Author: A.T.

Flash Update: Second ship comes in? You have to understand, I wait years for these things. And most of my ships sink. So I was as astonished as anyone a couple of days ago when Calton Homes (CN) – which I described here August 13 at 60 cents a share – announced it had reached a definitive agreement with Centex to sell its core business for about $1.70 a share. According to the September 2 press release, Centex will pay $50 million and assume all CN’s debt. CN will trade its only asset (so far as I know) – the home building subsidiary – for this $50 million. At which point perhaps the CEO will blow it all somehow; but with 11 million shares himself, I’m guessing he’ll at least try not to. And now back to our regularly scheduled programming:

* * *

Is it possible Amazon is my first true love/hate relationship? Love the company, hate the stock? Probably not, because “hate the stock” is too strong after it has dropped 60 or 70 points. I just think it’s still way risky and overpriced. But I have such admiration for how well this pipsqueak has managed to “do it right” – and I am short so few shares – I can’t say I’d hate to see it break through all the likely upcoming obstacles to a touchdown. (To see what such a future would look like for Amazon, see tomorrow’s column.)

I consider that a long shot, but when did Americans not root for the long shot?

That said, check out www.bookblvd.com which will lead you to the lowest online book prices around – often from a company called A1 Books. And note that you shouldn’t have to type barnesandnoble to get there – someone told me “bn.com” works just as well. When I tried, it didn’t; but if it doesn’t ordinarily work, what is Barnes & Noble thinking? For a fraction of the millions they’re spending on ads, surely they could buy that URL and make it synonymous with barnesandnoble.com. I know it’s moot once you bookmark the site, but I’m convinced a little thing like this is a BIG thing to the lazy among us (which is 90% of us) and to the uncertain spellers (40%).

Anyway, here’s the latest smart thing Amazon has done – as amply and amusingly chronicled in The Wall Street Journal two or three weeks ago, but in case you missed it. Rather than just list the top 10 or top 100 sellers for the past week, Amazon (and only Amazon) has taken to ranking ALL books – and updating those rankings hourly for the top 10,000 (daily for the next 100,000; monthly for the rest, which run up past 1 million).

So here’s what’s so smart. I love Barnes & Noble, yes. Barnes & Noble has been very good to me. Barnes & Noble even has my latest number in a few of its windows and featured at 40% off on its Web site. (No, it’s not about money – don’t ask/don’t tell.) But the Barnes & Noble Web site doesn’t yet have this ranking gimmick.

• So guess where authors quickly become addicted to going on the Net? Precisely. We’re like little over-the-counter CEO’s addicted to checking our own stock prices – which in our case is the Amazon rank. I’ve seen my investment guide ricochet from 235 to 1,400 and back to 639 in a matter of hours. One night, when I saw it slipping, I couldn’t resist – I clicked and bought one. Sure enough, an hour later I was back up a bit. (Amazon’s computer assigns weight not just to sales but – even more – to how recent those sales were. A sale 10 minutes ago counts for much more than a sale yesterday, let alone 10 days or 10 months ago.)

• And guess where at least some authors are going to send their friends to order their books. That’s right.

• And guess to what sales-ranking list thousands of newspaper and magazine articles will likely refer (as others refer to the Fortune 500 or the Forbes 400 rankings). That’s right, too.

And that’s why Amazon is so smart.

On top of which, once the software was written – a process I expect took one bright guy or gal the better part of a day – this little gimmick is a trivial expense. The computer just does it.

Barnes & Noble and Borders (and A1 Books and the on-line music/video/software stores) may well come up with great ideas of their own and leapfrog Amazon. For example, Barnes & Noble has begun awarding frequent flier miles via an outfit called ClickRewards (see www.clickrewards.com). But sometimes small size can be a plus. You can just sense the guys at Amazon are having fun.

As I was while their stock was dropping from 140 to 73.

A little more than a year ago, in July 1997, the Templeton Russia Fund had zoomed to 53 from 22 where I had recommended it (and 13 or so, where I had previously recommended it), and now a reader wanted to know what to do. My advice was not terrible – you can read it for yourself – but neither was it remotely on target.

TRF briefly jumped to 64-3/4, then collapsed to back into the high 20s, to a more rational level when things seemed reasonably hopeful in Russia. Now that they don’t, it has collapsed into the high single-digits.

Writes my wise, modest friend Gennady:

“It is a bloody mess here. I won’t bother you with the economics since you probably know that already. The issue lies with the fact that it is suddenly dawning on everyone that a) nobody cares, b) nobody is in charge and c) everyone is corrupt. People are less and less inclined to pay the little taxes they have been paying. Fewer and fewer organisations expect to survive the storm. The veins of the country are clogged. You cannot transfer money between banks since there is no assurance of your instructions being executed and you not losing the money. Cash is king again. The Duma appears to be ready to confront the president all the way and it is probably better for the country if they do. The new/old prime minister [Chernomyrdin] appears a downright idiot on TV when he blames the 5-month long reign of the Kirienko government for all the current ills.

“Western press compares what is happening in Russia to Brazil and Mexico of old and Asia of new. I think the real danger is that they do not understand Russia. It is nothing like Brazil or Thailand. When I was growing up there was no third-world poverty in Russia. Medicine and education were available. Russians will not go into the conditions many developing countries send their people into. Thus, when the government turns on the ruble presses (to pay wages and the bank deposits they guarantee so vociferously) and the hyperinflation hits, I am not quite sure if social unrest is out of the question. Today’s situation does somewhat mirror 1917: a weak executive branch confronts a disorganized legislative branch.

“The financial markets are dead, probably for a while. My friends at Credit Suisse First Boston [the leading investment bank working in Russia] say that there is nothing for them to do in Russia short-term, probably something to do long-term. What they cannot yet tell is if there are any medium-term prospects. The next few weeks will be quite telling. Will Yeltsin be forced to resign? Quite a possibility. Is he willing to confront Duma all the way? In his debilitated state not very likely. Will [Moscow] mayor Luzhkov become the next prime minister (and eventual president)? Possible. Will he then install his head of sanitation services in charge of defense and head of parks and recreation as economics minister. Undoubtedly.

“There is an old Chinese curse: may you live in interesting times. I will keep you informed.”

