Author: A.T.

I know many of you know this or have done it, but in case you want the flood of unsolicited mail and/or dinnertime phone calls to slacken, just send notes to the following. In a few months, it should taper off somewhat. Just make a note to renew your request in October 2003 – it sticks for 5 years.

Mail Preference Service
DMA
Box 9008
Farmingdale, NY 11735-9008

Phone Preference Service
DMA
Box 9014
Farmingdale, NY 11735-9014

Of course, do this and you may very well miss your chance to join the Cheese of the Month Club.

Tomorrow: Well, sure! The Cheese of the Month Club

There are those who think Dell Computer — an outstanding company by any measure, some of whose outstanding products I have been pleased to own — is an overvalued stock.

I’m not saying either way. (OK, I’m saying. I think it probably is. I think somehow, someday, little outfits like Compaq, IBM, Toshiba, NEC, SONY, Gateway and maybe even Intel or who knows who else may find a way to compete and, at the least, narrow Dell’s profit margins and slow its growth. I have, however, been wrong before.)

What I know for sure is that it’s fun — pointless, perhaps, but fun — to play with DELL’s market cap … to marvel at it … to find new ways of expressing the giant value Wall Street puts on it. All the more so when you consider that Michael Dell is (a) reputedly a very nice guy and (b) one of those astonishing modern-day American success stories who started the company in his dorm room.

It is for this reason that I have summoned all the subjects of my kingdom to construct on my own nascent Web site a giant “scale.” Its sole purpose (at least for now): to weigh the market cap of DELL, based on today’s prices, against a handful of not-entirely-unknown stocks you may have heard of as well. Click here to see it, and to see what it takes to tip the balance.

LET’S BUY MARS

From Duncan Smith: “With regard to your ‘Let’s Buy Mars’ article today, I think some guy named Dennis Hope already owns all the land in the solar system (other than the Earth), and is selling it off bit by bit. Check out www.lunarembassy.com. They are selling property on the Moon, Mars, and Venus, at bargain prices. Who knows how this will stand up in court once people actually start settling on the Moon and Mars, but it’s a brilliant business scheme nonetheless.”

CORRECTION: IT WAS $24

From Brian Annis: “You write [with respect to the Louisiana Purchase and the purchase of Alaska, so why not Mars?], ‘Only the $23 purchase of Manhattan Island has not been ridiculed among early North American land acquisitions.’ Actually, it wasn’t just $23. The Dutch paid TWICE for Manhattan Island, and HAVE been ridiculed for doing so. They originally ‘bought’ the property from the Canarsee tribe, then had to pay for it again to buy it from the real owners, the Manhattan tribe.”

And — what was I thinking? — it was not $23, according to popular lore and the value of beads and trinkets; it was $24.

3Com Puts

From Jeffrey Schwarz: “Well, I guess it’s a good thing I didn’t buy those puts. Since I asked you that question [should he buy puts on 3Com, hoping the stock would fall?], 3Com continued to go up due to more silly rumours and improved earnings. (Whew!) Improved earnings should keep it higher, or it might make a good put-buying opportunity now. Either way, options seem to present an unfavorable risk/reward ratio for me. Sure, you have a chance to make a bunch of money — but from what I gather, you lose most of the time and money.”

Yep.

Not long ago I told the heart-warming story of an ordinary couple who never earned more than $70,000 between them (before tax) yet who, by living beneath their means and investing the difference, had managed to retire, aged 62 and 60, with $3 million in savings.

“OK, they are retiring with $3 million,” writes Kathi Derevan, “NOW will they give themselves permission to ENJOY some of the fruits of their labor??? Is there such a thing as saving TOO MUCH money for the future?”

To be honest, I’ve never met anyone who rued having saved too much, though such people must exist. But sure: memories are as important as dreams. The more money you spend today, I suppose the more you’re building memories (“Remember that fantastic new BMW we had, back when we could afford one?”) at the expense of dreams (“Someday, we’ll just kick back, financially secure, and really enjoy the last 30 years of our lives.”).

Ah, the memories. “Wasn’t it wonderful never weatherstripping or insulating to lower the electric bill? Those were truly blissful days.”

OK, maybe I’ve stacked the deck with those examples. I’m sure Kathi is not suggesting people waste money by failing to weatherstrip.

But how about this one, as a compromise example. Does it strike a good balance? “Remember that trek through France? We only really splurged on hotels two nights, but the best night of all was actually the one camping out along the river and killing a couple of bottles of wine under the full moon with that big loaf of bread.”

OK, I’m not sure you can still do that. I was 16 at the time. There may be “no camping signs” throughout Europe now, and it may actually have been a river in Poland, not France. I don’t remember. My point is: It’s a balance. And if you do it with a sense of humor and a sense of gamesmanship, you can live beneath your means, saving for the future, and still enjoy it. Indeed, one thing savers enjoy most — without being miserly — is their sense of security and control. Driving a car you own outright may be more enjoyable than driving a fancier one on which you have to struggle to make the payments. (Every time my car is stolen — four times now — Charles, who has a different philosophy about money, cheers. Yes!, he thinks. Andy will finally get a new one! But then the police find it, I stitch up the top, and thank my stars it wasn’t an expensive new car they had stolen.) This is not the first time I’ve proposed a bumper sticker that would read: “Sure. But it’s PAID FOR.”

