is either a very fast reader or has a very dirty car.

HOUSEKEEPING NOTE: Currently, an alternative route to this column is www.andrewtobias.com. As of February 1, that will be the ONLY way to reach it. To keep reading, please adjust your bookmark. Also, please note my new e-address: atobias@andrewtobias.com.

From Andrew Frisch: “I’ve been following your Amazon tales and the ensuing sidebars for some time now. Since you promoted booksamillion.com today, I figured I’d let you know about another on-line bookseller and some interesting things it offers: www.books.com – I’ve actually been using them since 1992, when they were a telnet-based business, before the web thing caught on. They offer two features I appreciate. The first is ‘bookmarks,’ which are earned with purchases, and are accrued towards free books. It works out to about 5 percent if you use them efficiently. In college and grad school, I used them for most of my textbooks, which proved to be significantly cheaper than the school store, and helped build up those bookmarks rather quickly.

“The second feature borders on trivial but is kind of nifty. They supply you with a button to press to compare prices to both Amazon.com and BarnesandNoble.com. If either price is lower, which it rarely is, they automatically lower theirs to beat it. Typically it saves you a penny or two, but sometimes it’s a few bucks. Definitely worth the click.”

A.T.: Well, I tried this, naturally enough searching on, well, me. And it came up with only two weird selections for Andrew Tobias, I think because a middle initial – P. – has somehow crept into the world’s databases for me and I can’t get rid of it. (Never mind that it is my middle initial – I don’t use it.) But when I searched on “Only Investment Guide,” sure enough, I got my book, offered at $10.35. Which sure beats the $13 retail price. And then I clicked on Price Compare and – to my surprise – found that while it was $10.40 at Amazon.com, it was $7.80 at barnesandnoble.com, so suddenly Books.com had switched its price from $10.35 to $7.62.

That sure beats trudging from store to store and haggling the old-fashioned way!

One might think this sort of thing bodes ill for the fat profits Amazon will eventually make, not just on books but on videos and clothing and everything else it will eventually help you buy – the Internet is likely to make retailer profits razor thin on just about everything – but even with the stock up more than four-fold in the last eight weeks (and about 24-fold in the last year or so), AMZN enthusiasts are not hard to find.

To wit, this from Motley Mike:

“I think the power of Amazon is not just their book selling, but their music, movies, and their potential to sell more things. Have you checked out their video store – it is great. All kinds of search capabilities, reviews, etc. Anyway, just wanted to tell you that it’s too bad about your misguided shorts, but I’m glad you did short the stock because it’s guys like you that help Amazon-longs like me! Have a great day. Mike.”

A.T.: And here’s the thing. Amazon is terrific, and I have long assumed they’d be selling lots – indeed, everything – besides books. It’s not a tulip or a scam. Good people and good execution deserve success.

But it is not the only good company in the world.

Basically, the stock market today is giving people a choice, like that game show with the hidden prizes behind the three curtains. Here’s today’s choice (just two curtains):

Curtain #1: You could own all – ALL! – of Amazon.com. It would be 100% yours. All its assets, all its debts (I don’t think it has debts), its technology, its cash, its inventory, its brand recognition and goodwill and future profits – all yours!

Curtain #2: You could own all – ALL! – of Federal Express and United Airlines and the New York Times Company and Barnes & Noble. They would be 100% yours. All their assets – the planes and trucks and printing presses and retail stores and Web sites and technology and worldwide brand names and cash and profits – and all their debts (though if one went bankrupt, it wouldn’t affect your holdings in the others). Plus, just to make it as appealing as possible, you’d get a check made out to you personally for $1 billion. Truly, all this would be yours.

OK, this is a rare moment. WHICH CURTAIN WOULD YOU CHOOSE?

Music, please.

Close-up on sweat on contestant’s brow.

Mike chooses … Curtain #1!

And the crowd roars in agreement.

Because of course as of this writing, that’s just how the crowd is valuing the two prizes. Amazon is valued at a little more than $28 billion (down 10% from its high, no less). And the other four companies, combined, are valued at just under $25 billion. So even with that extra billion in cash I threw in to make it interesting – even these days $1 billion buys a lot – Wall Street would tell you Curtain #1 is more valuable than Curtain #2.

And maybe, given Amazon’s bright prospects, this is true. But it’s not as though FedEx’s prospects are so dim. Or that the New York Times doesn’t have a worldwide franchise whose value could grow. Or that even the bright people at Barnes & Noble and United Airlines won’t be able to find ways to grow their businesses. And it’s not as though that measly billion in cash I threw in would have to be buried in a mattress, either.

So what Mike is saying is that Amazon’s future is not just very bright, as I think it is, but that to pay $30 billion or so for the whole thing is what he’d do if he had $30 billion.

Personally, I’d spend $1 billion launching a competitor to Amazon ($35 to register the new Web site, $999,999,965 to hire Pixar or somebody to program it and make it fun) and use the $29 billion left over for a really great party.