A.T.: I must say I’m less excited by TRF at 9 today than I was at 15 when it was first offered (or 13, when it first dipped). The problems are so big, and the initial wave of hope and fresh energy that might have become self-propelling seems to have given way to disillusionment. That said, Russia may yet hang together. It has enormous natural resources and a well-educated people. If they could ever get their act together, the appreciation in investments there would be enormous. And the biggest gains will come to those who took the bet when few others would. So for very patient, very speculative chips – and just a few! – Russia is a place to consider. By the time things begin to look up (a time which may not come, or at least not before all current property ownership is wiped out), some of the early gains would already be gone.

The more important question, of course, is not whether we can make a few bucks betting on or against Russia. It’s how these 147 million people can get back on a just and prosperous track – important not just for them, but for the security and prosperity of the rest of the world as well.

If things get bad enough, maybe they’ll enact a low, simple, collectible tax and persuade people, via carrots (patriotism) and sticks (have you ever seen a Russian prison?) to pay them. And no, it doesn’t have to be a flat tax. It would not be complex to have the Russian billionaires pay at a higher rate than the coal miners.

If things get bad enough, maybe they’ll enact some laws for property ownership and enforce them.

If things get bad enough, maybe the Russian robber barons – seeing their fortunes and their country threatened – will, Joe-Kennedyesque, rise to the level of statesmen instead.

But maybe they won’t.

For those who doubt the severity of the problem, Alan Light suggests “How To Explain Y2K To Non-Believers” — at www.y2ktimebomb.com/Tip/Lord/lord9834.htm.

Krishna Kunchithapadam certainly doubts it. He writes: “I enjoyed your article on preparing for 2000. However, I do not agree with your prognosis. The best way to describe the hype surrounding the Y2K problem is through a joke:

“A man observes his neighbor spreading yellow cream on his lawn every day. He finally asks why. The neighbor says, ‘To keep away elephants.’ The man replies, ‘What do you mean? There’s no elephant around for thousands of miles.’ The neighbor winks knowingly, ‘Works like a charm, doesn’t it?’

“Y2K is a little like that. If you thought people took El Nino’s name in vain for any and every meteorological problem in sight, just wait till 1st January 2000. One of two things is going to happen:

• “Every (and I do mean every) problem will be blamed on Y2K, and not on general programmer or human/corporate incompetence as it should be. Today, if you walk into your bank and get bad service, you can complain to the manager and, perhaps, get some remedy. Post-2000, the same incompetence will be blamed on Y2K, and damned if anyone is going to sympathize with your dissatisfaction.

• “Or, every one of those Y2K ‘consultants’ is going to stand up and loudly proclaim that their doomsaying and ‘solutions’ worked. And they get to laugh all the way to the bank to deposit the fat checks they get for doing nothing more than drink coffee, and write silly books. ‘Works like a charm, doesn’t it?’

“There is some deep psychology in the Y2K phenomenon. The fact that company X is spending Y billions has little to do with ‘solving’ anything (or with the gravity of the situation), and much to do with avoiding culpability in lawsuits between 2000 and 2005 (say). I can bet that this cost will far exceed the paltry Y billions that a company spends (or claims to spend) now.

“Y2K has become the uber-act-of-god of the millennium, the ultimate anti-panacea, if you will. Everybody can absolve themselves of blame by pointing their finger at others, or else at some incomprehensibly vast, insidious, and pervasive abstraction. And if everybody gets ‘hit,’ no one feels like a sucker — there is comfort in numbers. It is this psychology that we see at work, not the ‘problem’ itself.

“Legitimate Y2K problems are of two kinds: (1) programming ‘bugs’ and (2) user-interface problems.

“Type (2) problems are common, even rampant — my checks all say ‘____ 19__’ for the date field. Most ‘date’ entry forms have just two ‘boxes,’ not four. However, these are the easiest problems to fix. Nobody is going to refuse my check just because I strike out the ‘19’ and write ‘20xx.’ Imagine the IRS refunding your tax payment because the check/1040 has the printed ‘19’ crossed out. Sure, the IRS claims it has a problem and needs to modernize its computers — any excuse to increase its budget. Ditto for everyone else crying for a Y2K budget.

“Type (1) errors are the serious ones, but none of them are visible to the average person on the street. Most of today’s computer users were not even born when type (1) errors were caused. And, here is the important thing to know: the errors happened because they were easy to cause. Programmers either took the easy way out of a software engineering task, and/or did not plan for their systems to exist to 2000 (short-sightedness and premature optimization). Both of these approaches were facilitated by programming in COBOL (incidentally, the biggie culprit in Y2K), but the reverse is true with pretty much every other programming language in use (then or now).

“A vast majority of the systems that a person is exposed to today (Internet software, word processors, etc.) is not written in COBOL. Almost every type (1) Y2K problem is confined to programs written in COBOL. Fixing these problems is made difficult because the source code for these software systems is no longer available. Incidentally, the problem is not the lack of knowledge of COBOL (as is usually reported in the media, along with stories of grizzled old-timers coming out of retirement to save the world, a la Armageddon — more psychology). Any competent CS grad student armed with a COBOL language reference can fix all Y2K problems in a matter of days, IF the source code is available.

“Specifically, both of the supposed Y2K problems you mentioned in your article are emphatically not Y2K.

“First, embedded processes have never, to my knowledge, been programmed in COBOL. In pretty much every other candidate programming language for these systems, it is not only not easy, but actually excruciatingly difficult to allocate no more than 2 digits for the year part of a date. Although I have no illusions about the laziness and short-sightedness of most programmers (being a student of computer sciences myself, and having seen my fair share of shockingly bad code), it is orders of magnitude more difficult to cause a Y2K problem in a language like C than it is in COBOL. So much more difficult that I can confidently say that a Y2K problem does not exist in such an embedded system.

“Moreover, just ask yourself, what is an embedded processor in charge of switching lines doing managing dates at the granularity of years. These systems work at times scales of seconds, minutes, and (at most) hours. One might as well say that these processors keep track of the difference between day and night, the change of the seasons, world time zones, daylight savings time, and (shudder) the ascension of Mars and Saturn as per some new-age horoscope.

“Here’s more psychology — Y2K hype no longer has anything to do with the real world, it has become the domain of sci-fi doomsday plots. Here’s how the game is played. Friend A suggests a widget (the more obscure and removed from everyday affairs, the better). Friend B now concocts a doomsday story about how the widget will break down because of Y2K and bring an entire planet to a grinding halt. Plausibility alone matters — facts are a hindrance and will be stubbornly ignored. Pithy remarks about the inter-connectedness of the cosmos, chaos theory, and butterflies in Hong Kong working in concert with El Nino.