Easier to joke about this, I know, when you’re lucky enough to be considered not poor for driving a wreck, merely eccentric. If I couldn’t afford a BMW, I might not be so comfortable in my Frankenstein convertible.

My father said something wise that Kathi reminds me of: Life is not a business. So, sure, people should enjoy the fruits of their labor. But the sense I had — just an intuition, really, from the tone of the message that gave rise to this exchange — was that Mr. & Mrs. Retiree, aged 62 and 60, had enjoyed their pre-retirement lives. But frugally.

From Elliott: “I noticed that State Farm is being sued for forcing their customers to use generic parts when they bring their car in to be serviced. Do you have any thoughts on this matter? I noticed that Nader, et al., are backing the Insurance Companies on this one.”

And rightly so. Ralph may be a Big Fat Idiot when it comes to personal-injury auto insurance, as I’ve argued at length elsewhere, but he’s very much on target if this is indeed his position on replacement parts. Generics are usually a better buy when it comes to many consumer items — it’s just wiser shopping. So if State Farm — a mutual company with no rich shareholders who profit from screwing consumers — thinks it’s in the interest of its customer/owners to hold down costs by specifying generics, it probably is. (All the parts, as I understand it, have to meet quality tests.) Otherwise, you give GM, etc., a monopoly — only GM can sell genuine GM parts — and monopolies are not consumer friendly.

If there’s a demand for a policy that would cover “only parts from the original manufacturer,” insurers should offer it (some already may), and consumers who want to pay the extra cost should be free to choose it.

Ah, the rush. I get so excited writing about auto insurance. Tomorrow, back to less exciting topics.

From cheery old Lubenovic: "What kind of financial strategies/tactics would you recommend for a worldwide recession or … depression?"

This would be so easy if you knew for sure a recession/depression were coming. It’s a possibility, of course, but by no means something you can "count on."

If you could, you would sell all your stocks and real estate and buy puts. (Puts leverage your pessimism much more than selling stocks short directly — and have the virtue of limiting your loss to 100% rather than leave it open-ended if you are wrong.) And/or you would put a good chunk of your money into U.S. Treasury securities. And you might put a few bucks into silver dimes, just to have some walking around money if the value of paper currency were ever called into question.

And then, when things seemed worst and most hopeless … when stocks were being given away at prices that would look good unless the world ended altogether … you would trade most of your profits in those puts and Treasuries and buy like a bandit. Because I can say with the confidence of a man who knows you will not be around to rebuke me if I am wrong: the world will not end.

But here’s the catch with a disaster strategy: We may already be a good deal of the way into that disaster. Just ask that sliver of the globe that lives East of Prague all the way on out to the Pacific and Hawaii. So it may be that the world is poised to reinflate and grow, that interest rates will rise, puts expire worthless, and Treasury bonds (at least those of the long-term variety) sink like a stone.

My guess is that the true path lies someplace in between those two scenarios. We will not have a worldwide depression, but the easy years are behind us for a while. A quarter-point drop in the fed funds rate — swell surprise though it was — may not be enough to turn the world economy around.

Hence it makes sense, I think, to spread your money — if you’re fortunate enough to have enough to spread — over the "four prongs" I have written about from time to time: some cash/liquid money first (money-market funds, T-bills, whatever); an inflation hedge in case the world reflates (your home, stocks over the long run, though inflation would kill most stocks at first); a deflation hedge (long-term Treasuries); and a "prosperity hedge" in case we really have already hit bottom (stocks). How you best weight these prongs depends on your own circumstances (80-year-old widows and 29-year-old eye surgeons are not the same) and your own view of what might happen (or at least your own view of how unhappy you would be if certain things happened, so you can try to stay within your tolerance for pain).

What will happen?

All I know for sure is that no one knows. If things get bad enough, prudence could even come back into fashion. That, no doubt, will be the bottom.

“As a fixed-income trader,” writes Sarah, “I’ve always understood your $10 bottle of wine vs. $108 case example” [wherein one can technically earn a 177% tax-free return on one’s money], “and I certainly put those principles to work in my own shopping (thank you www.NetGrocer.com ) but NOT ON WINE.

“If I buy 12 cans of Starkist Tuna fish when it’s on super sale, I cheapen up my per can cost substantially. Same with the 12 pack of toilet paper. But if I buy a case of wine, we drink twice as much! (Basically we have wine with tuna, wine with pizza, wine with everything.) Some items simply cannot be effectively stocked!

“Conversely, my fiance said over dinner last week: ‘Your garden has saved us a fortune.’ I immediately knew what he meant. It wasn’t that my tomatoes and peppers were any less expensive — after fertilizer, soil, etc., I broke even or spent a little more. But staring at all that fresh produce made us find reasons to eat in rather than racing for the nearest take-out menu (ah, Manhattan) or going out. Life, and saving, works in odd ways.”

