Author: A.T.

Sorry for missing the 6am cut-off for those of you who use Q-Page to get this e-mailed each morning. The dog ate my alarm clock.

Cleaning up a little mail . . .

On Swimming 43,000 Laps-to-a-Mile in My Tiny Pool, and the Need for an Underwater Pad and Pen:

Tim Couch: “Paul Harvey told the story about how NASA spent millions to solve the problem of a pen that would write in space. The Russians had the same problem but they solved it without spending millions. They used pencils!”

Carl Ondry: “Almost any dive shop can sell you an underwater slate for writing notes.”

John D.: “Andy — 43,000 laps to the mile?! I always thought that there were 5,280 ft. to the mile, or 8 furlongs, or 80 chains, or 320 rods, or 1/3 of a League, or even 63,358 inches for that matter! Wouldn’t that make it 132 laps — which is still a heckuva long swim. Maybe you were just kidding!”

No, it’s 43,000 laps. I’ve swum it.

On the World’s Best & Worst Companies:

Erik Olson: “I realize it’s too late to submit a nomination for this year’s award, but perhaps you’ll consider TicketMaster for a dishonorable mention. I recently attempted to buy tickets to an out-of-town NFL game on the TicketMaster web page. After selecting my tickets and entering all payment information, I was taken to a page where I was supposed to receive my confirmation number; instead I got the message “General sell failure”. I was instructed to call for customer service at a number which, to my dismay, was the same number you call (and call, and call and call and call, etc.) to try to get tickets. After an hour of trying, I finally got through only to be told by a TM operator that I needed to call their customer service number, regardless of what the web page told me. The nice lady in customer service told me that the reason my order failed was that they don’t accept the Discover card–even though the web page allows you to select “Discover card” as a payment option and there is no way of knowing they won’t take it (unless “general sell failure” can somehow be translated as such). The kicker was that my order had never been processed and I had not been able to buy the tickets, which were by this time sold out. The nice lady told me she gets calls about this problem all the time.

“TM holds such a monopoly on ticket distribution for large venues that even a rock band as popular as Pearl Jam was forced to give in to them even though they felt their fans were being gouged. Janet Reno pulled the plug on a antitrust suit against TM because she thought competition was emerging; that was four years ago and nothing has changed.”

“It is true that TIAA-CREF has very low cost annuities,” writes Richard Toolson, Associate Professor of Accounting, Washington State University. “However, as you’ve pointed out, they are only available to college and private school educators. Vanguard, however, does offer a pretty good spectrum of funds at what I believe to be rock bottom expenses. They are absolutely no-load (no back-end or front-end charges) and the insurance portion carries an expense ratio of just 27 basis points + 10 basis points for administration. Their total annual charges (including the mutual fund charges) are less than the annual charges for the vast majority of mutual funds. For somebody in a tax bracket of 28% or higher with a long term holding period (at least 10 years), who doesn’t need the money until after the age of 59.5 years, their annuities make economic sense. This is especially true for their annuities whose return is principally composed of mostly large amounts of ordinary income such as their REIT fund or High Yield fund. (I have run the breakeven periods on these and they make sense for a certain group of investors.)”

Well, the good thing with annuities is that their growth is tax-deferred, which means you get “the government’s” share of the appreciation working for you until you withdraw the money. The bad thing is that when you do withdraw the money, gains that would otherwise have gotten favorable tax treatment are all subject to ordinary income tax. So annuities are actually a machine that converts lightly taxed long-term capital gains into more heavily taxed ordinary income. (Who wants a machine like that?)

The 10-year period to which the good professor refers is roughly the time it takes for the tax-deferred compounding to make up for having to pay ordinary income tax on your gains at withdrawal. (The actual break-even point will vary from case to case depending on the actual investment results and on your tax bracket each year and at withdrawal.)

Vanguard’s low fees certainly help. But an alternative is simply to buy and hold stocks directly. When you do that, tax on the gains (though not the dividends) is deferred just as with an annuity; there are no expense charges; and gains when you eventually take them get the long-term tax treatment (or may even pass to your heirs free of capital gains tax altogether). So you get much of the deferral everyone covets without expense fees or giving up the favorable tax treatment of long-term gains. The same holds true buying an index fund, except that a small expense fee is charged.

And here is . . . Chapter 17 of Fire & Ice. (You already have Chapters 1-16.) How Revson tried to do for shoe polish what he had done for nail polish. (Really!) And other sad tales.

Meanwhile: What to do when there’s nothing about MONEY in this space? As today? My own suggestion is that you just stop thinking about it for a while, as I have. Money needs time to itself, time to grow. Watched pots and all that. But if you just can’t help yourself, and you’re willing to take your chances, I direct your attention to my Archives (which you can click at left).

