Author: A.T.

Summer’s in the air; time to write up the “house rules.” How else to share a summer place with 8 or 12 or 16 friends — let alone strangers — and survive? (Rule #1: “We don’t care that you only ate one yogurt all weekend; we split the food bill equally.”) Or if you don’t share, read on: rules are still needed. You have — or are — guests.

It doesn’t even matter so much what the rules are, so long as you have them. That way, there’s a common understanding and the lawyers in the house — there are lawyers in every summer house, even if they’re bond traders during the week — will have some basis on which to negotiate.

Also crucial: have the phone company install two lines (or no phone lines, but not, under any circumstances, just one line), and pay extra for the type of account that blocks outgoing long-distance calls not made with a credit card.

I no longer take a share. After years of doing so and watching the rent rise each year, I said to my friends, “Why don’t we just buy the house?” My friends agreed whole-heartedly, with one small twist. “You buy the house,” they said. “We’ll visit.” And they have been true to their word.

Which is fine, because, number one, they’re great friends; and number two, I get the good bedroom. Fair’s fair. But over the years I have learned a few lessons. Most important, I have learned that a good host lets his guests know what’s expected of them (and then, for the most part, stays out of their way). A really good host, I suppose, might expect nothing of his guests — might wait on them hand and foot all weekend and then clean their sheets. But my guests are friends, not visiting dignitaries.

The obvious thing to do would be to have a maid come each Monday. But that would mean watching the dishes and towels pile ever higher throughout the weekend, sleeping with it all Sunday night, and then sharing the house one day a week with the maid. Not for me.

So a system has evolved. For one thing, there is a “conversation piece” subtly attached to the living room wall to get guests thinking about their responsibilities. It’s one of those black felt-boards with white stick-in letters, neon having been hard to come by on short notice, and it says, at the top: “No Maid.” It also says “No Smoking” and it used to say “No Abrasive Cleansers” (someone found my box of stick-in letters and changed that to “No Abrasive Guests”), and it always says “Welcome” with the first names of all the guests, as if it were the Holiday Inn welcoming an out-of-state bowling team. But the main thing it says is: “Best Guest ’96: C.E.K.”

“Who’s C.E.K.?” people invariably ask, a little defensive, their competitive juices beginning to flow. “What’d he do?” “Mopped the kitchen floor,” I lie, inviting them with my eyes to take the bait. Amazingly, some do.

In fact, I had to stop telling the truth about what C.E.K. did, and resume rotating the initials every couple of weeks, because I found that when I was truthful (what C.E.K. actually did was arrive one weekend with copper tubing, fixtures, and a soldering iron and install a dual-nozzle outdoor shower), everyone realized they could never top that, and so lost all interest in trying.

Each summer, I toy with distributing to each guest something a tad more explicit. Welcome! [it would say]. The following are a few things you should know to make your weekend thoroughly enjoyable [for me]:

1. There’s no maid. Your room was made up for you by ______________, the previous guest.

2. Several guests have not been able to find the washer-drier. It is located in the laundry room. Note also that, though many try, it is actually not possible to wash and dry sheets and then remake a bed all within ten minutes of the last ferry.

3. It’s OK to take out the garbage — and to do so before it gets too full to tie. Taking out the garbage requires actually lifting the plastic garbage bag … [detailed instructions follow].

4. The red recycling container is for . . . recycling.

5. The dishwasher is located beneath the counter, to the right of the sink. Contrary to what most people have apparently been taught, it is not a good idea to fill the bottom rack with a single giant pot. Furthermore, when the dishwasher is full of clean dishes, that does not mean it can’t be used, just that you have to empty it first.

6. The little gates to the roof deck blow off their hinges if not latched. Yes, it’s not windy now, but it may get windy later, so please latch them. Or just leave the $200 it costs to get them fixed each time.

7. We are temporarily without a deck attendant. Therefore, it is OK to put the furniture back yourself after turning everything on end for a water volleyball game.

8. You are on the Fire Island side of Great South Bay. Thus, in reading the ferry schedule to determine your departure — all good things must come to an end — it is necessary to look at the right-hand column.

9. “Weekend” is a measure of time (from the English: weekend) generally thought not to include “weekdays,” another common measure of time.

I would never actually have printed up such a handout — better just to shell out the $200 each time the little gate blows off than risk losing a friend. But I can’t say it hasn’t occurred to me from time to time as I’ve been making up the beds.

