Author: A.T.

Gary Santoro: “Drop the whole postal thing. I’m going postal just reading your column!”

Hey, when you’re right, you’re right.

But as I threatened yesterday, I just couldn’t resist one more suggestion — and a tip.

Here’s the tip. Did you know you can call the post office and have them pick up? Not just for Express Mail, but for the $3 Priority Mail also. There’s a $4.95 charge for this, but unlike FedEx, which collects its $3 pickup fee on each of the 30 packages you might hand them — $90 for the visit — the USPS charges that $4.95 just once. The number to call: 800-222-1811. Someone will be out within two hours (or, in my case, two hours and twenty minutes). Just remember to ask him to do you a favor and hand-cancel your package for you when he gets back to the post office. Otherwise — if you used stamps rather than a postage meter and it weighs more than a pound — your package will be returned to you as a security precaution.

Here’s the suggestion. What if the dispatcher at 800-222-1811 had a computer? With Caller ID, it would see who’s calling. Then, if you’ve ever called before, it would know your address automatically. Indeed, the entire pickup could be scheduled without a human, just the way FedEx does it. It would save the customer time; it would save the post office money.

I assume this is someplace on Marvin’s wish-list (Marvin Runyon, Postmaster General).

Marvin?

Here I’ve been complaining about how, when I want to send somebody my book — or anything else weighing more than 16 ounces — I have to take an hour off from work to trot down to the post office and hand it directly to a postal worker. I’m told by my local mail carrier this is not the Postal Service’s idea — it’s an FAA regulation in the wake of the TWA Flight 800 disaster.

Well, having stirred up so much trouble over this (see below), I figured I should do some checking. According to the Department of Transportation, this is not an FAA regulation. Rather, it grew out of Recommendation 3.1 of what was known as the Gore Commission — a White House effort to improve airline safety. In this particular instance, the Commission recommended that the USPS advise its customers that items weighing more than 16 ounces and to be shipped by air would be subject to inspection and examination.

Well, that part is fine. X-ray, sniff, pressurize — do whatever you like to my package if it’s ticking. But no place in the recommendation does it say the post office should require these packages to be banned from the ordinary mail drops. That was the USPS’s idea. And it’s really dumb, because it does nothing for safety, yet wastes a tremendous amount of time.

Here’s how it works today:

You put your book with, say, a $3 Priority Mail stamp into a mailbox — or perhaps into your own mailbox with the flag up. The USPS picks it up, takes it to the post office, sees that it weighs more than 16 ounces, delivers it back to you and then waits for you to come down with it to the post office in person and hand it to a clerk, who stamps it — thump — and tosses it onto the pile to be delivered. That thump may be the security measure: If she/he thumps it and it blows up, they know it’s a bomb. And it’s a deterrent, because you know you’ll be blown up along with the postal worker, hence you’ll decide not to be a terrorist after all.

Here’s how it should work:

The USPS should go back to collecting these packages as it always did. For security purposes, by all means inspect and examine anything above a pound if that will help, just as the Gore Commission recommended. End of discussion.

Can you imagine FedEx or UPS sticking with a customer-unfriendly policy like this so long?

Anyway, here’s what some of you had to say about Going Postal II and its predecessor:

From a postal worker on AOL:

I also work for the United States Postal Service. I am a supervisor in an area we call 010, which is the acceptance area, where we cancel all of those 17 oz. packages/magazines. I couldn’t give a —- what you send through the mail system, but I do. Apparently there wasn’t anyone you knew on TWA 881. We have the FAA inspectors with us during our entire shift and we accept their input. In other words —- OFF! Use FedEx, UPS, or any other blind company that’s just in it for a profit and doesn’t care about the safety of your family. I will still try to.

It was TWA flight 800, not 881, and I actually did know someone on it. But I don’t think allowing me to buy registered postage strips at the post office, as I suggested — showing government ID and maybe even having my picture taken — would jeopardize security or lead to more planes blowing up. Today, I can simply hand my package to a postal clerk with no ID. Why is that safer? “Or,” I asked this gentleman in my reply, “are you just very angry in general?”

