Author: A.T.

To those of you who get this column Q-paged automatically each day, my apologies — I posted yesterday’s too late to make it, so you got a repeat of the day before. Soon Q-Page will be smart enough to send you columns only once they have changed. But for now, here it is again.

To those of you who did read yesterday’s column, here it is again — but with “the answers” appended.

(To those of you who have no idea what Q-Page is, but would like to get this page e-mailed to you automatically each morning, just scroll to the bottom of this page and click the Q-Page button. With AOL, unfortunately, it comes as an attachment. Maybe the forthcoming AOL 5.0 this fall will fix that. But for those with other Internet Service Providers, it seems to work quite well.)

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Have you been to hungersite.com? Every time you visit and click, one of its sponsors buys a hungry person a meal (limit: one click per day). I’ve clicked a few times, and it got me to wondering . . . how do we know they gave away 20,865 meals on July 7? Did the folks from USA Today and Yahoo! who’ve plugged this site checked to be sure? My guess is that, no, they didn’t check, but that, yes, the meals are being distributed, albeit not literally one-by-one on the days listed. I.e., the meal may cost a nickel (we are not talking about steak and potatoes in France — potato, I might note, does have an “e” when it’s plural — but, rather, one and a half cups of rice or something similar in a poor country). Presumably, the sponsor pays hungersite.com on some regular basis, and hungersite.com passes on all or a good chunk of the sponsorship money to groups like the UN’s World Food Program to be used to provide food to the hungry.

I have a call in to the UN World Food Program — listed as the current beneficiary of our largesse — to make sure they have heard of the hungersite.com, and to get an idea of what sort of dollars are involved.

In the meantime, one does wonder who, exactly, the hunger site is. Are there no names or faces out of modesty and altruism — definitely possible — or because full disclosure might tarnish the nice tone of this?

In the Frequently Asked Questions section, you will see no question like, “Who Are You?” or “Who Started This?” Rather: “The Hunger Site was founded as an independent Internet site to help alleviate hunger in the world. It enables people to learn about hunger and to make free donations of food to the hungry. It is not owned by any company or affiliated with any group or organization.”

Fair enough. But that could mean a bright young guy or gal is doing this and taking in a penny or two of his or her own for every click. To which I would say, basically: more power to him or her . . . but disclosure would be nice. (Imagine getting 10 million people a day to click this, and getting a penny from each — $100,000 a day.)

Anyway, I hope to learn a bit more about this. In the meantime, I may set Quickbrowse to include http://www.hungersite.com in my daily fare, so I can quickly and efficiently click. Then again, how many seconds is a nickel even worth? (If your time is worth $20 an hour: 9 seconds.)

If I find out anything interesting, I’ll let you know.

So here’s what I’ve learned since posting this yesterday. The meals go for 3 cents each (at a nickel, I guessed high), which of course does not begin to cover the actual cost of getting a meal to the people involved, but may pay for the rice or grain itself. Sponsors pay 3.5 cents a click. Each day you click, you rack up three cents for the cause and half a cent for John Breen, in Bloomington, Indiana, who started and runs hungersite.com. (And who doubtless has some expenses to pay out of that half cent.) His intentions, I suspect, based on his e-mail to me, are good.

In the short time the site has been up, it claims about 300,000 clicks, which at 3 cents each would work out to $9,000 for the UN World Food Program. And indeed, when I reached that outfit, I was told that $7,000 had thus far been received, and that they had been told another check was in the mail. The UNWFP seemed a bit perplexed by all this, and stressed to me it had no connection with hungersite.com, other than to have received three checks.

So far, also, one assumes John Breen is 300,000 haepennies ahead of the game, before expenses and any payment for his time and talent — about $1,500.

True, if a million children a day clicked, that would be $5,000 a day for John Breen (and $30,000 a day to help fight hunger). And if 10 million a day . . . well, but something tells me they won’t. And that if they did, John might well shave his cut of the action still further.

In addition to the 3 cents, the site does help raise awareness of world hunger. And it links to organizations to which people may wish to donate actual money.

In short, hungersite.com is a clever and, I like to think, well-intentioned idea, nicely executed; but — if your time is worth anything at all — unlikely to revoke the maxim that there is no free lunch.