(OK, OK, all right. Accuracy compels me to acknowledge that things have changed a little since I first wrote, but never had the nerve to publish, that. My better half has run roughshod over my need for privacy and engaged the world’s most expensive maid. But I still expect you to latch the gate and empty the dishwasher when you come.)

Writes Alan from Iowa:

“I hate to admit it but I am relatively new to the stock market, and I am confused (but it seems so are all the experts who disagree with each other). My parents knew nothing about the stock market. My dad worked hard but invested nothing in the market because he didn’t understand it and was afraid of it. He put his money in the bank and some rental property (which caused him no end of grief — renters always called to have that leaky faucet or broken screen door fixed “right away” at 6 AM on a Sunday morning). So when I sold my publishing business back in 1983 I put all the funds into CDs. (“All” being around $750,000.) At first it was great, but then rates dropped and of course I missed a great time to be in the stock market. (I saw it rising but put off diving in because we all know the line you’re standing in moves slower than the one next to you UNTIL you switch lines. <g>)

“Then around 1991 I started reading two great books – Making The Most of Your Money, by Jane Bryant Quinn, and yours. I took the plunge, put 5%, then 10%, now roughly 40% of my “nest egg” into the market and have been rewarded really well. I read and memorized and obeyed the “don’t time the market” mantra and “invest for the long haul” (which I am; I won’t need to draw out that money to live on for 10, 15 years, maybe more) but now I’m told not to invest blindly but to “keep my eyes open” — but to what? The financial experts all say different things and, even more agonizingly, they all seem to make sense when I read them.

“I have my IRA money 100% in stocks now. The amount has doubled in the last 3 1/2 years, from $80,000 when I took it out of the insurance company to around $165,000 now (thank heavens I put half of it into Vanguard Index 500). A part of me thinks I should be happy with this phenomenal luck and take it back out, put it into 6 or 7% at the bank and let it ride for the next few years. Another part of me still can’t shake the “don’t time the market” saying I’ve tried so diligently to obey since “getting smart.” (With that “as soon as I do the line will start moving” thing in my mind again.)

“What would YOU do in my place? How would YOU stretch a $750,000 nest egg to live on for the rest of your life, if you were ‘only’ 43 and could live on $30,000 a year comfortably by buying smart, etc. as your book taught me to do?”

How about splitting your non-IRA money into thirds?

• a third in the Vanguard Prime Reserves Money Market Fund, into which you’d put your dividends from the other two funds, and out of which you’d spend your $30,000 a year;

• a third in the Vanguard Total Stock Market Index Fund, which might over the long run throw off 2% or 3% in dividends and 6% or 7% in growth to help keep pace with inflation;

• a third in the Vanguard Total International Index Fund, ditto.

Based on how you say you invested the $750,000 you got from selling your company in 1983, and the frugal way you live, you likely have upwards of $1 million now. Plus that $165,000 in your IRA.

With reasonable luck, you should have more than enough to withdraw the $30,000 a year you need — in today’s dollars — for the rest of your life.

I suggest Vanguard because the annual expenses it nicks you for are about the lowest around. In the investment race, that gives your horse the lightest jockey. I suggest a third in the money market, because that would give you enough to weather a long storm. I suggest splitting the rest between U.S. and international stocks, because that takes a good deal of the risk from the equation.

As for your IRA, I think it could make sense to take some tax-free profits and sit on the sidelines for a while, as you suggest, even though this will get me into terrible trouble with the “don’t time the market” people (of whom I am usually one). In the next recession (there will be one, although only economist David Bostian seems to be predicting it any time soon), interest rates could drop a bit further (good if you’ve put some of your IRA into safe intermediate-term bonds) at the same time as corporate profits and, with them, stock prices could decline. If we never have a recession, or stock prices never decline, good — you’ll be doing very well with your two Vanguard equity funds, and with the portion of your IRA you kept in stocks (and/or switched into international stocks).

It’s important to note that there’s no single right answer here. You should do what feels comfortable. One of the great luxuries of having a nest egg, and of living frugally, is not to have to worry too much about these things.