“Your second example, about cooling fans in a mainframe, is even more off base. No processor ever determines if ‘20 minutes have elapsed’ by subtracting the current year from 1900 (or 2000 or whatever). These systems do subtract a constantly changing value (the current ‘time’) from an epoch value — but for a number of technical reasons, a problem will occur, if at all, sometime in 2036 or 2037 or some other equally non-millennial year (computers being binary, 2000 is not as ‘special’ to them as it seems to humans; conversely, what is ‘special’ in computerese is a seemingly random date for a human). It does not matter whether the computer/fan in question was built yesterday or during the 1960s. Serious programmers are more worried about the Y2036/Y2037 problems (and have already come up with standards and transition schemes to solve the problem long before it becomes a crisis).

“Want more psychology? Y2K, being the ultimate anti-panacea, has the power to paralyze the mind, and turn humans into helpless slaves of technology run amok. Why else would anyone [A.T.: i.e., me] suggest that a power breakdown would cause gas stations to stop working (and presumably lead to long lines of cars stranded on the highways)? Come on, people, ever heard of a siphon? Ever considered that an empty juice-can can also transport gasoline? Or did your circadian clock also throw a fit because of Y2K?

“It seems as if even the most resourceful human will suddenly, on the eve of 2000, stop thinking and sit motionless before the Y2K menace.

“All Y2K hype that I have seen has this property — superficiality. The supposed disaster is based on a number of ludicrous events that even a mildly thoughtful analysis would reveal are irrelevant to the situation at hand. Or else, there are plenty of solutions, trivial ones at that, available at hand.

“Sure, there will be some Y2K problems. However, almost none of them will be as ‘visible’ as the media hype makes them out to be. Of course, media hype helps float ‘solution companies’ and ‘consultants’ and even ‘Y2K stocks’ (let’s start a Y2K index and trade options on it). Almost none of the problems will cause a global catastrophe. [A.T.: Does this mean that only a handful will cause global catastrophe?] What is more, all of the problems are easily solvable.

[A.T.: Well, this is the point addressed in the article I referred to up top — “How to Explain Y2K To Non-Believers.” The article explains that the problems are easily solvable — just very numerous. Its author, Jim Lord, likens the problem to polishing a basket of marbles by Friday. He hands you the basket, a rag — what’s the big deal? It’s boring, but that’s it. Except, he says, picture not a small basket of marbles, any one of which is easily polished, but the Grand Canyon full of them. That’s a lot of marbles to polish by Friday, he says, or even by 2000.]

“There is just one thing that needs to be learnt from the Y2K ‘problem.’ However, the lesson is for software engineers. And there is good reason to believe that such lessons were learnt by the 1980s — the rest of the world is about 20 years too late with the story.

“Still, I am sure that the Y2K frenzy will continue — after all, this is a world that predominantly reads (and believes) the astrology pages. Post-2000, ‘yellow cream’ will be proclaimed a success by one and all. As for myself, I plan to fly (simply for the sake of flying) on 1st Jan. 2000 — what is more, I am going to get my air-ticket dirt-cheap. Nyah-nyah to the chickens-little of the world.”

A.T.: Well, I am fairly certain Krishna is right about one thing: He will get that airline ticket dirt cheap. (Of course, as a precaution, the FAA might require airlines to scale back flights by 60% the first week of January, which might drive up the price of seats — nothing is certain when it comes to predicting the future.) And I certainly hope he is right about the rest. But as noted, I’d still take at least the same sensible precautions one takes in anticipation of a power outage (i.e., in hurricane season), and maybe a few more. And I wouldn’t wait until November 1999 to do it.

You have so many really smart and self-assured technical people, like Krishna, making one case or another — and they disagree. I do believe the scariest scenarios are highly unlikely, if only because there are so many very smart people in government and industry working on the problem. As long as we have the power and communications grids largely working, as I expect they will be, improvising the rest is a relative piece of cake. But I forwarded Krishna’s e-mail to a friend who is orders of magnitude smarter than me and whose opinion, given his credentials and background, must be credited at least as heavily as Krishna’s. He responded:

“Krishna is either ill-informed or in denial. An unknown fraction, ranging from about 0.2% (Gerstner estimate) to perhaps 7% (the highest knowledgeable estimate I’ve seen), of embedded processors do have a Y2K problem because of two-digit year-date fields. It has nothing to do with COBOL. Embedded processors have also caused quite a few well-documented hardware failures all over the world: no myth. Nor does the legacy code issue — which is mainly COBOL as it relates to mainframes but includes many (even very modern) apps, BIOSs, and operating systems in PCs — have anything whatever to do with preprinted checks or other forms filled out by hand. I’d suggest you ignore this guy.

“My wife, by the way, was told last Tuesday that her driver’s license had expired because although you could see by looking at it that it expired on her birthday in 2000, a computer in California just read the ‘00’ and thought it meant 1900. Fortunately, there was a human being there too.”

A.T.: I think one can fairly reasonably conclude that the problems will not be catastrophic unless the whole world panics and makes them so (unlikely). But beyond that, no one knows. Could there be business failures and a recession? Certainly. (Young readers may be interested to know there were once recessions fairly regularly even without unprecedented global technology problems.) Could there be power outages for a few days while things are getting sorted out and brownouts or pockets of blackouts for a few months while the entire grid is being brought back up to full inter-connected capacity? Certainly. Might gas lines be pretty long during any such power outages even if siphons and empty juice cans are called into service? I should think that, too.

(Might a terrorist or two have infiltrated the tens of thousands of people working to solve the problem, hoping instead to plant a few whopping problems? One shudders to think.)

So I find myself in the odd position of recoiling at and largely scoffing at the flood of gloom-saying, exploitative newsletters and newsletter solicitations I just got in the mail last week (Howard Ruff headlined his: “MILLENNIUM MELTDOWN: We Turned Our Lives Over To Hal . . . And He’s Going Nuts!”), but not entirely. If we take the problem seriously enough, it probably won’t be that much of a problem. Those who dismiss it all as hype, on the other hand, are taking unnecessary chances. How hard is to stock up on water, tuna, and a little emergency gear? These things are always worth having anyway.

More on this in a few days — many of you have sent me very interesting feedback. I’m learning a lot! (Maybe hold off on sending more until you see if I cover what you were going to add?)