Have you been to hungersite.com? Every time you visit and click, one of its sponsors buys a hungry person a meal (limit: one click per day). I’ve clicked a few times, and it got me to wondering . . . how do we know they gave away 20,865 meals on July 7? Did the folks from USA Today and Yahoo! who’ve plugged this site checked to be sure? My guess is that, no, they didn’t check, but that, yes, the meals are being distributed, albeit not literally one-by-one on the days listed. I.e., the meal may cost a nickel (we are not talking about steak and potatoes in France — potato, I might note, does have an “e” when it’s plural — but, rather, one and a half cups of rice in Mauritania) . . . and the sponsor may pay hungersite.com monthly. Hungersite.com may then pass on all or a good chunk of the sponsorship money to groups like the UN’s World Food Program to be used to provide food to the hungry.

I have a call in to the UN World Food Program — listed as the current beneficiary of our largesse — to make sure they have heard of the hungersite.com, and to get an idea of what sort of dollars are involved.

In the meantime, one does wonder who, exactly, the hunger site is. Are there no names or faces out of modesty — definitely possible — or because full disclosure might tarnish the altruistic tone?

In the Frequently Asked Questions section, you will see no question like, “Who Are You?” or “Who Started This?” Rather: “The Hunger Site was founded as an independent Internet site to help alleviate hunger in the world. It enables people to learn about hunger and to make free donations of food to the hungry. It is not owned by any company or affiliated with any group or organization.”

Fair enough. But that could mean a bright young guy or gal is doing this and taking in a penny or two of his or her own for every click. To which I would say, basically: more power to him . . . but disclosure would be nice. (Imagine getting 1 million people a day to click, and a penny from each — $10,000 a day.)

Anyway, I hope to learn a bit more about this. In the meantime, I may set Quickbrowse to include http://www.hungersite.com in my daily fare, so I can quickly and efficiently click. Then again, how many seconds is a nickel even worth? (If your time is worth $20 an hour: 9 seconds.)

If I find out anything interesting, I’ll let you know.

This one, from Larry Jensen, pretty much speaks for itself:

“I was a witness to some interesting day trading manipulation recently, in one of the stocks I own, Smith Corona (SCCO).

“[Full disclosure: I was employed by Smith Corona for nine years. I was given my 60-day layoff notice in May, 1995, and then — a week before it took effect in July — the company appointed a “turn-around expert” as its new CEO. His first action was to file for Chapter 11. In February, 1997, the reorganization was completed, and I finally got 70% of my severance pay in new Smith Corona stock. (The other 30% in cash mostly went straight to Uncle Sam, to pay the taxes on the imputed value of the stock.) Although, rationally, I’ve never had any confidence in the reorganization or the future of the company, I continue to hold the stock. I consider it my license to continue speaking out as the “loyal opposition” to management. I was the only “outside” stockholder at the 1997 annual meeting, and one of three at the 1998 meeting. All of us were vehemently negative!]

“Since emerging from Chapter 11 in February, 1997, Smith Corona has racked up heavy losses, while trying to market a new line of products. Its stock has fallen precipitously over the past year, from 6 to as low as 5/8.

“Last Wednesday, a day-trading web site, www.great-picks.com, selected Smith Corona as its pick of the week. Within hours, the stock jumped from 1 3/8 to 2 1/4, with a total volume of over half a million shares for the day (many times the average). But by the afternoon, the price started slipping, and it was back to 1 3/8 by Friday.

“Reading all of the disclaimers on the great-picks web page, they (the sponsors of the page are essentially anonymous, with no identification beyond an e-mail address) make no effort to hide their purposes:

‘Our picks will have a small float, will be trading under $3.00 and will offer tremendous upward gains . . . Great-Picks, Inc., its executives, representatives or employees will invest in all posted picks and/or hold positions in the companies profiled, and these positions are obtained prior to announcement and publication of the Great-Picks.com pick on the web-site. Great-Picks.com, Inc., its executives, representatives or employees reserve the right to liquidate all or portions of these positions immediately after announcement of pick on the Great-picks.com web site.’

“In other words, they are touting a thinly traded stock, in order to make an instant profit off of those who take their advice! I can hardly find fault with manipulators who are so honest about their intentions.