A.T.: Ah, Manhattan, and ah the million-dollar-plus apartments that have terraces for a garden. Or Billy Joel’s old apartment that a crazed real estate agent once showed me in the daft hope I might actually abandon my $41,000 long-ago digs for this unusual one-bedroom-with-a-greenhouse on Central Park South that was a steal at little more than $1 million but came with a $50,000-a-year maintenance fee.

But however they grow this stuff, Sarah makes a charming point.

Which brings me to the recent cover story in the Boston Globe Sunday magazine profiling Edgar Dworsky. Every worthwhile movement needs its extremists, and the more crazed penny-pinchers among you might enjoy reading about him, as I did, and how he beat the Wiz (this one left me with mixed feelings), by clicking HERE.

Dave Davis sends us this “actual exchange between an attorney and an expert witness during a trial (source: Massachusetts Bar Association Law Journal).” Perhaps it speaks for itself.

Q: Doctor, before you performed the autopsy, did you check for a pulse?

A: No.

Q: Did you check for blood pressure?

A: No.

Q: Did you check for breathing?

A: No.

Q: So, then it is possible that the patient was alive when you began the autopsy?

A: No.

Q: How can you be so sure, Doctor?

A: Because his brain was sitting on my desk in a jar.

Q: But could the patient have still been alive nevertheless?

A: It is possible that he could have been alive and practicing law somewhere.

MORE FUNNY NEWS

“Since you enjoy www.bobsfridge.com/skew.htm, may I suggest The Onion, www.theonion.com? It is also a parody news site, but adds editorials, reactions from ‘the man on the street,’ and may be a little funnier. It is ‘R’ rated for language at times, but seems to be an equal opportunity basher, no one (or party) is safe from their satire. Has a bit of advertising clutter, but the price is right – free.” – Chuck McDannald

AOL 4.0 — Much Better

I know you will think I’m a feeb for using AOL — me and 13 million other technologically challenged souls. Yes, it’s cheaper and faster to use any of a myriad of ISPs (Internet Service Providers), but … well, it’s a long story. So, while I certainly would not suggest you switch from a cheaper, faster service to AOL, I did want to let you know that AOL 4.0 finally gets it right — or sufficiently right that I’m happy using it a lot more than I used to. In case you’re an AOL user who hasn’t bothered to upgrade (which you can do online — get it started before you go to bed, then wake up and finish), do it. It’s much better than the old AOL, both for e-mail (finally, a fairly decent address book function) and for the Web.

YadayadayadaDAAA, YadayadayadaDUHHHH

From Dr. Steven Rubin: “It’s clear from today’s column that you’re not a New Age music fan. The music you’re referring to is a track called ‘Adiemus’ from a CD called ‘Pure Moods’ (Virgin Records); not only are the rest of the cuts not nearly as irritating, but I look for that CD for ‘relaxation music.’”

Does Anyone Remember MYM?

“I would like to get an updated version of Managing Your Money for Windows 95. I have been using version #11 on DOS. I once tried the Windows and it really screwed up my whole program. Things I didn’t even have were listed. Please e-mail some info!!!!” – Bev Wertheimer

A.T.: MECA is out of the retail software business, and I am five years out of MECA. (When the company was bought out, one condition — sadly — was that my contract be bought out, too. Mope, mope.) I happily use the DOS version 12 of MYM which, like version 11, is far superior (in my mind) to the Windows version. I plan to keep using it (with lots of backups, etc.) until Bill Gates does something that makes me finally switch to Quicken. But MYM DOS runs fine under Windows 95.

I do print out all my data each year, alphabetically and by date and by budget category, and might do it more frequently if I ever felt my data were threatened.

If I ever do switch to Quicken or something, I imagine I’d do it January 1 of some year and keep all the old stuff on a DOS-compliant computer. Surely there will be some of those for a long time.

Note to non-MYM users: As good as MYM DOS is, you would be nuts to switch to it (and it’s not available, in any event).

Erich (who deserves his last name attached, but did not include it) writes: “Regarding Internet investing scams, how about the SEC requiring web sites which give out investment advice to display a link that people could click that would give them information on avoiding investment fraud? It could be a link which would take people to a site at the SEC. The link could contain a list of frequently asked questions, a description of some of the more popular investment frauds and so on. It would not be very intrusive, yet it would provide an easy way to tell if a site is in compliance, because sites which did not display the link could be automatically deemed to be out of compliance. People might easily ignore such a link, but it is one of the more efficient, free-market and easily enforced ways I can think of to consistently remind investors to check the validity of investment advice.”

A.T.: If you like this idea – I do – why not print this out and mail it to:

Office of Investor Education
S.E.C.
450 Fifth St., NW
Washington, DC 20549

Or forward it to help@sec.gov.

If they’re looking for investment writers who would be happy to help assure that the link they develop is investor-friendly, I know some who’d be happy to do it free of charge.