From time to time — wincing — I read some of the old ones. And when they’re not TOO awful, I click a box my web master has designed for me — I have, I should tell you, a brilliant, congenial, inspired web master (who has done what you see here on two lunch breaks) — and I “release” a few more old columns. For example, just now I “released” May 6, 7, and 8, 1997.

(“But we don’t WANT to be released!” two of them cried, shoving Kevorkian news clips across my desktop. “We are painfully cute. Terminally useless. Delete us! Delete us!” Their case is under review.)

Lorraine: “Just finished ordering from healthquick.com. The glucosamine and chondroitin under the name Pain Free was $16.99 for 150, Schiff. I pay around $26 for the same thing at Costco, our discount store. It’s much more at the health food store. You paid for this month’s on-line cost.”

Plus, you get $15 off your first order. Soon, your whole computer will be paid for.

And now this:

Some of you will recall my quest for submarine sonnatas, or “all news, all the time, underwater.” Didn’t work out. Now comes this from a man whose middle name is Money. I would fully expect to be rich just from being his pal. So far: no luck. But he knows everything about everything, and offers this about underwater radios:

“None of the ones that attach to your head work. They are just annoying and get wet. You have to get one that you submerge in the pool. I will bet you can probably do it with a cheap portable and one of those watertight bags that scuba divers use. (Do not try it with a 110-volt radio, thank you very much.) Sound really travels in water. Just ask a shark.”

I can’t quite picture how this would work, but I think I’ve come up with an alternative. To keep the laps from becoming too boring, I will think. Really — I have lots to think about. I just have not thought about it while swimming, for fear of losing count. I need hardly tell you that keeping count of the laps, and getting credit for every last one of them, is something even more fundamental to swimming than goggles. I count by two and fours and tens, I count forward and backward; when I get to a period of history with which I am familiar — nineteen twenty-nine, nineteen thirty, nineteen thirty-one — I try to think of some event or who was president. But if I actually think about a problem or a project, I’m sunk.

Well, I am now informed there’s some kind of lap-counting device you attach to your finger and click as you make each turn, with a read-out to tell you the score. Clicking at the turn is something I ought to be able to get into the habit of doing without thinking, so if I can locate one of these things, and it works, I’ll be able to turn my attention to the age-old questions (two of which, regarding falling trees in the forest and chickens in eggs, I believe I dispatched August 9). All I will need then is an underwater pad and pen, to jot notes before I forget. I know Jerry’s pen writes upside down — the one he got from that guy at Boca Vista Estates who got it from an astronaut. But could it write under water? And has Kramerica Industries begun work on an underwater pad yet? (New Yorkers: as I write this it is nearly 11pm. Time for Seinfeld. Good night.)

Talk about a good sport! In response to the savaging I gave LaCie for botching an otherwise terrific product, I got this gracious response from LaCie Engineering VP Mike Mihalik:

“Thank you for your helpful criticism about LaCie. Yes, we could have done a better job on the PC side; the problem with the incorrect installation has affected more than a few PC users (almost all), and the manual just adds to the problem — the correction is simple, and is in process. A really simple change to the Windows.inf file.

“As for the formatting: we chose to offend the smallest number of people. Why? We initially formatted the product to work right out of the box — on Windows machines. Unfortunately we antagonized the majority of our customers, who were Mac people. These Mac people were either offended that we made the product work on both platforms simultaneously (they thought the drives were crippled for the PC); or they could not get the drives to work at all, since they had disabled Apple File Exchange which permits using PC formatted disks on their Macs. Sales are predominantly Mac; almost 500 to 1. Why not two SKUs? Volume insufficient.”

As if that weren’t gracious and straightforward enough, some kind words followed. So as soon as the fix IS made, those of you with USB connectors on your PCs looking for a quick way to make huge backups — well, here’s a nice looking 10 gigabyte external hard drive for under $300. Once the disk is formatted for a PC, it seems to work like a charm.

And on an entirely separate note:

Muk Bud: “I have a philosophical question for you. Let’s say I have $600k in cash investments. Deep in storage, unbeknownst to me, I have a coin or stamp worth $400k. Am I technically and figuratively a millionaire?”

No, sorry, you need $5 million to be a millionaire.

Erich Riesenberg: “A friend of mine is backing kaboombooks.com. Basically, the company buys overruns of scholarly and academic books such as from MIT and Harvard and sells them at huge discounts. I compared their prices with the prices found by pricescan.com and bestbookbuys.com, and kaboombooks sold several titles for 30-40% less than the lowest prices those services found. I’d really appreciate it if you would mention the site.”

☞ The selection is quite limited — this is NOT Barnes & Noble — but it’s fun to browse, the kaboomers seem like nice folks, shipping is only $3, and “for a limited time” you get your choice of a free book with each order. If only they could supply some free time to read it.