“But the big question is, why do they attract such a large following? Nobody day-trading a stock on their vague recommendation is holding it for any fundamental reasons. Pure herd mentality will cause a spike in the stock, and the participants must be engaging in the ‘greater fool’ theory, thinking they can get out before everyone else. But in this case, the time frame for the fools to catch on in measured in mere hours or minutes!”

I went to the site and it really is sort of breathtaking. At the top, in large type: “Please read our disclaimer at the bottom of this page. This type of trading is only for experienced, seasoned traders.” But isn’t that sort of like the warnings to kids that smoking and sex and drinking are only for grown-ups? Does it deter? Or merely tempt?

The disclaimer itself is much longer than the piece Larry quotes above, and it is all jammed together in a single, dense 474-word paragraph. But the site makes a big show of urging people to read it. Boiled down to its essence: “We decide on a stock to recommend and quietly load up on it. Then we make it our pick — and, if we like, sell it to you idiots.”

Larry is right. This has nothing to do with investing. This is naive people playing musical chairs — against players (the executives of great-picks) who control the Victrola.

From Alan Rogowsky: “Dyslexics have more fnu.” I forwarded this to a good-humored dyslexic friend who replied: “I don’t get it.”

From Bob Downs: “Perhaps because I belong to organizations aimed at uniformed service members, I can beat quotesmith a goodly bit on medicare supplement plans and auto insurance. The price on the Plan D medicare supplement, for example, is $16 per month less than Blue Shield, the lowest price on quotesmith. However, I appreciate the column because it affirms that [I’m doing well].”

From Yunah K: “I would like to make a gift of $200 to the newborn son of a good friend. My first instinct was to look into a 20 year treasury bond, but my husband suggested that an equity would probably be a better idea given the time frame. What do you think?”

Your husband is right. Apart from the fact the Treasuries can’t be bought in such tiny denominations, over the long run, equities — ownership of business enterprises — are likely to do better, on average, than risk-free loans. (A Treasury bond represents a loan to the US government.) For those who simply cannot afford any risk, it’s worth “paying” for safety by way of a lower expected return. But young Elvis, here — he’s just getting started. And the longer he has to invest, the more likely that equities, for all their ups and downs, will eventually outperform Treasuries. Indeed, given the way inflation can wipe out bond values (in real, inflation-adjusted terms), you could argue that bonds are actually the riskier bet for someone with a very long time horizon. Inflation can knock the heck out of stock prices, too; but for the most part they eventually bob back up, riding on top of the newly-inflated price levels.

That said, given the small size of the gift — more than I give friends’ newborns, but still — I wonder if you shouldn’t give it to the parents to combine with something else they are doing along these lines. This would also avoid the hassle of having to get the actual stock certificate and then transfer it into the newborn’s brokerage account.

(How about clipping two $100 bills to a good investment guide and gift-wrapping that?)

[With apologies to a couple of very long-time readers who have read a version of this before . . .]

One of my favorite things to do July 4th is to buy the New York Times, knowing that its back page will be a reproduction of the Declaration of Independence, and that I will be able to read it out loud to whatever younger folks happen to be around.

"We hold these truths to be self-evident," wrote Thomas Jefferson, one of the largest slave-owners in Virginia. "That all men are created equal, that they are endowed by their Creator with certain inalienable rights, that among these are life, liberty and the pursuit of happiness."

I rarely get through the entire list of grievances against King George III. (Did you see The Madness of King George? Great movie. If it rains Sunday, why not rent it — and 1776?) But there is something wonderfully anchoring about reading these words, written so long ago, that are so fundamental to our freedom, that connect us to each other, and that so changed the world — and continue to do so today.

And the fact that Jefferson was, until the day he died, a slave-owner, far from putting the lie to any of this, merely emphasizes it. The Declaration is about fundamental fairness and the need to change when things are unjust. Over the years, the notion of people pursuing their happiness with equal rights — whether they be black or Jewish or women or gay — has steadily gained ground.