He wrote back:

No sir I am not JUST very mad. I am angry with the bad rap the USPS is getting from the 16 oz. rule. I am a front line supervisor, what would probably equate to your boss. As you know, your boss more than likely has no power and just follows guidelines. I am the same. Please take note the USPS employees (and supervisors) are mostly veterans and disabled vets who feel the same. I myself don’t understand taking a package to the counter.

So I faxed Postmaster General Marvin Runyon my suggestion a few weeks ago, following the glowing review of his job performance you may have seen on NBC Nightly News, and feel sure I will get an intelligent response — and the regulation changed — any day.

From Thad Fenton:

My goodness! I’m surprised you received such responses to your ‘Going Postal’ column. I fail to see how standing in line will keep a wacko from dropping off a bomb. And does anyone think that the counter clerk will be able to come up with a police sketch days, weeks, months or years later after a mail bomb tragedy? If the USPS were really serious, they would bomb sniff all packages in the sorting centers regardless of how they were received, and abolish the drop off restriction that needlessly clogs already overcrowded USPS walk-in facilities.

From Karen Moulder:

I am a former USPS employee, having had the good sense to quit my job last June. I just want to comment on the regulations regarding the necessity to have your 16+ oz (stamped) packages hand canceled by a postal clerk. I find it incredible that this is required, when airline food service employees that board these planes have not had to go through any personal security background checks and may board planes without restriction. It seems to me that this is just another lesson in futility. I do like the idea of registered stamps. However, because it makes sense, it will undoubtedly not be implemented. Regarding the term ‘going postal’ — lighten up postal employees! It’s a joke…you know your (sic) not crazy (don’t you?).

From Jeff Borders:

I work for the Post Office, and I couldn’t care less what you think about security measures or standing in line. It seems someone of your caliber would not have to participate in such mundane chores but rather could afford to pay someone to do that for you. Furthermore, I find it hard to believe that your company does not have a postage meter, which allows you to bypass all of this. If you can’t afford these simple luxuries, then I don’t believe I need your investment advise (sic)!

The theory here being that it’s OK needlessly to inconvenience low-income people? (Or that high-income people — like that DuPont guy with the wrestling fetish — don’t occasionally go wacko also?)

From Mike Finnicum:
Could not help but read the responses to your suggestions regarding the Postal Service. I very seldom send emails like this, but I think some people need to get a life! We use FedEx and Airborne a lot because of the lack of real ‘Business Practices’ of the USPO (sic).

From Robert at AOL:

I loved your article on the USPS, and the replies. One other point though. Regardless of our problems we have the greatest mail system in the world, no if, and or buts. The best. I love the USPS. (Try mail in Saudi, or India, or….)

That’s the spirit! And I largely agree. But there’s always room for improvement — even with the United States Postal Service.

Tomorrow: A Useful Tip and Just One More Suggestion

From Dr. Thomas Novinger: “I just wanted to send you a note concerning a check for $1.32 I recently received. I believe that my friends the attorneys at Heffler, Radetich & Saitta sent it to me to make me feel better about the $4000 I lost when Centocor stock crashed a few years ago. The travesty propagated by the legal profession in its efforts to protect us from ourselves and enrich themselves in the process scares and saddens me.

“I know that this issue is near and dear to your heart (I purchased and read your recent book), so I wanted to pass along my little story.

“Where will this litigation nightmare end? My colleagues and I think about being sued every day and to say the least it affects how we interact with our patients and how we manage them. Recently we asked a family to find another practice to care for their children because they are suing us. (We waited 12 months after they filed). Apparently they saw no problem with continuing with the same physicians they were suing. They look upon suing physicians with the same perspective as picking up some groceries after work.

“I’m sorry to digress. I know that medical malpractice reform is a different ball of wax from the securities litigation reform you were attempting in California. But they are all lawyers. And they are significantly affecting how a lot people and things interact today. And not in a positive way.”

Of course, the lawyers would argue — with some justification — that the fear of suits like the one that netted you $1.32 help to keep managements honest. And that the fear of malpractice suits does more to chasten doctors who might otherwise be careless or unprofessional than the medical profession’s own sanction procedures do.

