Get into Buffett’s Head January 28, 1999February 12, 2017 If you’ve never spent any time with Warren Buffett, through the many books and articles about him, here’s a site to visit: www.berkshirehathaway.com. As Jack Nettleton pointed out to me, “Its collection of Chairman’s letters is very educational. I think I recall hearing of people buying a share stock just to get the letter. The letters are now freely available online.” I’ll leave the rest of your morning’s reading time to Warren . . .
Phones, Books, Cars . . . January 27, 1999February 12, 2017 PHONES From Wilbur Coghill: “To answer one of your questions about free long distance (www.broadpoint.com)—according to their info, when you dial the toll-free number you can listen to as many ads as you want and each one is good for up to 2 minutes. Then after you’ve listened to as many as you want, you dial the number you want. When you are about out of time, about 30 seconds left, a warning tone will play so you now your time is about up.” I signed up for this but am still waiting for my PIN to get started and try it. I guess they’re swamped. And I also guess that e-commerce will be a while getting the kinks out. I’m still waiting on and untangling a 1800batteries.com order from last year. One reads quite a few reports of people being dissastisfied with the quality of service received—which is why Amazon, which spares no expense to do it right (and loses money on every sale), is gaining a loyal following. I do think it won’t be long before everyone else learns how to fulfill orders, too. This is just the first of the next thousand years of e-commerce. It’s barely begun! Still, having plugged booksamillion, one of the several ways to buy books cheaper than Amazon or BarnesandNoble, I thought I should include this feedback from Joel in Denver: BOOKS “I agree that the prices at booksamillion are good,” Joel writes, “but in my one ordering experience (concluded last week), they dropped two-thirds of my order WITHOUT A WORD — no e-mail, no indication on the ‘check your order’ part of the web site, nothing. My only CLUE that the order was not, in fact, ‘completed’ (as the web site would have led me to believe) was that the total amount of the order had mysteriously dropped by two-thirds. “HUH? “I wrote. Waited three days. No response. “I called. Apparently some of the books needed to be ordered from the supplier, which I expected (since some of the items said they’d take some number of weeks, which was fine by me). However, apparently they’re not only fundamentally incapable of handling orders which have mixed delivery times, they’re also fundamentally incapable of letting someone know what’s happened. “Let me be very clear: it wasn’t that they shipped some now and would ship some later. No. The helpful person on the phone suggested that, if I really did want those other books that hadn’t been shipped, I should place ANOTHER order. Otherwise, they’ve dropped them and I might as well also. “So, anyhow, the ten books that did ‘make the cut’ arrived. One is damaged (deep pointy dents in the middle of the cover which could not possibly have happened during shipping) and one is mis-manufactured (a paperback with wavy folds along the glued spine). I’m underwhelmed. “Finally, they used UPS, which wasn’t possible to anticipate from their shipping info page. A word about UPS: for all practical purposes, they’re useless for delivery to residences. Really. They deliver only during the week and only during normal working hours. If you and anyone else at home are, say, AT WORK during these times (imagine!), you get a helpful yellow sticky note instead of your package. Ok, well, I’d rather not have the package left out to be stolen, so I’ll just go pick it up, right? No, the depot is only open during business hours. Well, surely it’s nearby, since it had to be on the local truck, right? No, it’s miles and miles from Denver in Commerce City — there’s no hope of getting there on time. Well, you could ask them to deliver it when you’re home on Saturday, right? Heck no. The only option is to have it re-directed to another address — work. Which is in fact the only option that works well, THUS PROVING THE POINT that UPS is useless for residential delivery to modern families in which people are gone to work during the day. [In many areas, I believe they do leave packages outside or on your porch, etc.—A.T.] Give me USPS or FedEx any day. “And retailers: give me the option of who I have delivery from. Don’t hide it from me. I know what works and doesn’t. If you ONLY ship via UPS, I’ll either go elsewhere, or if your offer is compelling enough I’ll know up front that I’ll have to have it delivered to work (which my employer grudgingly allows on occasion), without doing the Yellow-Sticky-Note-Shuffle. It’s much easier to pick up a package from the USPS post office nearby, though. Yes, there are interesting issues around the quasi-privatization of USPS and their potentially unfair competitive edge in already having all of these locations. That’s perhaps academically interesting. But as a real person getting a real package here-and-now, they win. FedEx seems to be more flexible on when they deliver and have drivers who are more polite. They win, too. “As an interesting anecdote to the UPS situation, I’ve had several people on the 1-800-PICK-UPS line (the number on the UPS yellow sticky notes) agree with me that UPS is fairly useless for residential delivery. Apparently handling calls centered around this set of issues is a very large portion of their 800 number’s work. “Thanks for letting me rant. [Why should I be the only one who gets to? – A.T.] If you ever want to use any portion of this in a column, go ahead, just ID me as ‘Joel.’” And remember: www.books.com , as described a couple of weeks ago has this super neat COMPARE PRICES button that automatically drops its price to beat the others. CARS From Rick Mayhew, occasioned by A Day in the Life of Bureaucratica: “My Dad was on the city council when it came time to buy a new vehicle for the dog catcher. They got bids on a brand-spanking new truck and were sorting through them when ole Dad raised the question, ‘You mean our fine citizenry in their older and used cars are going to see our dog catcher in his brand new pickup truck? Would it hurt if we just bought a used truck for the dog catcher?’ Strangely, no one had even considered that possibility.” From David Lebovitz: “There was just a very interesting article in the San Francisco Chronicle regarding why there are so many horrible drivers in California. One reason was that school budget cuts (during the Reagan era) eliminated drivers ed from most public schools. The other reason, which I really liked, was that so many drivers were flunking their driving tests that they had to make the tests easier, since it was creating a back-up at the DMV. So they eliminated testing people at parallel parking (since no one could do it!).” No wonder the traffic’s so bad. Everybody keeps driving around because they don’t know how to park.