In Turkey today a woman needs signed permission from her husband to work. In Albania, until a few years ago, two men could be imprisoned for 10 years for loving each other. Even in America, as recently as 1960, it was anyone’s guess whether a Catholic (gasp!) could be elected president. Who would have imagined that the number one draft choice of the Republican party in 1996 would have been a black general? Or that in the summer of 1999 the Stonewall Inn — where 30 years earlier a group of citizens who had had it with police harassment fought back — would be added to the National Register of Historic Places?

It’s a bull market that, with ups and downs, began 223 years ago tomorrow. Drive safely.

What a week it has been around my household.

Have you been to PlanetRx.com? Right now you get three items of your choice, worth about $15, free.

This largesse is fall-out from the Internet wars.

Internet companies, as you know, vie to see who can lose the most money, as huge gains in sales and losses tend to drive up stock prices. Right now PlanetRx is vying with drugstore.com, part-owned by Amazon.com.

Drugstore.com is offering $15 off (at least it offered it to me) and 3-items-for-a-penny.

(Both offer free shipping with orders of modest size. Not to mention the convenience of not having to leave the house.)

I had heard good things about PlanetRx but hadn’t actually used it until I went to find athletic supporters. To do that, I typed goto.com (on my browser, and probably yours, you don’t even have to type “www”). Then, in GoTo’s search box, I typed “athletic supporters” (using the quotation marks to tell GoTo I was seeking that actual phrase). Up came a bunch of sites, the first two of which were dead on. Shopinprivate.com (“We carry all sorts of items that are embarrassing to buy in a store or pharmacy”) had jocks for $8.50. Over-the-counter.com (“Never be embarassed at the checkout again!”) turned out to feed into PlanetRx.com, which offered precisely the same brand for $6.99. I bought five.

Free shipping — and three other free items that I could choose from a reasonably interesting list.

Earlier in the week, at drugstore.com, I had gotten my 3-items-for-a-penny-each plus $15 off a bunch of containers of Coppertone mosquito-repelling sun tan lotion.

I am now ready to play tennis in any mosquito-infested swamp.

Netgrocer.com, meanwhile, was offering for free:

3 Cans of Spaghetti-Os
1 Box of Honey Crunch Corn Flakes
1 Box of Regular Corn Flakes
2 5-Packs of Bic Disposable Razors
4 Packages of Kool Aid Pink Lemonade Mix
1 Package of 15 Solo Plates

Estimated value: $15.69.

The offer may have expired by now and, in any case, you had to buy $25 of other stuff of your choosing and admit you liked Spaghetti-Os. (Last time I ordered from netgrocer, I got a free jar of olive oil without even asking for it.)

I’m not saying I have saved enough on these deals this week to make up for the money I’ve lost shorting Amazon. But I probably saved $40 in real cash money. You should, too!

Last week I wrote: “What an awful lot of people have developed a taste for is neither investing nor sophisticated speculation but gambling.”

A friend writes:

“Some readers, including me, might find it useful for you to elaborate on the difference. For example: After hearing that NATO was running out of cruise missiles in the Kosovo war, and reasoning that this type of war is likely to occur again in the future, I went out and bought stock (on-line, of course) in Raytheon, which makes cruise missiles. I did do some research in news archives first, which turned up some articles suggesting that Raytheon was a solid company and attractively priced, but did no quantitative analysis of my own. Am I investing, speculating or gambling? Does your answer depend on whether I intend to flip it for a quick profit (I bought at 60, it’s been in the low 70’s recently) or hold it for a few years (which is my actual intent)?”

I would say in this case you were investing.

Indeed, I thought of doing the same thing.

Of course, whether or not it was a good investment would turn on such things as, mainly, whether your expectations of rising sales/earnings were borne out and whether the stock market had not already fully discounted these improvements. (So far, you seem to be doing fine.)

But you were investing. Raytheon is hardly a wild speculation. And neither, sadly, is the defense industry. (Wouldn’t it be nice if war and weaponry were this way-out concept that might conceivably find a market but were a long shot?) Raytheon isn’t an underfunded start-up. Raytheon isn’t teetering on the edge of bankruptcy.

Nor were you buying some out-of-the-money options on Raytheon in advance of the bombing, speculating that the bombing would indeed begin (as it did) and that this would drive up the stock. In hindsight, that could have been a neat and successful speculation.