So I don’t agree all lawyers are the same or all legal actions are unwarranted — and I know you don’t either. The problem is finding the right balance. With regard to securities litigation, Congress made a good attempt to restore some sanity to this. It passed overwhelmingly and then overrode a veto to become law. But that still leaves 50 gaping loopholes; namely, taking these actions to state court instead. Our idea in California was to try to restore balance at the state level as well. Not shut these suits off, by any means, but raise the hurdle a bit so that suits without serious grounding are not automatically brought any time there’s an earnings disappointment and a company’s stock tanks. We lost; the lawyers won. What else is new?

Click the hyperlink above for a little more on this if you’re interested.

From Doug Aker: “A lot of talk these days about the new Education IRA’s. My question: Don’t these accounts suffer from the same problem as putting college savings in your child’s name, namely colleges view money in them as 100% directed towards college expenses and you wind up getting less in financial aid? I am beginning to think much of the new tax changes that are supposed to help parents with college expenses are going to wind up hurting them by putting more money in their pockets to spend on college and consequently less financial aid. The change that really scares me is the one that allows parents to withdraw money from traditional IRA’s for college expenses. It used to be that the parents’ retirement money was protected from financial aid calculations. But now, what’s to prevent colleges from forcing parents to withdraw money from their IRA’s to pay for college.”

Good questions. My guess is that funds in an Education IRA, but less likely in retirement IRAs, will have that effect you fear — though this is a judgment call the colleges will have to make. Nothing prevents colleges from considering whatever they want in their calculations. After all, providing financial aid is not a college’s legal obligation. (It’s interesting how people have come to assume that people should not save up for their own kids’ higher education, that they’re entitled to have it subsidized by someone else.)

But for most people, I think this is academic. It’s student loans (and the new higher-education tax breaks and HOPE Scholarships) that will provide the aid, not outright grants. And that part should be unaffected by what you’ve saved.

So save up!

JEWISH PARROTS

“The Jewish parrot joke you published is a modified version of one Isaac Asimov included in his books Opus 200 and Isaac Asimov’s Treasury of Humor. It’s on page 242 of my hardcover copy of Opus 200.” — hss

A VERY GOOD INVESTMENT

“I bought some Hallmark cards today at 75% off. If I use them next year, that is a 300% annualized return (after-tax dollars). Good investment.” — Vann Roberts

YOUR NEW (USED) TUXEDO

“When it comes to tuxedos, you should always buy a used one. I got a great Ralph Lauren tux for $60.00 last year. Musicians, who always need tuxes to perform never buy new ones. (We are too poor) I have never had occasion to rent a tux but I bet it is the only thing that you can buy cheaper than you can rent for one night. I bought my first tux back in 1976 because all entering freshmen in the Indiana University School of Music were required to own a tux. Cost was $60.00 then too. Thus my average cost of clothing for 20 years was $3.00 per year (plus the cost of black shoes and socks and assuming all dividends were reinvested and no commissions paid).” — Robert Graham

But where, I wrote back, does one buy a used tux in one’s size? The thrift shop?

“Some places sell used tuxes and have a large selection. Most thrift stores seem to have tuxes too. I am thankful that people get fatter as they get older because most of the tuxes seem to be in great shape. People must have just outgrown them. I guess that it helps that tuxes are worn so seldom that they don’t look nearly as seedy as some of the suits that you see in 2nd hand stores.”

AN EASY $10,000

“Thank you for writing about the AOL Visa card and the prospect of borrowing a large sum interest free with their ‘convenience checks’ only to repay it every 7 weeks. Suspecting what you suggested (that they’d soon shut it down), I immediately rounded up one of those ubiquitous AOL disks, logged on, and signed up. I was almost in disbelief when, one week later, my account (with a 25K credit line) was established. Another week later, I had a set of convenience checks and made my first draw.

“While I liked your suggestion of just placing it in savings to earn a few extra dollars, I chose to be a bit more aggressive and placed it directly into my Internet trading account. Here we are, five and a half weeks later, and I’ve generated over $10K in trading profits with their money. Admittedly, I’ve made some well-timed trades and been the benefactor of a volatile market, but $10K? It sounds unbelievable, but I have the brokerage statements to prove it (and will gladly provide them). My strategies haven’t been anything too amazing, I typically trade in high-tech stocks (they’re more volatile), buy them when they appear cheap, and get out on a point or two, depending on the price of the stock and the percentage gain.