I was going to run more on Y2K today, but I have noticed some activity in the market of late. (Truth to tell, I generally write these things a few days in advance, which is why if, say, an earthquake destroys Los Angeles, my comment the next day might be on the travesty of breakfast cereal serving sizes. [Have you noticed that it basically takes three or four “servings” of cereal to equal one actual, genuine, human-size serving?])

As best I can scope it out, the trend in the market these last few days has been: down. And volume Monday was 2 billion shares, when you combine the NYSE and NASDAQ numbers. Of course, it is Tuesday morning as I write this, and by the time you read this Wednesday, the market could have gone up or down 1,000 points. But right now, I’d have to say: down.

But that is about all I am certain of.

I do think this drop is long overdue — I thought Greenspan was no fool, and certainly no Cassandra, when he mentioned “irrational exuberance” a year and a half ago, when the Dow was 6,000 … so for it to have given up this year’s gains is no astonishment.

I also note that the decline is both typically overplayed and underplayed on the evening news. There is much talk of a 1364 point drop in August, “the largest monthly drop in history,” but of course points mean nothing. It’s like people who talk about how the New York City subway used to be 15 cents, cluck, cluck, without also noting that corporate V.P.’s back then were thrilled to earn $20,000. It’s the percentage drop, not the point drop, that is the only relevant measure.

But if the newscasts tend to exaggerate the decline in the Dow by clinging to points (gotta make it dramatic, after all), they underplay the decline by clinging to the Dow. The Dow is down about 20% from its all-time high of 9300 earlier this summer, but the average little stock is probably down 50% from its high of the year. And 50% begins to smart.

So is this a great time to buy?

No.

It’s a great time, as always, to begin or continue a lifetime program of steady periodic investments in the market. For youngsters, a decline like this is great news — the worse it gets, the better the bargains.

But just because American Express is down from 101 to 78 last I looked (not a small one- or two-day drop for a blue chip), it’s still up from 26 a few years ago, and it’s still possible that in a bad economy, some Amex card holders might not be able to pay their bills or take as many vacations as they used to, etc.

The fact is — as always — one can make a strong case for how great the future could be (and why, thus, this is a great time to invest in it) or a strong case for how awful things could get (so run for the hills and wait a while).

The fact also is — as always — no one can tell you with any assurance which will be right. Something will happen, so at some point some people will look very prescient. And, to be sure, some of the rest of us will be wrong for very much more sophisticated reasons than others. (One of the most brilliant, eloquent, wise and gracious men on Wall Street, Jim Grant, has been spectacularly wrong for about a decade now — but maybe Vindication Now Looms.) But the future is too complex to guess with any assurance how it will play out here or abroad, especially in the relatively short term. (In the long term, being an optimist, I say it will turn out well.)

Hence — as always — you should have no money in the stock market that you will need to spend in the next few years. For truly long-term money, now is a much better time to be in the market than a few months ago (i.e., better to buy Citicorp at 101 than at 175; better to buy Golden Books Family Entertainment at 1-and-change than at 11-5/8). But by no means should you be complacent. Citibank could just as easily go to 50 as to 200, if you ask me; Golden Books seems hell bent on zero, though I hope not. (The lawyers have already begun to sue.)

It is now, I think, time for a joke. I worry about this joke, because it is vaguely (very vaguely) sex-related. I don’t want to offend anyone. But dicey times call for dicey jokes.

From around Dave Davis’s water cooler: A man with a winking problem is applying for a position as a sales representative for a large firm. The interviewer looks over his papers and says, “This is phenomenal. You’ve graduated from the best schools; your recommendations are wonderful; and your experience is unparalleled. Normally, we’d hire you without a second thought. However, a sales representative has a highly visible position, and we’re afraid that your constant winking would scare off potential customers. I’m sorry … we can’t hire you.”

“But wait,” the man says, “If I take two aspirin, I’ll stop winking!”

“Really? Great! Show me!”

So the applicant reaches into his jacket pocket and begins pulling out all sorts of condoms: red ones, blue ones, ribbed ones, flavored ones … finally, at the bottom, he finds a packet of aspirin. He tears it open, swallows the pills, and instantly stops winking.

“Well,” said the interviewer, “That’s all well and good; but this is a respectable company, and we will not have our sales people womanizing all over the country!”

“Womanizing? What do you mean? I’m a happily married man!”

“Well, then, how do you explain all these condoms?”

“Oh, that,” he sighed. “Have you ever walked into a pharmacy winking and asked for aspirin?”

Tomorrow: Y2K — How Real Is It?

Is it one more reason to be concerned about the market?

And one other thought. I just walked outside and saw a monarch butterfly. Where I am, they begin to come out in force for the next couple of weeks. The air is fresh, the hurricanes, thus far, have missed, the market is a mess, as are some of the world’s economies. But the monarch butterfly is so awesome. All the more so if you believe those crazy stories about their coming from caterpillars (yeah, right, like buses that turn into Learjets). Don’t get so deep into the market, either financially or psychologically, that you fail to notice the butterflies.

We’ve been talking about stocking up for Year 2000, just in case some temporary shortages should appear. Probably won’t, but might, and it’s good to be prepared. But, as I mentioned yesterday, it can also be a good investment buying by the case. I have been saying this for a long time, and the example I’ve always used involves a case of wine.

This example has sort of evolved. The first time I used it was in 1978, on the Tonight Show. Say you bought a $10 bottle of wine for dinner every Saturday night but could instead get a 10% discount buying by the case. You’d "make" 10% on the extra money you tied up. And you’d "make" it in just 12 weeks — a bottle a week for 12 weeks equals one case of wine — which works out, I explained, to "better than a 40% annual return."

I didn’t explain how much better. I figured 40% was dramatic enough. Where else can you earn 40% tax-free? (Uncle Sam doesn’t tax you for smart shopping.)

As the years passed, I found people were having trouble understanding this little shtick of mine. Why is it 40% if I just got a 10% discount?

So I tried explaining it in a little more detail. What actually happens, I explained, is that instead of going to the store and laying out $10 for one bottle, you are laying out $108 for 12 bottles — $120 less the 10% discount. Which means you are laying out $98 more than you otherwise would have. That extra $98 is your "investment." By keeping at most that much extra tied up all year, you save $1 a week on wine — $52 a year. And "earning" $52 a year by tying up $98 is earning 53%.

So now I was up to 53%, an even better tax-free return.

This confused people even more. That first $98 is gone, they would tell me, and now you have to come up with a new $98 to buy your next case of wine.