Chris Peterson: “I read your column regarding annuities and why there are a bad deal. You state at the end that educators shouldn’t be alarmed because TIAA annuities are a better deal. What makes them a better deal?”

☞ Their expense charges are lower, and profits are paid back out to annuitants as dividends. TIAA-CREF, as it’s known, is the combination of two sister non-profits, Teachers Insurance and Annuity Association and the College Retirement Equities Fund, set up earlier in this century to provide educators with a good deal. For more, see the excellent TIAA-CREF website: http://www.tiaa-cref.org/.

There’s a whole investment world out there beyond the stock market called real estate. And at one time, you could hardly turn on the TV at 3am without seeing an infomercial from a guy — one of several — who could make you rich beyond imaging for no money down (except the $295 for his audio tapes, “normally a $795 value”).

Well, John T. Reed publishes a newsletter for folks who buy/run rental properties. He has had his good times and his bad times investing in real estate, and is quite candid about it all. Now, as faithful reader George Fescos pointed out to me (thanks, George), he has a web site on which you’ll find a list of every real estate guru you ever heard of, and many you haven’t, along with Reed’s comments: http://www.johntreed.com/Reedgururating.html.

For those who wonder, “what ever happened to?” or “could a deal like that really work?,” this page gives some answers. The word bankrupt appears in bold face several times.

John is not exactly all sweetness and light — in reading his newsletter from time to time I find myself wondering which he dislikes more, tenants or government. (Answer: lawyers!) But he is a straight shooter who admits his mistakes (the only mistake I’ll admit to ever having made was buying that stupid LaCie external hard drive; but I’m happy to tell you it’s now finally formatted for my PC and working brilliantly), and it’s kind of fun to see him rank his competition.

World’s Best Company: PC Connection — 800-243-8088. I ordered a $300 10-gigabyte LaCie external hard drive from them this past Sunday and had it Monday morning.

World’s Worst Company: LaCie. This is seemingly the only company on the planet that makes an external USB hard drive. At least the only one I could find. (It is headquartered in France, I think.) USB is yet another of those funny little connections that allow massive amounts of data to stream unimaginably fast across a wire. How it could possibly work so well and be so small and — well, I’ve just come to accept it as magic.

What I find odd is that the hard part of this job LaCie seems to have done brilliantly. This attractive book-size device can receive 10 billion bytes of information flawlessly in a matter of minutes and store them without forgetting a thing. Even if you turn it upside down. Can you even imagine the mega-brilliance that had to go into the creation of such a thing?

And then you have the one other little chore — trivial, really. The part where the product interfaces not with the computer to which it is hooked up, but with the customer who bought it. This is done through a series of very simple, but critical decisions.

The first decision LaCie made was not to ship two separate versions, one “plug and play” for the Mac, the other for the IBM. LaCie ships all its drives formatted for the Macintosh. This choice was made in order to inconvenience the maximum number of customers.

The next decision was to ship this miracle drive with a faux User’s Manual that does not match the product — e.g., it tells you to “insert floppy disk 2/2” yet comes with no floppy disks. I could go on, but basically the only way to use this drive, if you happen to be one of those rare customers with a PC rather than a Macintosh, is to call customer support in St. Louis (a good French saint).

But I need hardly tell you there is no phone number for customer support in the faux User’s Manual. I found LaCie’s number by finding its web site — which is also not listed in the Manual. (A good place for it might have been page 5, which reads, in its entirety: “This page intentionally left blank for pagination.”) Nor need I tell you that even on the web site there is no section — let alone a prominent one — titled, Click here for help formatting your LaCie hard drive.

No, you have to find the phone number, call on your own dime, wait 20 minutes on hold, and then get a nice person who is almost as frustrated as you that LaCie has done it this way. An hour later, you might succeed in getting the drive formatted for Windows — or you might not. (Once I did, twice I did not.)

Stupidity of this magnitude could perhaps be understood, though not condoned, if it somehow led LaCie to greater short-term profits. But having half their disk drives returned in frustration can’t help the bottom line; and neither can the cost of a tech support operation that spends all day long listening to angry, confused, disappointed customers. Surely I am not the only person with an IBM-compatible. I know Apple is doing well again — bless my little January leaps — but surely they’ve left a little market share for PCs.

What if Ford shipped cars that were all set to go, except they needed you to install the electronic starter, for which it gave you incorrect instructions? Now there’s a marketing plan.

It is for these reasons I am pleased to present to LaCie the award for the World’s Worst Company. Nominations for next year’s award are welcome. But LaCie will be hard to top.