“In any case, I wanted to pass on a success story and wish you the best this holiday season. You’ve certainly helped to make this a wonderful Christmas for myself (sic) and my family.” — Seth

Of course, $10,000 beats the $160 or so in interest you might have gotten doing it my way. But bear in mind that if the market had gone against you, I might have helped you lose $10,000. Borrowing to speculate scares me — even interest free. (Gosh, I’m boring!)

POOR GLORIA

“You don’t know me from Adam…..and vice versa i assure you….however, i need some help. So here it is. I have approximately $3,000 to invest or trade or something. now what i need to do is make about 25,000 somehow. in the next two years. i am a 45 year old woman who needs a break and this seemed like the most likely place for me to get one. A: i know absolutely nothing about stocks, trading or the likes. B: I am rather intelligent. C: I am more than willing to learn and D: i can charm the pants off of just about anyone. But i digress…. Please help me out here, Andy, turn me on to someone or something that can make my small, totally insignificant life a little happier and a whole lot more secure. Believe me, if you do this small favor for a close member of the ‘fellow man’ club you will be sleeping even better then i am sure you do now.” — Gloria

Unfortunately [I wrote back], there is no legal way to octuple your money in two years — let alone after taxes — that doesn’t involve enormous risk and isn’t essentially the same as going to Las Vegas. (Actually, if you learn to count cards at blackjack, you just might be able to do it — and pocket your $25,000 over a few weeks play before you become known as a card-counter and get kicked out.) Much better, if you can, would be to try to find some extra work you can do to earn an additional $15,000 or so a year, which could net you $25,000 after tax within your time frame. Sorry!

What’s sad and scary is that someone like this clearly does not have the funds to risk in the stock market, nor the knowledge and seasoning to go it successfully alone. When such people begin buying stocks, two clichéd images force themselves into mind: lambs being led off to Someplace Menacing, and a fat lady warming up her vocal chords to sing.

INFO

“dear sir marry christmas, pls send me info learn about stock thanks.” — sugianto

Short and sweet, no? I just can’t get these lambs and fat ladies out of my head.

It looks as if a balanced budget looms. Treasury Secretary Rubin noted on a talk show this past weekend that from November to November, Uncle Sam actually took in as much as he laid out.

But looks can be deceiving.

First, the bad news. The day Washington starts slapping itself on the back for balancing the budget — slapping that’s already begun — we’ll still be running a deficit well in excess of $100 billion. That’s because of how we account for the Social Security Trust Fund and scores of other, much smaller, trust funds. The surplus Social Security taxes we’re supposed to be piling up for our old age are actually counted as “revenue” by Uncle Sam. We’re spending, not saving, it. In 1998, the Social Security surplus is expected to be around $100 billion. So whenever you hear a federal budget number, just subtract $100 billion. If you hear that the budget’s balanced, then you’ll know we’re running a $100 billion deficit. If you hear we’re running a $35 billion deficit, then in truth we’re running a $135 billion deficit. A $50 billion surplus? No, a $50 billion deficit.

Imagine your own household budget. You spend $1,000 a week. You take in $940 — plus $60 that your daughter gives you every week for safekeeping. She’s saving up for college. Would you say your budget is balanced? You take in $1,000 a week, spend $1,000 a week. Yet, clearly, you are running a $60-a-week deficit, embezzling $60 a week from your daughter. About $3,000 a year. The day will come when your daughter presents you with the bill for Dartmouth and expects you to pay it with all that money she earned mowing lawns, sitting babies, designing web sites.

In Uncle Sam’s case, it’s not $3,000 but upwards of $100 billion (though still just 6% or so of annual revenues).

The further bit of bad news is that if we do achieve a balanced budget — which is to say a $100 billion deficit — we will have done it in a prosperous economy. Imagine how the deficit might swell in a recession.