It’s also worth pointing out that you obviously have the talent to earn some more money now, if you choose to do so. Once you’re 70 or 80, still with the prospect of another 20 or 30 years ahead of you, your options will narrow. I know you’re not twiddling your toes in the lake [Iowa has no lakes, and I know from separate e-mails that this man’s hard at work pro bono]. But you still should consider earning a few additional dollars while you’re still young to increase your flexibility when you’re older. [OK, Iowa probably does have lakes, just as Kansas probably has hills someplace. But not many.] No rush, but keep your eyes open to the right opportunity. Do I sound like a fortune cookie? [Minnesota — now there is a land o’ lakes.]

One of my favorite New Yorker cartoons pictures a fearsome looking secretary sitting at a desk — don’t mess with this old battle-ax — and one executive rounding the corner, confiding to a visitor: “Miss Kessler is our poison pill here at Tolan, Merle & Fender.”

If you’re not sure what a poison pill is, read on.

From Debra Lavoy: “I own a bunch of stock in a company which made this announcement. Can you tell me what it means? Thanks.”

The announcement (which you should feel free to skim):

XXXX today declared a dividend distribution of one Preferred Share Purchase Right on each outstanding share of its common stock. Each Right will entitle shareholders to buy one one-thousandth of a share of newly created Series A Junior Participating Preferred Stock of the Company at an exercise price of $125.00. The Rights will be exercisable if a person or group hereafter becomes the beneficial owner of 15% or more of the Common Stock of the Company or announces a tender or exchange offer for 15% or more of the Common Stock.

The Board of Directors will be entitled to redeem the Rights at one cent per Right at any time before any such person hereafter becomes the beneficial owner of 15% or more of the outstanding Common Stock.

The Rights are not being distributed in response to any specific effort to acquire the Company. The Rights are designed to assure that all shareholders of the Company receive fair and equal treatment in the event of any proposed takeover of the Company and to guard against two-tier or partial tender offers, open market accumulations and other tactics designed to gain control of the Company without paying all shareholders a fair price.

If a person hereafter becomes the beneficial owner of 15% or more of the outstanding Common Stock of the Company, each Right will entitle its holder to purchase, at the Right’s exercise price, a number of shares of Common Stock having a market value of twice the Right’s exercise price. Rights held by the 15% holder will become void and will not be so exercisable.

If the Company is acquired in a merger or other business combination transaction after a person becomes the beneficial owner of 15% or more of the Company’s Common Stock, each Right will entitle its holder to purchase, at the Right’s then-current exercise price, a number of the acquiring company’s common shares having at that time of twice the Right’s exercise price.

The dividend distribution will be payable to shareholders of record on June 3, 1997. The Rights will expire in ten years. The Rights distribution is not taxable to shareholders.

So what does this mean? The short answer is that it’s a “poison pill,” designed to make it impractical for someone to pay you a bunch of money for your shares — much as they might want to, and much as you’d like to take it — if the company management doesn’t want to be taken over. It’s called a poison pill because if the acquirer did swallow your company, the mechanism described in the pill would be activated and make it a most unattractive meal.

A longer and more balanced answer, courtesy of a friend who is much better at this stuff than me, is that “poison pills force an acquirer to go through the Board of Directors in order to make the acquisition, instead of making a 51% acquisition of the Company, and perhaps giving the remaining 49% (usually the small investors) some junk paper to complete the acquisition once they’ve attained control. The pill forces the offer through the Board, so they can decide whether all shareholders will be treated fairly. The form of the pill has been determined by the case law surrounding the Time Warner and other deals in Delaware. [Once upon a time, Time Warner was offered $200 a share, if memory serves, when the stock was more like 80. Shareholders were dying to get their hands on that $200, but the directors, in their wisdom, “protected” them from this. You might think directors shouldn’t be allowed to act this way, but when you are incorporated in Delaware, as a great many public companies are, directors can do almost anything. The lawsuits over that particular incident helped lawyers refine the language of the poison pill.] It theoretically enables the Board to consider the full value of the Company over a ten-year period, and force an acquirer to pay up for that value.

