THE LONG WEEKEND
Happy Labor Day Weekend. Those of you who actually labor for a living should be proud to know you are more productive than ever. (Thank you for that.)
Those of us who live off our investments (and, some might say, your labor) can, as I mentioned Tuesday, be pleased that you are getting paid less – and that, to sweeten our pot further, our taxes have been slashed. If you average $250,000 in dividends, $250,000 in municipal bond interest, and $500,000 in long-term capital gains each year, then you were paying $199,000 in federal income tax when President Clinton left office – a crushing 19.9% of your income. Today, thanks to Republican rule, you pay only $112,500 – 11.25% of your income. Like the President says: you have sacrificed in the wake of 9/11. You pay a lot of taxes!
AL-B-A MONKEY’S UNCLE
As some of you will recall, I’ve been writing about a company – or rather the warrants on the stock of a company – that didn’t do anything, but hoped to buy some other company that did.
I won’t reprise the whole thing here, but August 4 I bought more warrants at 36 cents. I liked this speculation, I explained, because the warrants (symbol: ALBAW) give us the right to buy the underlying stock (symbol: ALBA) at $5 a share anytime up to 2009 – and the stock was then trading at $5.35.
Yesterday the stock closed at $5.54, so the right to buy it for $5 should be worth close to 54 cents . . . and the right to buy it any time between now and 2009 should be worth somewhat more. (Being able to ‘keep your options open’ is always worth something in life, and here we get to keep them open for more than two years.) Yet the warrants closed at just 47 cents – which was 7 cents below their intrinsic value.
The company is in dredging. Or will be when the acquisition it made is completed. I don’t know anything about dredging. I just know the folks who bought the dredging company are smart folks. Maybe they know something about dredging. Heads, the stock in 2009 is $6 or $8 or $10 or $12 and our warrants, purchased for half a buck, are worth $1 or $3 or $5 or $7. Tails, the stock is $5 or below and our warrants expire worthless. For money you can truly afford to lose – because you truly may – this strikes me as a good bet.
First it was ‘better coffee Rockefeller’s money can’t buy.’ Rockefeller sued. So it became, ‘better coffee a millionaire’s money can’t buy.’ That was the Fifties, maybe the Sixties. Who can remember his Chock Full o’ Nuts jingle history? (It’s hard enough to remember you have water boiling to make the coffee.) And now the jingle returns: ‘Better coffee a billionaire’s money can’t buy.’ We are a thousand times richer in fantasy than half a century ago. If that’s not progress, I don’t know what is.
OLBERMANN ON UBERMAN
A lot of you sent me this link to the video of Keith Olbermann’s comment on Secretary Rumsfeld’s recent speech.
Quote of the Day
In 1800, 75% of [an American's] working man's expenditures went for food alone. By 1850, that had dropped to 50%. Today it is a little more than 11%.~The Wall Street Journal, September 20, 1996
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