But think about it. If you were someone who planned to spend $10 every week on wine — $520 a year — and who would have LOVED to save 10% buying by the case but just couldn’t scrape up enough money all at once to do it, how much financing would you need?

Would you have to go to a bank and ask for a $400 line of credit in order to be able to change your buying habits?

No, you would need only a $98 credit line — and you would only fully draw it down that very first week. After that, you would replenish it by $10 a week (the $10 you used to spend on wine by the bottle), which means that after 12 weeks, when you needed to buy the next case, you would not only have replenished the full $98, you’d actually have an extra $12 to work with (the money you saved buying by the case). So now you’d have to draw down only $86 of your $98 credit line.

In other words, to finance this change in habits you’d need a maximum credit line of $98. But you’d only actually draw down that much the very first week. Within 10 weeks, you’d have paid the balance down to zero, then run it back up to $86 in the 13th week to buy your next case of wine, then paid that off in 9 weeks, then run it back up to $74 to buy your next case — and so on. On average, over the course of the year, you’re using far less than the full $98 to finance this change in buying habits.

So the return on your decision to tie up that $98 at first, and then gradually less, is actually much greater than 40% or 53%.

If my good friend Less Antman has keyed all this into his Hewlett Packard financial calculator right — and I’ve never known him to err — it works out to an annualized 177% rate of return (though try explaining THAT in 40 seconds on the Tonight Show).

It’s still only $52 you’re earning — $1 a week by getting the 10% discount. But applied to all your regular shopping, it can be the best "investment" in your portfolio.

Next step: Find a vintage you like equally well that’s $8 a bottle.

From Ken Kidd: It’s nice to see someone finally talking about what we all hope will be not happen. I am a programmer involved in some of the Y2K testing. Because of my involvement, I became very concerned several months ago about how to make emergency preparations. As a result, a friend and I have compiled all the most practical information that we have been able to find into a emergency preparedness guideline that we are currently publishing and selling for $5.00 plus shipping and handling. It provides useful information on what you can do.

In your column, you mentioned wanting a bike-powered generator. I have designed and built one that will work for emergency situations just like what you are describing. I currently am selling the plans for $10.00. The construction is fairly simple and can be built for around $200.00. The construction can be built using a crescent wrench, a pair of pliers and a couple of screwdrivers. It gives you information that you can use even if you get caught trying to make your preparation at the last minute, or even worse, right in the middle of it. If anyone is interested, e-mail me and I will give you the information to order — kdkidd@hotmail.com

A.T.: But wait! You may not need to build your own!

From Jesse Lunin-Pack: I’ve known about the y2k problem for a few years now. I work for a Fortune 100 financial services company, and we are spending absurd amounts of money to update our computer systems, so I assumed that everyone else was as well. My confidence, however, was shaken when I read a recent article in Wired Magazine about y2k programmers who were “headed for the hills” with guns and canned goods to ride out the storm.

I’m not ready to give up all I know and become a survivalist, but I have to admit that life in New York City without power, running water, heat, or reliable food distribution is a scary thought. I have not quite decided how to prepare yet. Check out USENET if you want to hear what the real reactionaries have to say on the subject (misc.survivalism and comp.software.year-2000 are good places to start).

Finally, as to the bike-powered electric generator: There is a company called Zap Power Systems that makes electrical drives for bicycles. (It sort of turns bikes into electric Mopeds. Pretty cool product actually.) The interesting thing is that you can reverse the system and recharge the batteries either by coasting down a hill, or by setting your bike up on a trainer and pedaling it like an exercise bike (or so says the marketing literature).

You can check out Zap at www.zapbikes.com. By the way — they are a public company. OTC symbol is ZAPP. I don’t currently own their stock, but I’ve been thinking about it. Any thoughts?

A.T.: Well, I checked the site and you have to love this company. I would not buy the stock — the risk factors in the prospectus are all too real — but I sure would root for it. (The Web site seems to be offering shares for $6 that are now trading on the open market for $3.75. I assume that if I had followed through and subscribed for shares, they would have written back that the offering has been completed — not clear why the Web site does not reflect this.) The company’s “Zappy” — you stand on it as you cruise along at 12 miles per hour to the office — is a $699 hoot-and-a-half, if you have to buy a gift for the guy who has everything or want to buy one for your child and have him beaten up every time he arrives at school. It actually could make sense instead of a second car in some limited situations. The New York Times pictured a cadre of executives riding their little Zappy’s someplace last week (a staged photo, but still). And the company has several other pollution-friendly “vehicles” as well.

Meanwhile, John T writes, “Here’s your bike generator” and points me to http://popularmechanics.com/popmech/sci/time/9809STTNM.html, wherein I find another reference to ZAP and a little historical flashback to a French exercise bike circa 1914 that did the same thing — there is little new under the sun. (One exception: fat-free WOW! potato ruffles. Don’t eat too many, but you really have to try them.)

Mike Rutkaus downloaded and searched the index for Home Power Magazine (http://www.homepower.com/) and found some bicycle/power related articles. Even more interesting to those of you in windy places may be the wind-powered generators. Mike goes on to write:

Wow! AT recommending storing food/water/etc.! I listen to this every night on short-wave radio programs (Bo Gritz, Jeff Bennett, Dr. Sam Solomon, and others), but YOU saying this!

PS – I suppose you could charge 2 nicad C cells by connecting them directly in the proper polarity to existing bicycle lighting generators.

A.T.: Thanks, Mike. The thing is, I think there’s a low probability we’d need any of this, but the nice thing about being prepared is that it’s also a good investment. I’ve been pitching “buying in bulk” for 20 years, just because it’s often a great investment. (Six hundred thirty columns or so ago I explained how buying wine by the case, at a 10% discount, instead of one bottle at a time, could be a 177% return on investment. For those of you who may have missed it, I will reprise it again tomorrow.)

Legs getting tired? Want to read more about the nation’s power grid? Alan Light turned me on to this excellent, beautifully written column by Dick Mills, an expert in software for the electric utilities: Dancing On the Rim of the Canyon.

And now this helpful Year 2000 feedback from my friend in the Heartland (yes! this East Coast boy has a friend in the Heartland!):

I’m very concerned about Y2K. On one hand, it seems absurd. On the other, how many broken down cars does it take to back up the freeway? And if you went into a gas station and asked them to manually pump you a gallon of gas they couldn’t do it. (Some do have backup electrical generators.)