So before you rush out to spend the hoped-for surplus now much in the news, please bear in mind — and tell all your friends — it’s not a surplus at all.

Or is it?

Here’s the good news. Because of the way Uncle Sam accounts for what any ordinary business would term “capital spending,” things may not be nearly as bad as they seem.

When a business buys a machine or a county builds a road, it amortizes the cost over the life of that machine or road. (I’m oversimplifying, but this is the general idea.) When Uncle Sam buys a machine or pays much of the cost to build a road, it “expenses” the full amount then and there, just as if it were paying the phone bill.

So just as we’re shortchanging our children by the way we account for the Social Security surplus — spending the money we should be saving — so are we shortchanging ourselves in their favor by treating as a current expense the cost of projects that will benefit them many years into the future.

You will be forgiven for wondering why we don’t just do the accounting properly. Why not exclude the Social Security surplus from the budget numbers? And why not charge to future years a sensible portion of the capital investments we’re making, as any business would? Hello? Is anybody home?

The first part — excluding the trust fund surpluses from budget revenue — would be easy. But the second is tougher than you might imagine. Clearly, building a road or a bridge is an investment. How about a tank or a fighter plane? Funds for education? Midnight basketball? All these are investments in our future. (The goal isn’t the basketball game per se, but helping to steer kids down the path to productive citizenship, working and paying taxes, rather than the path that leads to crime and incarceration, absorbing taxes.) Yet where would it end? One can imagine Congress sorely tempted by the lure of this kind of accounting. Could all education expenditures be written off over 50 years rather than “expensed” all at once? You can just see the free-for-all.

So in an odd sort of way, our irresponsible Social Security accounting may be more or less balanced by our conservatism in expensing our capital expenditures.

In a sense, one might argue, our accumulated national debt — the sum of all those annual budget deficits we’ve been running, now up to about $5.5 trillion — is like the long-term debt of a company that’s been making investments in the future. At a bit under 70% of our Gross Domestic Product, it’s higher than we’d like, but by no means insupportable. It’s been higher, it’s been lower.

Especially in prosperous times, we should lean against the wind to lower that 70% ratio. Gradually reducing it to the 30% or so it was before the Vietnam war would improve our fiscal health. But here’s the thing many people miss: It is the relative size of the debt, not the actual dollar amount, that matters. A $100 million debt would swamp most small businesses but mean nothing to an enterprise like Intel. Our $5.5 trillion debt would swamp Germany or France but is not the end of the world for us. It’s that 70% ratio, not the $5.5 trillion, we need to focus on and reduce.

If — with honest accounting for the trust fund surpluses — we ran a $110 billion deficit this year, we would expand the national debt by 2%. But if at the same time the economy grew by 5% — say, 2% inflation and 3% real growth — then the national debt would actually have shrunk relative to the economy as a whole. Keep this up for 50 years — 2% growth in the debt, 5% growth in the economy — and you have a $90 trillion economy and a $15 billion debt. At which point the debt, far from approaching 70% of the gross domestic product, would be not quite 17%.

This is not to deny the symbolic importance of a “balanced budget,” however oddly it is calculated. But it does give one a somewhat more sanguine feeling about our fiscal affairs.

Less important than a zero deficit, let alone paying down the debt, is making the money that we do lay out count. Six hundred dollar hammers are obviously out; welfare payments to those who don’t need them only breed dependency and cost self-esteem; unneeded pork barrel projects deserve the line-item veto.

In years of high tax revenues and low unemployment, we should be paying down the debt. But in most years, it’s enough to have it grow slower than the economy as a whole.

This is not the stuff of stirring slogans, bold goals, or calls to action. For that you need something simple: Balance the budget. Pay off the debt. But even if “perception is reality” — an important point for investors to bear in mind — the reality is, nonetheless, somewhat more complex. We haven’t balanced the budget, and we certainly shouldn’t spend the “surplus.” But neither need we pay back that $5.5 trillion.

I know for some of you it’s a nightmare, but here’s the way it plays out:

1. The President leaves office January 20, 2001. History winds up rating his performance higher than many expect. Peace, prosperity, a balanced budget, an emphasis on inclusion and education, a vision for the future — not a bad eight years! (The fact that he lost some money decades ago in a real estate tax shelter called Whitewater turned out not to be tremendously relevant to most Americans’ lives after all.)