I’m Treasurer Again! January 26, 1999February 12, 2017 Have you ever been treasurer? I clearly did not have the cool or charisma to be class president—seventh graders somehow sense this without having to be told—yet my older brother had been a big shot four years before me, so I knew I was supposed to be something. Rather than run for president or “veep,” I ran for treasurer. It was not a hotly contested position. I was soon the 11-year-old treasurer of my class. Likewise, grades eight through twelve. Indeed, the last couple, I ran unopposed. The duties of class treasurer, as I recall them, consisted of just one: to collect the annual dues. I was less the treasurer than the bill collector. And with dues set at $6 a year (less, I think, that first year; more by the end—you know how government tends to grow), I was a kid with some serious walkin’ around money. Of course, I didn’t get to keep it. But 40 years later I have no recollection of depositing it in the bank, either. I don’t think we had a bank account. (And how would an 11-year-old get to the bank?) Perhaps there was some kind of account with the school itself—I would hand in my take at the end of the day to Mrs. Somebody. I just can’t recall. There was no audit committee. Well, completely out of the blue, I was put up last week to be treasurer of the Democratic National Committee. For this there is a bank account. The DNC raised $53 million last year. Not as much as the Republicans—never as much as the Republicans—but still enough to open a bank account. (Indeed, $53 million is small potatoes. In a presidential-election year, it explodes.) We need campaign finance reform. But until we get it, neither party can disarm unilaterally. So there I was at my first C-Span-televised DNC executive committee meeting Saturday morning (attending as a guest—the 445 members of the DNC make their determination March 20), sitting next to a nice woman named Mary Ellen Withrow. I knew her name because of the giant cards in front of each of us. When the meeting was over, she turned to me and very graciously introduced herself. “I didn’t realize you were our new treasurer,” she said. “It’s nice to meet you.” Mumble, mumble. (I am never at a loss for a distinctive comment.) “You know, we have something in common,” she said. It developed that she, too, is a treasurer—Treasurer of the United States. “Oh, wow!” I said, thinking of free samples. She was out of business cards, but in a sense I already had several of her “cards” in my wallet. And so do you. Check it out: Mary Ellen Withrow. Can’t wait to know her better.
What If Everyone Bought Index Funds? January 25, 1999February 12, 2017 “Is there any scenario, with a reasonable probability of occurring, in which investing in index funds as one’s core mutual fund holdings would not be smart?” — Dana Nibby No. Over the long run, the much-lower-expense-drag of the index funds give them a huge advantage over actively-managed funds. It’s like comparing horses with 20-pound jockeys versus horses with 150-popund jockeys. “I.e. [he persists], what happens if everyone, more-or-less, gets the idea that investing in the S&P 500 is the thing to do; similar to the group-think of the ‘Fools’ running up the stock of Iomega. Wouldn’t that be an inherently unstable situation?” Well, if literally everyone did it—and especially if they all chose just S&P 500 index funds rather than spreading their money across a broader range of index funds—then prices would become less rational and efficient, giving active managers a better chance of beating the index funds despite their higher expenses. This is an argument for looking beyond just the S&P index funds, and, for that matter, beyond just the US market (of which the S&P 500 companies make up a large share). But naturally, long before it got anywhere near the impossible extreme I just described, it would self-correct. People would see “bargains” outside the universe of indexed stocks. They would sell their index funds (driving the price of S&P stocks back down toward fairer valuations) and buy the bargains (driving up their price). The paradox is that, on the one hand, we need investors and money managers actively trying to beat the market in order for the sum of their collective judgements to set sensible, rational stock prices. Yet, on the other hand, when they do, it becomes very hard for any of them consistently to beat the market, let alone by enough to justify (for example) 1.5% annual expense charges—150-pound jockeys.
FREE Long Distance January 22, 1999February 12, 2017 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 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.
Wise Words and a Cheap Joke January 21, 1999February 12, 2017 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. 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.
American Depository Receipts January 20, 1999February 12, 2017 “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.
A Day in the Life of Bureaucratica January 19, 1999February 12, 2017 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.
When Prizes and Awards Are Not Taxable January 15, 1999February 12, 2017 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: It must have been won for outstanding educational, civic or literary achievement. (I had written a magazine article.) 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.) 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: 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.
An Even Better Source for Free Books January 14, 1999February 12, 2017 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.