Last winter a very bad ice storm hit Iowa City. Branches and power lines crashed by the zillions and we were without power for 18 hours. That doesn’t sound like a very long time, but when it’s still winter outside and you’re sitting there by candle light, and it’s eerily quiet, with the only sounds the occasional crash of a limb off in the distance as the weight of the ice finally makes it succumb to gravity during hour number 16, and you see the temperature on the thermostat dropping roughly 1 degree per hour, you think, “My God, what if it’s like it was up there in Canada, where the power was off for over three weeks after a bad ice storm?” It’s a miserable, rotten, near panicky feeling. It doesn’t help that when our power goes out our well-water goes out, too.

So when summer came around I went out and bought an electric generator for our home – a deluxe Honda 5500 watt model. I paid for the generator and Jack paid to have an electrician wire it directly into the fuse box of the house. Believe it or not, we’ve had to use it three times since then and it’s great peace of mind. Just before July 4th, when Jack was in Europe, Iowa City was hit by near-tornadic 80 to 100 mph winds. Again zillions of branches and power lines went down. The entire town was without power for at least a day, and for our house two days/nights. What a GREAT comfort it was to have power at night (and it wasn’t even winter, which would have made the situation far more serious). Ours was the only house in the area with the lights on, I was watching satellite TV, the refrigerator was humming away, and I could check my e-mail. I’m sure the few people who drove by (not recommended, as roads were blocked by limbs everywhere) did a double-take.

While I bought the generator for weather/disaster emergencies, it’s nice to know we have one when 1/1/2000 rolls around – when it could be 30 below zero outside. Assuming that natural gas is still flowing, we’ll have power for the furnace fan.

Some details: Knowing nothing about generators at first, I searched the Internet. It worked great. I decided on a Honda 5500 watt generator and found places charging from $2600 to $4500 for it. I printed off the pages of the discount company and took them in to my local dealer and asked if he could match it. He said that at $2600 he’d only have $90 profit, and would have to charge Iowa sales tax. I decided to go with him anyway since there was some assembly required and he’d deliver it to the house for free. So I ended up paying $2,750 plus tax. (You can buy cheaper generators at hardware stores but this one is a deluxe model and idiot-proof since I am a mechanical idiot.)

The electrician charged $500 to wire a connection into the house’s fuse box. It could only be hooked into 4 fuses, either by law or by wattage limitation or both, so we chose refrigerator, furnace blower, first floor lights and TV room (of course ). Of course, 5500 watts can’t power everything in our entire 4600 sq. foot house all at one time, but our generator will power every single light and appliance included in the 4 fuses it’s hooked into – we checked – and have power left over to run items off two extension cords, which we can run to specified extra areas (to open the garage door electrically, for instance).

The generator requires roughly a gallon of gas per hour of operation at maximum 5500 watt generation. Our model has a feature which makes it energy efficient – it burns gas according to how much power is being drawn. I keep 20 gallons of gas on hand (not inside the house) in four 5-gallon plastic gas cans. When 1/1/2000 rolls around maybe I’ll have double or triple that on hand just in case (and a good supply of low-tech fire wood – January can be COLD in Iowa).

Storing gas: I’ve learned a few things there, too. Obviously, due to fire hazard, don’t store it in the house; use a garage or outbuilding. Gas gets old after about 3 to 5 months so it must be rotated. I’m told Amoco Ultimate stays good the longest. I mark on my calendar when to rotate the old gas; every few months I empty the cans into our cars and fill them up with fresh Amoco Ultimate. And once a month I start the generator to make sure it runs. It’s a bit of a bother, but nothing compared to the awful feeling of being without electricity.

I hope that Y2K will prove to be less of a nuisance than an ice or wind storm, but we should all be prepared for a few weeks or even 3 months of emergency. And not just for Y2K but for any natural disaster. It makes our nation stronger to be prepared, ready and able to take care of ourselves – for an earthquake, tornado, or war; for Y2K; or for when some terrorist someday does something really awful. I don’t want to be paranoid, but we live in a dangerous world and should be prepared. A lot of disasters have hit mankind over the course of history and one may be in store for us.

A.T.: See? I told you many of your responses are much more interesting than my columns that provoke them. (I’d thank Bill more profusely and specifically, but he’s not too keen on having all the neighbors know where they can find a three-month store of emergency goods.)

For more on Y2K, you’ll find a collection of daily Y2K news articles at www.year2000.com/articles/articles.html.

Tomorrow: Pedal Your Own Kilowatts

From Kim Ness: Enjoyed your comment about the crazies of the late ’70s/early ’80s. [The buy a gun and run for the hills crowd.] I would have been one of them, at least when it came to buying gold, but I’d just gotten out of school and had no job and no money.

Regarding Paul Volcker, while I have no personal opinion about his mental powers, I do know of a true story (published in the Reader’s Digest I believe, or maybe in the Orlando Sentinel) back in 1983 or 1984.

It seems that at that time one of the Senators from Florida was a woman named Paula ? (can’t remember her last name). She had gotten swept into the Senate by the Republican tsunami of 1980. At some point she and Mr. Volcker were at a function where Mr. Volcker spent a good amount of time explaining macro-economics to this senator, a lady with little economic or business background. During his monologue he kept hitting his head against a lowhanging chandelier. Finally Paula, a petite woman, had had enough of Mr. Volcker’s preaching and said, “Mr. Volcker, I may not know a lot about economics, but I do know that if I kept hitting my head against a chandelier I’d have enough sense to move.”

A.T.: Paul Volcker was a great public servant and a real American hero, in my view. But can’t you just see it?

The inflationary problems Volcker had to handle in the late ’70s, early ’80s were largely psychological. There could be more than a small element of that regarding the Year 2000 problem. Not to pay any attention to it could prove foolhardy; to pay too much attention could prove almost as scary. That’s why taking some very-likely-needless precautions early is a good idea. The more people feel prepared, the less likely they are to act irrationally or anti-socially.

Tomorrow: some very practical ideas from a friend in the Heartland.

My recent columns on the Year 2000 problem, in which I suggested we just might have a real problem, drew a lot of comment — much of it, as always, a lot more interesting than my own.

From a friend at the FDIC (the Federal Deposit Insurance Corporation): Did you notice the recent announcement from the Fed that it will increase cash reserves at its banks in ’99 in anticipation of greater demand for greenback withdrawals late in the year? I’d say that is a major wake up call to folks to do a little common sense preparation today.