“The truth is, these pills can have two effects. In the case of a Time Warner, they are used to entrench incompetent and venal management. In the case of a new, high-tech company, they can be effective in preventing a Milkenesque takeover by a bogus shell company. The trouble is, the investor cannot tell which it is in the case of her Company (if the lawyers have done their jobs correctly). In the case of heavily talent-driven enterprises, where the talent could leave in an instant, these pills are generally redundant. No one would attempt a hostile takeover of Netscape a year ago and throw out Barksdale and Andreesen. Today, with the product line more established, they might consider it (I doubt it, but it gives you a feeling for the range of consideration). In the case of a Time Warner, or a GM, you can easily see that the players in the executive suite have a lot less to do with the Company’s success. In these cases, the pills are designed to keep the G-IVs [$25 million private jets] flying.

“Without knowing the Company adopting the pill, its insider shareholdings and its business model and stage of development, it is hard to judge whether the pill is one designed to keep Beluga on the plates in the corporate dining room or one designed to protect minority shareholders in an attempted 51% takeover by an underfinanced and inferior entity. Clever, eh? Some of this concern is legitimate, fueled by the junk-led takeover attempts of the 80’s. Cash offers were made to 51% of the shareholders (generally institutions who knew where there certificates were, and tendered on time), and then some Chinese paper with an investment banking opinion was given to the remaining shareholders, once the new group had control. The remaining shareholders were generally small investors, who didn’t read The Wall Street Journal, or have a Bloomberg. This gave Management a great excuse to execute pills to protect themselves, while appearing to protect small shareholders. In some cases it is true, in some not. It is just hard to prove.

“The complicated preferred [described in this poison pill] is just a way of justifying a valuation of the target’s value in ten years time. The valuation needs to be re-set each year, and generally is, by the Board. No shareholder vote is required. Many of the big state pension funds, like Calpers, oppose these pills.”

*

OH NO, MR. CHO!

So I pass by Mr. Cho’s Sushi-To-Go last night, thinking I might tell him about his mention in yesterday’s comment, and to my horror see a “For Rent” sign in his window. Say it ain’t so, Mr. Cho! It was only the day before that I had trotted out of his place with 18 of the most delicious eel, tuna and salmon sushi, with no hint of disaster looming. But, yes, it seems that from all that fish slicing and rice twisting, this lovely sweet man has developed severe carpal tunnel syndrome and has to close up shop. I am bereft. And of course I feel a little silly recommending a place on the very day its “going out of business” sign appears. But maybe if enough of us stop by with good wishes, he will get well soon and come back. I hope so, Mr. Cho.

Tomorrow: It’s a Bird, It’s a Plane — It’s Lunch!

Gee, it’s great to be alive. You’re thinking that’s because the market is 7500 on the Dow, give or take, and — like the odometer that finally turns all its little dials to 00000.0 when you go those last 170 yards beyond 99,999.9 . . . delicious . . . the market is going to 0,000 just as the calendar is going to ,000 — it’s all coming together, in other words, neat and well organized, like the strands of a complicated plot.

But no, this is not what has me excited, although it certainly is fun to see one’s net worth inching up almost every day. Likewise, I’m happy to see the crime rate, welfare rolls and unemployment rates coming down, the AIDS virus yielding to science, the days getting longer and longer (if it keeps up this way through Thanksgiving, we’ll have nothing but sunlight), cigarette advertising under attack, decimal stock-market pricing on its way (it will shave transaction costs) — all that.

But the immediate cause of my good cheer is my root canal. I have wonderful news. It turns out — in the hands of a really good endodontist, anyway — root canals are just no big deal. All my life I have dreaded the possibility that one day I might need one. But having managed to avoid it until last week, I lucked out. I skipped the century or so when it was a procedure just this side of agony. Technology saved me, and just in time.

Seriously: this is one fewer thing for you to worry about. If you ever need one, take the time to find someone who specializes in root canals and then figure it will be only a little less convenient and comfortable than going for a haircut.

Tomorrow I’ll get back to money. But aren’t you relieved? Soon, I’ve read, they may be zapping tooth decay without need of drilling. Ah, brave new world. It’s stuff like this that makes you think the market’s not so overpriced after all. (And talk like that that makes you think it is.)

There is no connection here to sushi, but I had to find a way to get you to read a comment about root canals. (But if you happen to be on the Upper West Side of Manhattan, stop in for some sushi to go from Mr. Cho — the little hole in the wall on Columbus between 72nd and 73rd. "Hello, Mr. Cho," I say whenever I’m in town. He bows, I bow. He makes very good sushi, and if you live in the neighborhood, he delivers.)