2. He plays a year of golf and then, too restless for the Supreme Court, becomes junior senator from Arkansas — and through his intellect, energy, people skills and standing, essentially winds up running the Legislative Branch. Not literally running it, of course, but then when did a president entirely run the Executive Branch either? I’m told that in any large organization, the CEO has to lead more than dictate.

2. Then, around age 72, finally tiring of the endless hubbub, he is appointed Chief Justice by President Gore, so he gets to head the third branch of government as well — the ultimate hat trick.

Now, you’re thinking, Whoa! Unless they repeal the two-term amendment to the Constitution, how could President Gore appoint him Chief Justice in 2018?

The answer is — and this surprised me as much as anybody — Al Gore, in some last minute convention maneuvering, actually agrees in 2000 to be Bill Bradley’s running mate.

“After all,” Bradley tells him, “you’ve been the most productive and effective vice president in American history. And after 16 years in the post, you’ll be irresistible. Anyway, the country needs you.”

“Vice President — again?” Gore moans. But, patriot that he is, he signs on, does another great job, and then, finally (after a four-year hiatus when Newt briefly captures the White House), becomes president himself and appoints Bill Clinton Chief Justice. (Bradley, meanwhile, goes on to coach the Knicks.)

No, wait. That’s not right. Who’s kidding whom? It’s Gore/Bradley, not Bradley/Gore. The reason President Gore gets to appoint Bill Clinton Chief Justice in 2018 can be explained in a single word:

Tipper.

Wallace gave me this. Wallace is one of those terrific whirlwinds who stirs up everything around him — cajoling, energizing, shouting (but with a Southern accent, so it’s impossible not to be charmed) — and I think of this as Wallace’s prayer, though in truth someone just gave it to him and he passed it on to me.

Perhaps there’s a Wallace in your life.

Perhaps you’re a Wallace.

In any event:

Dear Lord,

So far today, God, I’ve done all right. I haven’t gossiped, haven’t lost my temper, haven’t been greedy, grumpy, nasty, selfish, or over-indulgent. I’m really glad about that. But in a few minutes, God, I’m going to get out of bed, and from then on I’m probably going to need a lot more help.

Amen.

Bonds are “in” these days, perhaps with good reason. If we have a recession, interest rates could fall further (i.e., bonds will rise — it’s two ends of the same see-saw) and earnings could fall, which could be bad for stocks.

Normally, I shun bonds. Not enough excitement. And I certainly shun long-term bonds when interest rates are low. Too much interest-rate risk. But as I wrote in Worth a while back, there are some long-term bonds I’ve bought — very long-term bonds, backed by a very good credit (well, we’ll see about that), selling at an extraordinary discount.

Specifically, these bonds are the “fives of eighty.” Not the 5% bonds of 1980 or even 1880 but, verily, the fives of 1780, backed by the full faith and credit of the United States. By now, I have a whole bunch of these little suckers, many of them bought for the price of a nice dinner. That’s really about all they’re worth if they’re canceled, as, according to Alexander Hamilton’s report in 1795, all but $90,000 of the approximately $3 million issued were. Most of my bonds, however, issued in denominations between $1 and $20, are among the $90,000 that remained unredeemed. Arguably, they have been accruing interest for 218 years.

On a $20 bond — one of which I managed to buy from a dealer for $45 — the interest comes to $832,333.

“Hello, I’m here,” I have visions of myself saying to the teller at the Federal Reserve Bank in Washington, handing him one of my $20 bonds for redemption.

“Just a minute, Sir,” the teller would say, nonplussed. And while that “minute” would doubtless stretch into decades of litigation — look how long it took the Eskimos in Alaska — my little bonds would be accruing interest at 5% a year all the while.

Then again, they’re only worth what someone will pay for them, which these days is typically a few hundred dollars each.

To do this justice, I have to ask you to back up a second and picture it. There we were, this pathetic little fledgling country trying to fight the British Empire. Any little kid learns the basics — the shot heard round the world, George Washington and the terrible privations of the winter at Valley Forge. You know. But how did we finance all that? Who paid the soldiers? Who paid for the salt petre?