Tomorrow: An Even Better Source for Free Books

HOUSEKEEPING NOTE: Currently, an alternative route to this column is www.andrewtobias.com. As of February 1, that will be the ONLY way to reach it. To keep reading, please adjust your bookmark. Also, please note my new e-address: atobias@andrewtobias.com.

I am not recommending this, I have not tried this, and I apologize if you already got this e-mail solicitation yourself. But if you haven’t, and you have a hefty phone bill, this could actually make sense.

Sure, there is a grammatical error in the very first word — always a bit off-putting (and sure, they misspelled “interstate” and Israel).

And sure, they round UP to the nearest minute (so a 2-second phone call counts as a full minute), and they charge seven cents, not five, after the first couple of months — plus a $4.95 access fee in any month when you’ve used the service.

And sure, intrastate calls are nine cents, not seven or five cents.

And you have to dial those stupid extra digits each time you want to make a call. Sure.

But with the various memory speed-dial functions a lot of phones have now, the extra digits may be no trouble. And “canceling” this service is supposedly as simple as not using it. So what’s to lose?

And if you do make a lot of calls, you could save some real money. Say you now get one of those dime-a-minute rates yet still rack up $100 a month in out-of-state calls. With the plan these folks offer, you’d save $300 a year. (And the truth is, some of you continue to pay a lot more than 10 cents a minute, in which case the savings would be greater still.) That may not sound like much — $300 a year. But putting it into a Roth IRA, say, if you’re 28 today and could compound it at 10% a year, would enhance your resources by $132,000 by age 68. (Never underestimate the value of a little scrimping and saving.)

So — with that background — here is the e-mail I got:

#

19-Dec-98 04:11 EST
Sb: Long Distance for 5 cents per minute anywhere in the USA!
Fm: “5 Cents/Minute” > INTERNET:extreme_discount@bigfoot.com

You’re [sic] name has been received as a person interested in money saving products. If you have received this e-mail in error, please e-mail us at mailto:trash10@usa.net.

Please e-mail questions to mailto:request14@usa.net

HOW WOULD YOU LIKE TO SAVE MONEY ON YOUR PHONE BILL?

Without changing carriers, you can NOW DIAL
10-10-629 +1+area code+number

First time users will be asked to enter a project code.
The project code for you to use is: 55355

You will now hear a recording announcing your rates.
5 cents per minute 24 hours a day 7 days a week!

NO contracts
NO signing up
NO minimum usage
NO switching carriers

Here are some 10-10 numbers advertised on TV or in print. Let’s see what you get:

Depending on the time of day you call, and how long you talk, rates vary from approximately 30 cents to 10 cents a minute. Rates vary according to the time of day, and whether it is a weekday or weekend.

10-10-220
~~~~~~~~~

99 cents up to 20 minutes, then 10 cents each minute there after [sic]. If you talk less than 20 minutes, you still pay for a FULL 20 minutes. The average phone call is 3-5 minutes. If you talked 5 minutes, you are now paying about 19.8 cents per minute.

10-10-811
~~~~~~~~~

The dime line. 10 cents a minute. [minimum 3 minutes] A one minute call is 30 cents.

10-10-629
~~~~~~~~~

5 cents per minute nationwide for all iterstate [sic] calls and 9 cents per minute for all intrastate calls. This is for BUSINESS & RESIDENTAL PHONES RIGHT NOW!

INTERNATIONAL CALLERS
~~~~~~~~~~~~~~~~~~~~~

DIAL 10-10-629+001 + AREA CODE+ NUMBER.
FIRST TIME CALLERS WILL BE ASKED FOR YOUR CODE: 55355

Listed are examples of what you will pay per minute, no additional charges for international calls.

Argentina .45 Australia .14 Belgium .15 Brazil .46 Canada .07 Chile .29 Croatia .39 France .14 Germany .14 Guyana .77 Honduras .53 India .67 Isreal [sic] .22 Italy .23 Japan .26 S. Korea .35 Mexico .15 Myanmar 1.25 Netherlands .14 Nicaragua .49 Norway .17 Poland .35 Russia .43 Sierra Leone .95 Saudi Arabia .87 S. Africa .47 Thailand .69 Yugoslavia .68 United Kingdom .09

QUESTION: How will I be billed?
As you are now, through your local telephone company, on the same monthly phone bill that you receive now.

Question: Can I use this for both HOME OR BUSINESS:
YES, SAME RATE, 5 CENTS PER MINUTE 24 HOURS 7 DAYS A WEEK.