Tomorrow: Poison Pills

Paul F. writes: “I have been extremely successful using a strategy of selling covered calls with IOM (Iomega). I bought at 32, doing a buy-write [buy the stock and simultaneously sell a call against it] and dropping my basis down to $29.50 a share. I continued to write covered calls as the stock continued to drop. My goal had always been to make 20% profit on the stock. My last covered calls were written when the stock perked up to 17, and that dropped my basis down from $14 a share to $12 (all commissions figured in). Now that IOM is up to $18 a share range, I might get called out. But, who cares? My basis is $12 and I would get $17.5 a share. That’s more than the 20% I originally wanted. If I don’t get called, I will wait until it perks up to 18.5-20 and write the $20 calls, lowering my basis again, and increasing my guaranteed profit margin if I get called!”

Do you see what he’s doing? He buys a stock and at the same time sells someone a call on it at a higher price. So if it goes way up and it’s “called away,” he misses out on the bonanza, but still has a nice profit.

In this case, when he first bought the stock at 32, his effective cost was only $29.50, because he was paid 2.5 points ($250 on each 100 shares) to sell (or “write”) the calls.

He probably wrote the 35 calls, giving someone else the right to buy his stock any time in the next few months for 35.

If the stock shot up to 60, he would have gotten only 35 for it — missing the extra 25 points. But he would still have done nicely: selling for 35 stock he’d bought for an effective cost of 29.50. Not a bad profit for a few months — 18.6% before commissions and taxes.

Of course, in this example the fellow buying the call for $2.50 would have done a lot better, exercising his right to buy at $35 a stock he could have simultaneously sold for $60, and realizing a $25 profit less the $2.50 he paid for the calls, commissions and taxes. With 10 calls, say, representing 1,000 shares of stock, that would be about $22,000 profit on a $2,500 speculation in just a few months.

But how often do stocks run up from 32 to 60 in a few months, and what are the chances you will catch them just before they do?

Options trading is a “zero-sum game” — for each winner there is a loser — less commissions and taxes. In stocks, everyone can theoretically be a winner, as the economy purrs along, throwing off dividends and perhaps even growing. In options, on average, everyone loses: it’s a less-than-zero-sum game because of the commissions and taxes.

Of course, as Paul describes, Iomega did not shoot up from 32 to 60 right after he bought it. Instead, over time, it staggered down, down, down. And every so often, when one set of calls expired worthless (pity the poor guy who did pay $2,500 for the ten 35 calls, hoping the stock would shoot up), he’d write another set, for another premium, at a lower price.

In his mind, his “basis” on the stock he had originally purchased at 32 is now down to 12. (I guess he’s been doing this for quite a while now.) But that’s not how it works for tax purposes. As Paul probably knows, each premium he receives for selling a call is taxable as ordinary income. His tax basis of $32 a share on the stock itself remains unchanged. So unless he’s doing this in a tax-sheltered account, one thing about this strategy is that it assures that much or all of any profit you make will be fully taxed. Between federal and state income taxes, that can be a big handicap.

(Someone who can compound $10,000 in a stock at 20% a year, untaxed until he sells 20 years later, turns that $10,000 into $383,000. Figure he’s in the 40% tax bracket, and that’s $230,000 after tax. The same person earning the same astonishing 20% but paying tax on it each year will have $96,000.)

And there are the commissions along the way, for buying the stock and then selling each successive crop of calls.

Still, there’s no question this strategy can work out OK — it has for Paul.

But what if the Iomega he had bought at 32 dropped to 16 within just a few months. Then he would have paid $32,000 for 1,000 shares (say), received $2,500 to write those first calls . . . and now what? He’s lost (in this example) nearly $14,000. He can write more calls, but before doing so he should recognize that doing so is really a separate decision. He may think of it as part of one long strategy, but each move is a separate gamble. Say, in this hypothetical, he had written IOM 20 calls when the stock was 16, getting $1,500 for doing so — but then the stock dropped to 8. Ugh! (He’d have lost nearly $6,000 more.) Or the stock shot to 30. Ugh! (It would have been called away from him at 20 — how much better he’d have fared if he hadn’t written that second call.)

You can construct endless scenarios, and for conservative types who nonetheless enjoy “action” and “the game,” writing calls can be a relatively sensible way to play. Kind of like going to Las Vegas and betting red or black at roulette, with small stakes. You can stay at the table a LONG time without losing much. If you’re lucky, you may even win, even though the house (commissions and taxes) makes that less and less likely the longer you play.