The answer, oversimplified to be sure, is that the Continental Congress printed paper money. It quickly lost value, as paper money printed to finance wars so often does. By 1780, Continental Currency was trading for about a fortieth of its initial value — about two and a half cents on the precious-metal dollar. At that point, Congress officially exchanged a couple hundred million dollars of the near worthless paper money for just a tiny fraction as much sound paper money, guaranteed both by whichever state issued them (each state issued a portion) and, for extra safety and to inspire extra confidence, by the United States of America, and hand-signed on the back by an authorized agent thereof.

Will the U.S. government ever make good on this obligation? I have no idea. Needless to say, I’m not holding my breath. But Hamilton does use words like “absolute obligation” on which “interest is due perpetually until paid” in his report, and the precedent of compound interest is fairly clear. So who knows. The scale of the thing is enormous, but not so enormous as to be impossible. If all $90,000 were presented at full accumulated value (and I like to think a lot of these bonds have been destroyed in fires or lost to floods or tossed out with old newspapers), Uncle Sam would have to fork over about $3 billion — $20 million of it to me — and then take back perhaps $1 billion in income tax on the interest. A lot of money, but not much to maintain the creditworthiness of the United States of America. Of course, at simple rather than compounded interest, I’d be getting about $5,000 instead of $20 million. And if I ever did get any meaningful portion of that $20 million (I don’t want to tip my hand here, but I just might be willing to settle for twenty cents on the dollar), I’d be consumed with guilt — the primary means by which bleeding hearts react to good fortune — and would presumably give most of it away. Still, it’s fun thinking I have $20 million for which I paid about $30,000.

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salt petre: This substance, rumored to have been put into our milk at summer camp to keep us from getting too restless, was an important component of gunpowder in the eighteenth century. For $260 I purchased at auction a Salt Petre Inspection certificate dated June 11, 1776. Back to Text

“Quite a few years ago I read a book by you in which you recommended Mutual Shares. I was finishing my MBA at the time. I began to invest in it and never stopped. I’m 42 now, earn $60K in salary and have never earned more. I am nearing millionaire net asset status and will most probably achieve it long before age 50 — even with the expected attenuated gains from the market in coming years. Compound interest and understanding taxes can take one a long way. A little good advice helps too. Thanks. Please withhold my name if you choose to use this note in your column.”

Listen: I take no credit for this. Almost none of my advice is original; I got it from people like Aesop and Ben Franklin and Charles Dickens. From Mark Twain and Tolstoy. But at this time of New Year’s resolutions, I think it’s worth pointing out that this stuff — slow but steady common sense stuff — really does work. And needless to say, it’s gratifying to see the results.

Live beneath your means today, make a plan for tomorrow, work hard, and, with any luck, you’ll be a millionaire before too long, also.

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Aesop: “Slow and steady wins the race . . . . A crust eaten in peace is better than a banquet partaken in anxiety . . . . It is thrifty to prepare today for the wants of tomorrow.” Back to Text

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Ben Franklin: “Necessity never made a good bargain . . . . There are three faithful friends — an old dog, an old wife, and ready money.” Back to Text

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Charles Dickens: “Annual income twenty pounds, annual expenditure nineteen six, result: happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result: misery.” Back to Text

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Mark Twain: “October. This is one of the singularly most dangerous months to speculate in stocks. Others are November, December, January, February, March, April, May, June, July, August and September.” Back to Text

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Tolstoy: “Buy term insurance and invest the difference . . . pay all your credit card balances in full within the grace period . . . investing 20% or 25% of your portfolio in non-US stocks can actually reduce the risk of your portfolio slightly while at the same time slightly increasing its expected long-term return.” Did you know Tolstoy was actually a financial planner in the Sevastopol office of Shearson, Lehman, Hutton, American Expressski, as it was known back then? No? OK, well did you know he actually did write these words, in 1892: “The more is given the less the people will work for themselves, and the less they work the more their poverty will increase.” Money advice any parent should recall at allowance-negotiation time with the kids. Back to Text