(Nor were you shorting Lockheed, knowing it’s not as well managed as Raytheon. Shorting a stock can be a smart speculation . . . buying Raytheon and shorting Lockheed might have been an interesting “hedge” . . . but shorting a stock is speculation, not investing.)

No, you were investing in the long-term success of a well-managed established company. You were not leveraging your risk with margin. You were not adding to your risk by imposing an expiration date on the transaction. (With an option, the stock not only has to go up, it has to go up before the option expires. An option is a bet, not an investment. You don’t own part of an enterprise, you’re merely betting on the direction of its stock price.)

With a long-term holding in Raytheon, you will even pocket some dividends. (Before they got so tiny in relation to stock prices, dividends used to be a very large part of the point of investing. And one day will be again.)

To repeat: there’s nothing wrong with speculating, if you can bear the risk and know what you’re doing. And there’s not even much wrong with gambling, if you recognize that it’s an expensive form of entertainment that can be addictive and wreck lives. But “playing the market” the way many Internet traders are playing it these days is, make no mistake, gambling. It can be addictive and will wreck some lives.

Faithful reader Anne Speck puts it this way: “Gambling is ultimately a zero-sum game. If I win, the house loses. Investing, on the other hand, is more like gardening. I take resources and set them aside. They grow and become more valuable. Then when I sell (or harvest) them, it’s a win-win thing. I get the value of the growth, and the buyer gets something healthy that — hopefully — will continue to grow for him (or her).”

I couldn’t have said it better.

The overall theme of last week’s discussion was investing vs. speculating vs. gambling. But one of you — Dan H. — got me sidetracked (it is so easy to do that! I will be headed in one direction and then a bird flies past my window and I start thinking about birds, and the poor birds that can’t fly — ostriches! — and that gets me going on low-fat red meat [ostrich burgers have even less fat than turkey burgers] and before you know it . . . ) with the message heading “You can gamble and WIN.”

So I dutifully printed Dan’s contribution (it seems that at video poker you really CAN gamble and win), and then just as dutifully made fun of it. In the long run, I explained, even if you went to all the trouble to learn the system and fly to Las Vegas or someplace to test your skill, you’d likely make just $2 an hour before expenses. “And that’s not gambling, that’s work,” I concluded.

“Another drawback to that video poker scenario,” writes Fred Barotz: “If a 0.5% advantage [over the house] translates to $2 per hour profit, then one would have to bet $400 per hour on a quarter machine to achieve this, correct? So, even if the machine takes a maximum of, say, five coins per hand, you would need to play 320 hands per hour to bet $400. This is about one hand every 11-12 seconds. So, it seems you not only have to be perfect, but lightning fast as well. (Sounds a bit like my day job.)”

Well, hang on. It’s crow-eating time. (How much fat in crow, I wonder?) Or at least partially so.

Dan H. again: “Gary Catlin wrote the video poker tutor program which calculates the optimal play and odds. There are others, but his company, Panamint (pan-a-mint), is the only one whose base program version can be downloaded on line for free (www.vid-poker.com/vptutor.html). If you want the full-featured one that allows you to configure and calculate odds for different video poker machines, then you have to pay $25.

“I’ve met Gary, and he has a great story about finding a progressive video slot in Vegas with a 2% advantage over the house, but it was a $25!! machine. You could play up to three “coins” per play, so the actual bet was $75 per play. Good video poker players play at up to 500 hands per hour. That’s betting more than $35,000 per hour in hopes of statistically making (over the long run — at least hundreds of hours of play) $700/hour. Gary and a friend of his who is CEO of a moderate-size software company played for more than 10 hours, at the end of which they were a few hundred dollars ahead.”

And exhausted, one would think. But if even Gary could come out only a few hundred dollars ahead on this ideal machine after 10 hours, it sounds as if you or I would never come anywhere close to $700 an hour. Even he might have been earning barely fifty bucks an hour.

“Counterintuitively,” Dan continues, “the odds can be better on quarter machines than on dollar machines because casinos figure that nobody bright enough to do it is willing to go to all this effort to play optimally for $6 an hour. For a dollar machine, that’s more like $25/hour, which can be a decent living for people so inclined. Consequently, they make the odds worse for those machines. The $25 machine was an anomaly which the casino doubtless figured nobody would ever play the way that Gary and his CEO buddy did.