You may even have a special knack or insight that allows you to do better than the averages would predict. You may be a fairly consistent winner in this zero-sum game if you can identify stocks that will not fall too sharply. You’ll be getting premiums, you’ll be getting dividends (although dividend-paying stocks tend to be far less volatile than the Iomegas of this world, and thus to provide far lower premiums when you write the calls), and you may also get price appreciation as the stock gradually inches up over the years — or even if it shoots up and gets called away from you.

In other words, most of the time, you’ll make money. Once in a while, you’ll get really hosed. Good luck, Paul. You may just have the knack.

Personally, I only write calls when I have a stock I don’t want to sell (because of taxes), but which I think has really gotten ahead of itself. I haven’t done it much, and with only mixed success.

Finding things that seem dumb in hindsight is kids’ play. (Why do you think I ask that my archives extend back only seven days?) Still, it’s fun. Who can fail to smile at stuff like this:

“This ‘telephone’ has too many shortcomings to be seriously considered as a means of communication. The device is inherently of no value to us.”
–Western Union internal memo, 1876.

We all have examples. I have a whole file. Here’s one I came across in cleaning out some old stuff and plan to add to my file. It’s what Barton Biggs had to say in the July 19, 1993 issue of Forbes:

“We want to get our clients’ money as far away from Bill and Hillary Clinton as we can. The President is a negative for the U.S. market. I’m embarrassed that I voted for him and contributed money to his campaign.”

Biggs, Morgan Stanley’s chief equity strategist, is a smart and sensible man, as any regular reader of Barron’s or the other magazines that quote him extensively will affirm. Yet in 1993, early into the huge run-up that began with the President’s 1992 election, he recommended that investors hold just 18% of their total assets in U.S. equities. At the time of his quote in Forbes, the Dow was 3500 and change.

His bearishness on the U.S. market was not only because of the Clintons — he felt stocks had gotten ahead of themselves generally — but the Clintons, as you can tell, were a big reason. He didn’t believe the President was serious about cutting the deficit. We would continue to have huge deficits, which would lead to higher interest rates and a sharply lower stock market.

Instead, as recounted in detail in Bob Woodward’s “exposé” The Agenda, the President made the tough choices needed to begin cutting and persuading a Democratic Congress to go along. The projected deficit fell, interest rates fell, the economy grew, profits grew, employment grew, stock prices doubled.

From Dana Dlott: “Thanks for your entertaining saga of THE STAR. If it were proven to me that one had to be a total ——- in order to be a great star (or great scientist, artist, etc.) I might think differently. But it turns out there is lots of evidence to the contrary. I know hardly any STARS, but several Nobel Laureates, and some of them are pretty nice. I think greatness is uncorrelated with being a total ——-. I say, SHOOT HER before she reproduces.”

From Michael Simpson: “Your story reminds me of many encounters I had with the Hollywood set at the San Diego Wild Animal Park (I worked there while going to college). For the most part, I find actors and actresses boorish, shallow people. Those I found most kind and “normal” were the younger stars. I met Brooke Shields and Tom Cruise and they are nice people. I met Shelly Duvall at a party we were catering at the Zoo. She is an extremely nice woman.

“The ones that stick in my mind however are the obnoxious ones. Michael Landon once visited. One of the food service clerks was trying to assist him, like she would anyone else and like the doorman in your story, and he snapped at her. The hurt in her eyes was very evident. He just sneered at her and said some derisive things. She left crying, and I think about how she probably carries that hurt to this day. At the time, Landon was in a show about himself as an angel. I thought ‘What a crock.’ When he got cancer and died, I could feel no compassion for the man.

“Judy Collins is another royal pain. She was performing at our theater. She had the staff running around doing silly things. Me, I was running all over Escondido trying to find a specific wild rice. We served them dinner. She didn’t even touch the wild rice. I hope she didn’t get bound up.

“The late Ricky Nelson performed at the park. He was an hour late and the crowd was starting to get ugly. He showed up but offered no apologies. He played a short set. That year, he burned himself up in his plane freebasing.