I’m not a market timer, but I’ve already (back in May) moved the bulk of my retirement portfolios out of equities and into bonds and governments. I plan to dive back in to the stock market sometime in 2000 after either the dust clears, or it appears there is much to do about nothing. I figure at worst I’m trading potentially greater stock run-up for lower bond yields for 18 months, and in my “best case” I’ve conserved my principal and accrued gains of the last few years and can buy back into the market when stocks looks cheap again in 2000.

By the way, credit card servicers are busting their guts to get ready for Y2K. Many of them are not accepting, or delaying for 6 to 8 months, conversion accounts from other servicers. I’ve learned this from a recent bank failure that involves hundreds of millions of dollars in credit card portfolios. (The WSJ is working up an article about this failure as we speak.)

From Emmett Redd, Associate Professor in the Technology Department at Southwest Missouri State University (I had said that if the power went out, so might the ability to pump gas): Gasoline probably won’t be too hard to pump without electricity. On many pumps I am familiar with, just take off the side, loosen the belt between the electric motor and spin the pump by hand. Also, most of the tanks around here are above ground (to avoid groundwater contamination). Just shut the valve, “break” open the lines and gravity fill whatever container you have available. The store owner will like your bag of dimes better than the muzzle of your shotgun. 🙂

However, I have lived through enough ice storms where electricity has been out for 2 or 3 days for neighbors of mine. Even our house got cold after 16 hours without the forced air furnace. Therefore, I have always lived my adult life with at least two sources of heat, at least one of which does not require electricity. Wood has been a great primary source for over half of my life. But now my house has a propane heating stove (with a 300 gallon tank out back), baseboard electric (in case I forget to call the propane truck), and a kerosene heater (purchased back during the high fuel price days of 1985, but now used to keep the apple trees frost-free or to warm up the diesel tractor for starting when electricity is not available).

The advice for multiple heat sources applies for every winter here. And don’t forget Jan. 1, 2000 is likely to be cold.

Most of the rest of your list is fine, but Jan. 1, 2000 is too close to the solstice for a solar water heater. Just heat the water on a non-electricity dependent heater.

Y2K or not, the solar electric fence charger should (and is) keeping my cows in the pasture they are supposed to be in.

Be Prepared.

From Kevin Rasmussen: A pretty in-depth exploration of personal Y2K preparations can be found at: http://millennia-bcs.com/prep.htm

This is a part of the Cassandra project web site, which is a non-profit organization that discusses “Y2K and the Risks to Public Health and Safety.” It’s a neat source of information and anecdotes.

From John Wildenthal: There are a few verified examples of embedded chip failures. You might look at www.cv.nrao.edu/y2k/sighting.htm for some verified problems, including the valve at a UK nuclear plant (scram/failsafe in 20 seconds after Y2K).

Power generation (except for windmills, hydroelectric, and solar) is a process of boiling water-spinning turbines-cooling water, over and over. The fan problem you discussed is evidently not uncommon in automated water valves. DeJager’s Damocles site mentioned that in the context of a sewer plant until DeJager shut Damocles down.

A.T.: I’m not entirely certain what this means or who DeJager is. Damocles I knew in a previous life. (High school, that is.)

From Jonathan Hochman: No doubt there will be some Y2K disruptions. Last year we had an El Nino weather pattern. How many times did we hear about various problems that were caused by El Nino? Lots of people started joking that every little problem must be the fault of El Nino. Those inclined to ‘pass the buck’ will take advantage of the year 2000 to blame all sorts of failures and lapses on mysterious computer bugs.

Having spent a considerable number of years earning a computer science degree, I can give a quick lecture. Binary computers (virtually every device that people commonly call a computer) store numbers as 0’s and 1’s. Depending on how many switches (bits) are allocated to store a number, the number can range from 0-1 (1 bit), 0-3 (2 bits), 0-7 (3 bits), 0-15 (4 bits), and so on.

Some legacy programs, written in archaic languages like Cobol and Fortran, may show two digit years when they print or input dates. However, I see no reason why the programmers would have wasted their effort to program special arithmetic functions valid from only 0-99. In 1999, a year stored as an 8-bit number (0-255) will be stored in the computer as the binary equivalent of 99. When the computer adds one to the year, the computer’s 8-bit storage slot will contain the binary equivalent of 100. Maybe the computer will print ’00’, but in memory the date will still be valid for many arithmetic functions like adding, subtracting, and comparison. The program’s math and logic functions might continue to provide correct results for up to 155 years!

Recently the FAA determined that its non-Y2K-compliant air traffic control computers would fail in 2007 because they stored dates as (I think) 5-bit numbers, 0-31. Maybe the software was implemented in 1975, so 1975 was represented as zero. Failure is expected in 1975+32=2007.

I doubt that many essential devices care about the year. Clocks in computers count up from 0 to 2*2*2*2*2*2*…*2-1. The year 2000 is nothing special to them, because they use binary math, not decimal. They could ‘flip’ (like a car odometer) any time, depending on when they started counting, and how many binary digits they store.

Logically, we should expect old computer software and chips to produce unexpected date-dependent results from time to time, whenever the date exceeds its storage range. We probably have been experiencing these problems all along. In 2000, the biggest problem will be that various systems will print out funny dates, or fail to understand newly input information. However, it does not follow that math based on dates will fail to calculate properly. I very much doubt that the power grid will go down, or that digital toasters will suddenly start burning toast because they no longer know what time it is!

Please put the problem in perspective, and do not be deceived by those who stand to profit from high consulting fees to re-engineer old software. Anybody using such old software should probably replace it with a modern product. I recently bought Oracle stock (ORCL), because Oracle sells complete software packages for running many different kinds of businesses. Why fix the muffler on an old junker when something else is going to break next week? At some point its [sic] better to replace the whole car than to keep spending money on incremental repairs. Anybody in big business worried about Y2K can call Oracle and buy a sparkling new information system, free of Y2K bugs, much less costly to maintain, and providing all the latest features to enhance efficiency. (For small business, I suggest Peachtree Accounting, which is also Y2K compliant.)

A.T.: I hope Jonathan is right, as he well may be. It’s certainly true that a great way to solve many Y2K problems is to get a new system altogether. I’m told this is why many big companies have gone or are thinking of going to an SAP software system, a hugely elaborate but elegant accounting/inventory/everything system that works wonders. One small problem: The system takes about two years to install. Let’s see. What’s August 26, 1998 plus 24 months ….