“The casinos are well aware of the situation, but so far it hasn’t taken enough of a slice out of them to care. What’s more, they make up for it by people who think they are playing optimally but really aren’t. (A few moderate mistakes will really kill your return.)”

The thing that has always impressed me about easy money is how very hard people will work in hope of getting it. Look at Humphrey Bogart in Treasure of the Sierra Madre. Or look at all the hours the alchemists put in back in the Dark Ages. (A boring, colorless account of this stretches for 158 pages in the classic Extraordinary Popular Delusions and the Madness of Crowds. But the first 100-or-so pages of that 1841 classic are more or less required reading, and I will be posting them here on this web site one of these days if you — who have already waited 158 years — care to wait a little longer.)

Anyway, through the marvels of Internetry, it was not long before I heard from Gary Catlin himself:

“Your discussion has come to my attention. Your correspondent Dan H. overstates the difficulty of learning to play near-perfect video poker, and also fails to mention some additional benefits. One is that many casinos have a small ‘cash-back’ program that can add up to 0.5% to your total return. [Dan actually hadn’t failed to mention it; I had edited it out for space. Mea culpa.] Another is that casinos provide ‘comps’ which are free rooms, meals, shows and merchandise based on the amount of play. Plus many players can play more quickly and at a higher coin level (i.e. dollars instead of quarters) than mentioned. The result can be a potential average ‘hourly rate’ in excess of the $2 mentioned.

“I was playing video poker in Las Vegas last fall, and started chatting with a fellow sitting next to me. I did not mention who I was, but he began to tell me all about my own software. It turns out he spent many months practicing and perfecting his play. Then, he and a partner drove out from Cleveland with a plan to spend six months in Las Vegas, playing video poker full time. The goal was to test the theory and see if they could make enough to support themselves free of their regular, oppressive jobs. I finally introduced myself, and elicited a promise from the gentleman to contact me at the end of the six month experiment. Well, I heard from him recently, and learned that he returned briefly to Cleveland to pack up his things — the move to Vegas and the new ‘career’ were to become permanent.

“This is not an isolated story. There is a small community of ‘professional’ video poker players in Las Vegas. And there are many thousands of recreational players (like myself) who have more conventional means of support, but enjoy coming to Vegas, staying in free rooms, eating free food, enjoying the shows and sights, and getting a chance to gamble at a game we expect to show a profit on. I should stress the profit is only likely to be shown in cumulative lifetime play, and that serious bankroll fluctuations must be expected on any given trip.”

Well, fair enough. The thought of bright, talented people wasting their productive lives this way — Profession? “Video poker player” — depresses me. But Gary sounds like a decent, sensible fellow. And as a computer-Scrabble addict (and not even paid for the pleasure), who am I to throw stones?

Tomorrow: Back to gambling in the stock market, which is where all this began before that bird flew past my window. (Just 2 grams of fat per patty, versus 16 for a hamburger!)

Turns out, you can win a lot more from Video Poker than $2 an hour (see last week’s discussion). But before returning to that tomorrow — and the issue of investing vs. gambling generally — let me slip this one in:

“When I was ordained,” writes a friend, “I was given $3,000 which I put into a savings account. Having it there keeps me from having to pay service charges on my Chase checking account. I don’t write many checks. Possibly three per month. Do you suggest a better place for my pittance?”

Well, if the monthly service charge you save is $10, which is probably about what it is, then you are “earning” $120 a year on $3,000 — 4%, tax free, which isn’t bad. If you could do twice as well (which you could not without taking at least some risk), that’s still only $2.30 a week more, and I guess there’s a limit to how much time and effort you should put in trying to find a way to get an extra $2.30 a week.

You might check with Chase to see if you can move your $3,000 into a money-market checking account that pays interest and would still serve to waive the checking service charge. Those accounts limit you to writing three checks a month. But for you, that might not be a problem. You’d be earning around 2% in taxable interest — wheeeee! (a second pittance!) — at the same time as you continued to “earn” 4% tax-free in saved fees.

If I were you, I’d just sit tight. You won’t get rich, but you’re not allowed to anyway.