“These stars view themselves as all important. They work to become stars and when they do become stars, view it as a burden. There aren’t fans because there are stars, but stars because there are fans. Tina Turner is one star that probably has the best grip on this. She sincerely thanks her fans after a concert. (She’s one I would like to meet personally.) Anyway, enough of my rant.”

From Robert Doucette: “I read your column on the requirements of Ms. Star at the hotel and it reminded me of a conversation I had with one of my better in-laws. He manages an open-air pavilion which hosts concerts for big-name talent throughout the year and often has to deal with some strange requests as part of the care and feeding of celebrities, such as bowls of M&M with all of the brown ones removed. Some of these bizarre requests are put in to demonstrate their own sense of self-importance but some of them have a good business reason behind them.

“Sometimes a ‘requirement’ is put into the concert contract as a warning flag. It allows the rock star (and their business managers and entourage) to know immediately if the concert manager has read the contract and intends to comply with all terms and conditions. The brown M&Ms may not be important, but the backstage nurse for a diabetic drummer would be. And, if they get there at 9 a.m. and find no M&Ms or brown M&Ms, the manager knows she needs to ask about the nurse.

“(By the way, my cousin-in-law did give me the good news that although many celebrities are a real pain to work with, many are delightful. He says Dolly Parton, Jimmy Buffet and Elton John — in addition to being extraordinarily talented — are very well-mannered and a joy to work with.)”

"I have a question for you!! If you use my question in an article, please omit my last name! I am currently living in a mobile home that is paid for and has controlled rent. I can afford to buy a house but really have no desire at the present moment. The situation that I’m in has allowed me to save a good percentage of my income and invest. I’m 33 and would like to buy in a few years. Am I making a mistake? Am I losing out on a great tax break??? Is the tax break really what it is cracked up to be? The market in California is soft and I’m guessing that the environment will not change drastically anytime soon. Please let me know what you think!!!!" — Ken

Hmmm. Two conflicting things here. On the one hand, based on this sketchy info, I’d suggest that now — when the market for homes is soft — might be a good time to buy one. I wouldn’t be surprised to see California real estate prices pick up again. I think it’s already happening. Relatively speaking, stocks are pretty high and some California real estate prices not so high. A better time to buy a home rather than more shares of Coke? (A decade ago, you would surely have done better buying the Coke than the home.)

Then again, if you’re happy where you are and can continue adding to your investment portfolio, keep squirreling it away! Have you read The Millionaire Next Door? They got rich at least in part by living beneath their means.

In any event, I wouldn’t buy the house for the tax deduction. It helps you afford the mortgage and property taxes, and should certainly be taken into account when you figure what home ownership would cost you. (Also take into account repairs, insurance, lawn maintenance, repairs, utilities, painting every few years, plumbing problems and repairs.) Alone, though, the tax deduction is no reason to buy a house.

Hawaii is a state that chafes under its high auto insurance premiums, high proportion of uninsured drivers, and all the rest. The legislature passed a law a couple of years ago that would have cut rates 45% by cutting out almost all the lawsuits between drivers and eliminating the incentive for most of the fraud, but Governor Cayetano — a former trial lawyer — vetoed it. A big win for the trial lawyers of Hawaii, a modest win for the insurance companies (who don’t want to see the business shrink by 45%), and a big loss for Hawaii motorists.

The only insurer that pushed hard for the legislature to override the veto was State Farm, which, as a mutual insurer, doesn’t mind if the business shrinks 45%. (State Farm executives get no stock options or profit shares. At Allstate or Geico, by contrast, executives’ first goal is to see their stock rise — which doesn’t happen when premiums drop 45%.)

Anyway, the issue was recently revisited, under renewed pressure for lower rates. And this time, a way was found. Governor Cayetano got involved in the legislative process again and saw to it that the “threshold” beyond which drivers could sue each other was weakened even further. Great news for the lawyers. Meanwhile, to cut premiums, they reduced their mandatory minimum personal-injury protection (PIP) from $20,000 to $10,000. (Reduce it to zero, and premiums for those electing the zero coverage could fall even further.)

In other words, rather than cut back on legal fees and the incentive to commit fraud, they mainly cut back on benefits.

I do not worship pagan gods, because I don’t believe in them, frankly. And I don’t believe in them because if there were pagan gods, I know volcanoes on all seven Hawaiian Islands would have erupted over this latest legislative twist. Miraculously, all the lava would have fallen on the Governor’s mansion.