From Jerome Payne: I read your article on Y2K today and I find it amazing that people are comparing this to a hurricane or a blizzard or an earthquake. When is the last time any of these events impacted the whole world at the same time (relatively speaking — 24 hours to be precise). There is a major difference between Y2K and any natural disaster we’ve faced to date — there won’t be the rest of the country/world to help dig us out of it, they’ll be digging themselves out.

Hope you will rethink the magnitude of this occurrence. The closest natural disaster this will be like would be for an asteroid 1-mile in diameter or so to impact the earth. The whole world would feel its impact — severely.

A.T.: I highly doubt it will be terrible, which is why I suggested there was an 80% chance 2000 would come and go with little more drama than Kohoutek’s comet. But it would be very foolish not to take simple, cost-effective precautions just in case. (Buying in bulk is a good idea anyway. Having an alternative energy source can be a good idea anyway, although it’s obviously not practical for everyone.)

More of your comments to follow.

PS – Thanks to Peter Yeates for pointing out that “Warren Buffet has sold his zero coupon bonds — see www.berkshirehathaway.com/qtrly/2ndqtr98.html Note 4.” What a nice little trade that was. Why didn’t I put $4 billion into long-term zeroes when long-term rates were in the 7% range? But if he’s out now, that may tell you something, too.

Correction: A penny stock I mentioned recently as being on the New York Stock Exchange, symbol CN, is actually traded on the considerably less prestigious American Stock Exchange. Sorry for the slip.

* * *

From Jarett Chaiken: “I just started investing a few months ago, and have been reading everything I can get my hands on to bring me up to speed, and I’ve found countless articles and books that tell me how to pick stocks, what to look for, and what to expect. What I haven’t found is anything telling me when I should sell. The best I can find is ‘Sell when the reasons that you bought are no longer valid.’ This seems unreasonable to me. If I follow that line of reasoning, the day I don’t want to buy it anymore I should sell. Once I decide to buy a stock, I want to have a solid exit strategy; and if I can’t come up with one, then maybe I should re-evaluate why I wanted to buy it in the first place.

“To pick on one of your favorites [Jarett is being wry here], I’ve heard plenty of people tell me to buy Amazon shares because they keep going up and don’t show signs of stopping (Why? I’ll never know) but then, when do I get out? The same time everyone else discovers that it’s overvalued and sell at a loss?

“I’m not expecting any ironclad guarantee to make money, but if I lose a money I’d like it to be because of my bad judgement in planning rather than my failing to plan.”

A.T.: It is, of course, an excellent question, especially because traditional Wall Street analysts are much quicker to recommend buying a stock than selling it. (Analysts want management to answer the phone next time they call; Wall Street firms sometimes hope for underwriting business from the firms they write reports about.)

There’s a book called When to Sell by Justin Mamis (most recent update: 1994) you might want to check out. But (absent the effect of taxes) the answer is to sell any stocks you don’t strongly feel you should own – based on solid fundamentals, not voodoo: They pay a high dividend (which almost none do these days) or they are selling cheap relative to their assets and/or their earnings and growth prospects.

Look, you can get an absolutely safe “stock” that currently “grows” at 5% a year with no chance of loss – short/intermediate-term U.S. Treasury bonds. So for you to take the considerable risk of tying up your money and/or losing 80% of it (or even 100%) on a stock, you need to really believe you have some understanding of why it’s worth taking that risk.

The famous Warren Buffett avoids high-tech stocks because he doesn’t understand them. This may be good advice for the rest of us as well. (If you ever felt that, as a group, they had unreasonably fallen into disfavor, you might certainly buy them as a group, not trying to divine which will be the winners. Either construct a little portfolio, or buy one of the high-tech “sector funds” where, for a fee, experts will choose the specific stocks for you.)

If you’re a techie and have good reason to believe in the management and/or products-in-the-pipeline at a firm you know well (a supplier? a competitor?) but that is undiscovered as yet on Wall Street … well, that would be a good reason to buy its shares.

If you find a stock yielding 6% versus the Treasury’s mere 5% … and you think, based on your research, earnings (and thus, some day, dividends) are more likely to go up than down … then THAT could be a good reason to pass up a certain 5% in favor of 6%.

Indeed, even a stock that pays no dividend, or just a small one, could be a great and compelling buy if it were selling at a low multiple of its current or future realistic earnings.

But ultimately, despite long periods of musical-chairs markets and euphoric markets (and, for that matter, sinking-ship markets and overly-despairing markets), stock prices will be determined by assets and after-tax earnings potential (and by the level of interest rates on competing investments like bonds).

So, yes, you might want to re-evaluate the stocks you’ve bought. And don’t feel like an idiot if you can’t find compelling reasons to give up the safety of 5%. There’s no rush. Work at it long enough (and/or let the market drop far enough, if that’s what happens), and you’ll find lots of them.

Of course, the other way to approach this is simply to put a steady monthly sum into two or three no-load, low-expense index funds (or equivalent “stocks” like SPY, MDY, DIA and WEBS), and never sell until, decades from now, you actually need the money. (Well, you’d start selling some years before you need the money … money you really need within the next 4-5 years should not be in the stock market, especially at times like now, when it’s still near it’s all-time high, both in absolute terms and in terms of price/earnings ratios and the rest.)

Long-term success in the market most often comes from buying shares in good companies, not so much because you think they will go up (though that’s the ultimate goal) as because you want to own a piece of the business and profit from its long-term success, getting a piece of the profit each year and, in most years, seeing that profit grow. It is not dumb to hold some shares for the better part of a lifetime, as Buffett has held GEICO and the Washington Post Company and others, especially in taxable accounts. It is dumb to sell too often, taking lots of taxable gains, because the taxes will greatly diminish your long-term success. (This is another reason “index” funds and instruments fare relatively well; they generally do little selling, and thus generally keep the tax bite low.) That said, if you hold a stock that seems to be gripped by craziness and euphoria, as Avon was in the early ’70s at 140 a share (decent company though it was and remains), or whose long-term prospects do not seem bright, it doesn’t make sense to hold on just to avoid taxes. (Though the company continued to do reasonably well, Avon stock dropped 87% in two years before bottoming out and beginning a very gradual recovery.)

In sum: “When to sell” is an agonizing question to which my answers are as unhelpful as everyone else’s – but a question you are right to consider even before you buy.