Please e-mail questions to mailto:request14@usa.net

DISCLAIMER:
10-10-629 is only available in the United States. When first using this service you will hear a recorded announcement confirming your rates. Calls are billed in 1 minute increments with partial minute usage rounded up to the next full minute. Make unlimited calls for 5 cents iterstate [sic] and 9 cents per minute for intrastate domestic calls for the low monthly payment of $4.95 access fee for the first 60 days of service. After the first 60 days, make unlimited calls for 7 cents iterstate [sic] and 9 cents per minute for intrastate domestic calls for the low monthly payment of $4.95 access fee. The monthly access fee is assessed per line. All fees and charges will be included on your local phone bill. If you do not use this service in any given month you will not be billed the 4.95 fee. This service may not be available in all areas and is subject to tariff. All rates are subject to change and right is reserved to limit or deny service in accordance with tariff conditions.

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Even if this one doesn’t make sense for you, isn’t this a good time to haul out your phone bill, try to make sense of it, and find a way to cut it significantly?

From Jonathan Edwards: “It’s a fundamental tenet of investing that, over time, small cap stocks outperform large cap stocks. One might be tempted, then, to invest in small cap-oriented mutual funds. But it’s not clear whether the studies that demonstrate the superiority of small caps assume that you hold them once they become big caps or sell them and invest in other small caps. If you bought Microsoft in 1986 and held it, you did well. But a small cap mutual fund that bought Microsoft in 1986 has presumably long since sold it since it doesn’t meet their small cap investment guidelines. Do you (or your correspondents) have any idea whether one can follow the small-cap-mutual-fund path to riches?”

One of my correspondents, Less Antman, does indeed have a very clear view. He writes:

“The belief that small stocks outperform large ones may be more of a fundamental myth than a fundamental tenet of investing. The academic studies were incredibly flawed, failing to take into account the enormous spreads between bid and ask prices on lightly traded stocks and the historically high trading costs. All of them assumed that investors repeatedly traded in the smallest stocks without incurring ANY trading costs whatsoever, turned over their portfolio at blazing speed, and paid no income taxes back in the days when tax-sheltered brokerage accounts didn’t exist. David Dreman’s recent revision of Contrarian Investment Strategies [yours for $17.50 from www.amazon.com or $15.75 from www.booksamillion.com] did an excellent job of identifying the bogus nature of the ‘small stock advantage.'”

In the real world, Less notes, small stock mutual funds have a consistently inferior historical record to large stock mutual funds, primarily because of higher management and trading expenses. (In the investment horse race, the mutual fund with the lightest jockey – the lowest expenses – has a huge advantage.)

“The traditional 2% advantage of small stocks over large stocks disappeared in 1982,” Less continues, “not surprisingly the year that Ibbotson Associates [a respected arbiter of such things] switched from artificial indexes of small stocks to the actual results achieved by the DFA 9-10 stock index fund (it invests in the stocks with market capitalizations in the ninth and tenth deciles, meaning the smallest 20% of market capitalization). The DFA fund underperforms the index it was intended to duplicate – the one that beats big cap stocks by 2% – by approximately, SURPRISE!, 2% per year.

“Finding a terrific little company with a product you believe in and then holding on for years could make you rich, but habits of savings, diversification, and patience during bear markets are much more likely to help you achieve your goals. Small stocks can be a good diversification tool, since small and large stocks don’t perform in identical fashion, but there is no magic in small stocks. Buy and hold stocks, or buy and hold mutual funds, and you’ll do well. Short Amazon because you’re smarter than Mr. Market, and you’ll be forced to write daily commentaries to pay your food bills.”

Ouch.

Early Morning Readers: If this appears to be the same column you read yesterday, then please click here to see what wound up being yesterday’s column – we switched them.

I have the estimable Brooks Hilliard to thank for this one. It’s a peek into the future – but also a way to get free books right now. (You supply the paper if you want to print them out.) Ever read 20,000 Leagues Under the Sea? Want your kid to read Tom Sawyer or Huckleberry Finn? Aesop’s Fables? How about Adventures and Letters of Richard Harding Davis? (He was the ultimate foreign correspondent at the turn of the century.)

Amazingly, these things download very fast, at least when you choose “plain text.” And while the selection is still very limited – so this is more of an amusement than something you are likely to rely on to buy books – it is, as I say, a taste of the future.

Check it out: www.1stbooks.com.

Of course, most of the books you’ll find there come under the heading of “cheap” rather than free.

According to Brooks, who has researched this for his own monthly e-newsletter, “authors earn a 40% royalty on sales, which – even at low prices – is often more per book than they get from traditional publishers. Most books are available for downloading in a choice of formats including Adobe Acrobat (which preserves the original ‘look’) and one or more word processing formats. In either case, the buyer can either print them out or read them on screen. Because First Books has no significant incremental costs for each sale other than the author’s royalty, it can keep most of its prices under $10.”

And now, as if free books were not enough for one day’s free column, how about free Brooks? Namely, a free subscription to his newsletter, CEO’s Web Review? Just click here to see his page and then, if you’re interested, have it e-delivered on the 20th of every month. It’s succinct and one of the few e-newsletters I find short and sweet enough to be welcome.