Tomorrow: Back to the Vices.

[Note for those of you getting daily delivery via Q-Page . . . I posted this column late, which is why you may have been e-mailed Friday’s again. But soon Q-Page will get smarter about that, or I will have to become more punctual.]

For your weekend delectation, I’ve turned on Chapter 12. (You already have Chapters 1, 2, 3, 4, 5, 6, 7, 8, 9, 10 and 11.) You think you’re a health nut. Get a load of Charles Revson.

But now back to on-line gambling. (See the discussion from yesterday and the day before.) If you’re looking for some reasons to keep your money in the stock market at today’s high levels, read on.

From Thad Fenton: “Your column today really hits the mark. The convergence of on-line trading and dot-com stock frenzy provides all the ingredients for a bubble run-up and crash. I can’t help but believe that this is history repeating itself in America — the Roaring ’20s and now Bull Market ’90’s. While in the ’20s everyone was living off the margin, it seems today everyone is living off their (often unexercised) tech stock options.

“Your analogy to gambling is apt. Will those who played the game and made money have the discipline to take their money off the table while they’re ahead of the ‘house,’ or will they stay in the game only to have the croupier suddenly rake away their chips? As you, I fear that greed has overcome reason in the market even for the “everyman,” and when the bubble bursts everyone will point their fingers at someone else and demand new regulation or file face-saving lawsuits, and few will look in the mirror for the real party responsible for the market mayhem.

“It’s hard to keep a cache of cash in these markets, but I’m confident that I’ll soon have a chance to buy back in at seemingly rock-bottom prices and then ride the market back over the long haul. Guess that’s why an asset allocation strategy does so well over the long term — the discipline of the allocation forces you to take some chips off the table when you’re winning, and leaves some chips to throw in when you know that the marble will have to land on black after a long streak of landing on reds only. But asset allocation isn’t sexy, doesn’t make one look particularly brilliant or prescient, and doesn’t generate prodigious short term fees for money managers, so I guess the popular press and talking heads won’t tout the theory and practice as they should RIGHT NOW. What a shame.”

Nicely put.

The other side of this, though, is the case against market timing. Basically, because almost no one can successfully call the direction of the market — a great many smart people have been skeptical of the US market for the last several thousand Dow Jones points — there is a case to be made for remaining fully invested forever, even in tax-sheltered accounts that allow you to take some chips off the table without tax penalty.

I buy that never-time-the-market line a lot less at 10,500 on the Dow (let alone the S&P 500, which has appreciated even faster) than I did a few years ago at, say, 5,000.

Still, there is a strong argument to be made for this. Also for the case that things ARE different this time (arguably the five most dangerous words in investing). Human nature never changes, so in that sense it’s hard to imagine there will never be another panic, another bear market, another prolonged period when the average person truly loathes the stock market and knows it is a terrible place for your money. But you can argue that we are in the midst of a long-term ramp up in positive factors that really do justify today’s prices, or close to them, and allow for much higher ones ahead. (Again, I’m too old to buy this argument fully — Gillette at 44 times earnings? — but I can make it.) You have the astonishing productivity-enhancing leaps in technology combined with the greatly reduced drain of military expenditures (military spending as a percentage of gross global product has to be near an all time low) and the trend toward far more efficient, productive market economies in places like China and Russia (yes, even in its current miserable state) and Eastern Europe. This is very big stuff. Add to it good relations amongst central bankers and a growing appreciation of the need for sound policies, and you could make the case that we are getting a bit smarter in the art of collective economy, as a species, even if human nature itself isn’t changing.

So there’s a rosy picture to be painted for sure, and, in any event, even in the U.S. market there are interesting values and special situations here and there.

So you can make the case for someone’s remaining fully invested in the stock market with that portion of his or her money that is truly “long-term,” whether I buy it fully at these valuations or not.

What you can’t make the case for, other than as you might make the case for other self-destructive behavior (“Newport — Alive With Pleasure!”), is the on-line casino. Active trading on the Internet, as practiced by most of the folks practicing it, is just gambling. Many players will ultimately lose money; and the vast majority, even if they make some, will make far less, after tax, than they would have with a prudent long-term buy-and-hold strategy.