PS – For your laptop-at-the-beach reading, here is Chapter 16 of Fire & Ice. (You already have Chapters 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14 and 15.)

But first a word about this endless PlanetRX promotion. Enough already, you are thinking, did you win the free trip to Topeka or not? Well, even though the official rules said the contest ended July 31 — and still said that a couple of days ago — it has apparently been extended to August 31. So if you haven’t yet gotten your three free products ($3.95 shipping), click here. As you know, if enough people click here, I might actually be one of four Grand Prize Winners who get 25,000 frequent flier miles. I’m definitely in the running.

(It used to be that gold was the universal currency, the medium of exchange that drove people to do loopy things. Today, at barely $250 an ounce, no one wants gold. But we will do almost anything for miles.)

And don’t forget healthquick.com with its $15 off your first purchase. Sara Wolfson: “My son takes a supplement for treatment of an illness and it is sooo expensive, but much cheaper at this site. Thanks!”

Now a word about the quotes, like the one you see there at left.

In the first place, they display at random, from a large file I’ve collected over the years, so I don’t know which one you are looking at right now. Any that seem particularly apt — a quote about taxes on April 15 — are just coincidence, as are any that seem particularly inappropriate on a given day.

Second, I don’t always agree with them. My quoting Stalin — “It’s not the people who vote that count; only the people who count the votes” — doesn’t mean I buy what he says. You should vote!

Third, I occasionally slip in a factoid, or just something I’ve said. These are not, strictly speaking, quotes. But I don’t care.

I have fun with the quotes, and am struck by the way many things about money haven’t changed in hundreds, even thousands, of years. “Money is a handmaiden, if you know how to use it,” wrote the Roman poet Horace before the birth of Christ, “a mistress, if you do not.” Well, OK — on one level I suppose I know the Romans had money. And I suppose I know that they had maidens and mistresses. But it always amazes me to think that without CNN or sewing machines or photocopiers their lives could have been, in many respects, so much like ours.

“He is richest who is content with the least,” wrote Socrates. But how different is this from Ben Franklin a couple millennia later? “Who is rich?” asked Franklin. “He that rejoices in his portion.” Indeed, how different is it, really, from Ross Perot, talking to a bunch of Harvard Business School students: “Guys, just remember: if you get real lucky, if you make a lot of money, if you go out and buy a lot of stuff, it’s gonna break. You got your biggest, fanciest mansion in the world. It has air conditioning. It has a pool. Just think of all the pumps that are going to go out. Or go to a yacht basin any place in the world. Nobody is smiling and I’ll tell you why: something broke that morning. The generator’s out, the microwave oven doesn’t work, the cook’s gay. Things just don’t mean happiness.”

I actually wrote Perot a letter when this appeared in Forbes — some awfully good cooks are gay — but you get the point. Things don’t buy happiness; there’s peace and happiness in living within one’s means; you can have $50 million and want more or be a pensioner and count each day a blessing.

Still, a little extra free skin cream couldn’t hurt. Click here.

Have you already seen this one? It purports to be a collection of actual warning labels (and other helpful packaging instructions) that have appeared on a variety of products:

On a Sears hair dryer:
Do not use while sleeping.

On a bag of Fritos:
You could be a winner! No purchase necessary. Details inside.

On a bar of Dial soap:
Directions: Use like regular soap.

On some Swanson frozen dinners:
Serving suggestion: Defrost.

On a hotel provided shower cap in a box:
Fits one head.

On Tesco’s Tiramisu dessert (printed on the bottom of the box):
Do not turn upside down.

On Marks & Spencer Bread Pudding:
Product will be hot after heating.

On packaging for a Rowenta iron:
Do not iron clothes on body.

On Nytol sleep aid:
Warning: may cause drowsiness.

On a string of Chinese-made Christmas lights:
For indoor or outdoor use only.

On a Japanese food processor:
Not to be used for the other use.

On Sainsbury’s peanuts:
Warning: contains nuts.

On an American Airlines packet of nuts:
Instructions: open packet, eat nuts.

On a child’s Superman costume:
Wearing of this garment does not enable you to fly.

One reason for all this obsessive labeling is fear of lawsuits. That fear has led to safer products, for which we should all be grateful. But there’s a balance. Fear of lawsuits can have adverse consequences as well. Things cost more; and some worthwhile innovations may never even make it to market. Those interested in this balance, and in the point of view of those who believe we’ve actually gone too far, might want to check out http://www.overlawyered.com/.

(Then again, many of the wild verdicts one reads about are either drastically reduced at a later stage of the process, or involve more than at first meets the eye. That woman scalded by the coffee was just one of hundreds who had previously been injured without corrective steps having been taken — and it was a really, really bad burn. So no one should favor killing all the lawyers. It’s more a matter of fine-tuning.)