COOKING LIKE A HORSE
Brian Adair: ‘If you like ice cold carrot juice, try this: blend equal parts carrot juice and low fat vanilla ice cream (I like Breyers). My girlfriend made me try this drink a few months ago (‘Carrot juice? That sounds disgusting’ was my exact response.) Now I can’t enough of it. I bought a juicer just to make my own carrot juice and I buy a 5 lb bag of carrots every few days. (I’ve been eyeing the 20 lb bag every time I’m in the store, but I haven’t bought it yet.)’
Now I see why I remembered Froggie and his magic twanger. It comes from an old show called Andy’s Gang. Thanks to Jack Kirsch and Jon Zich for these links. Click here for the history. And here for Froggie’s page. Hiya kids! Hiya! Hiya!
Eric E. Haas: ‘I read with interest your comment about Third World cigarette distribution. I remember an interesting press conference about ten years ago. President Bush (the First) was bragging about opening China to American cigarette exports — how this was a great thing for America. What seemed especially ironic was that this was the same man who sent his army to invade the tiny nation of Panama to bring Manuel Noriega to justice. The charge: Exporting addictive drugs to the United States.’
☞ Tobacco helped build this country – you will note the tobacco leaves on the dollar bill – and the industry has had a good friend in the Republican Party, and vice versa. The Bushes and the Doles have gotten on fine with Big Tobacco. By contrast, Clinton/Gore, not to mention Congressman Henry Waxman, were the industry’s worst nightmare. (Remember smoking on airplanes? Ah, the good old days. Those days may have ended sooner had Elizabeth Dole not been Secretary of Transportation, calling for further study.)
TRADING ONE ADDICTION FOR ANOTHER
Mike Lebuf: ‘Forty years ago, cigarette companies were allowed to hand out free samples on US college campuses. But no more. Instead of free cigarettes, students are now given credit card applications.’
VALUE LINE VERSUS INDEX FUNDS
Mike Gavaghan: ‘You’ve written quite a bit about the near futility of trying to beat the market average over the long term (thus recommending index funds). So, what can be made of the claims by Value Line that their ‘timeliness’ rankings are highly correlated, since 1965, with stocks that both outperform and underperform the market over a 12 month period? Here’s a link where they state there case. Are they just playing statistical games here, or is this track record worth paying attention to?’
☞ I subscribed to Value Line for many years and loved those huge looseleaf binders they’d send, with their wonderful research and ranking system – it was sort of the equivalent of the Scott’s Catalog to a 13-year-old stamp collector. And I loved the notion that they could help me beat the market. I visited their offices, met the great man (then 90 or so and the head analyst, and came away impressed. (This was, by the way, well before the invention of index funds.) Then they had a rough patch – right around the time they went public, if I recall – as their ranking system seemed to get out of whack for a while. It may well have returned to whack. But:
1. Following their lead takes some work, and – if you do trade in and out as the rankings change – exposes you to tax.
(Remember, if Warren Buffett had achieved the same astounding annual returns he has, but switched positions once a year incurring tax instead of holding for the long term, he’d be a poor man today! Well, OK, not poor. But consider this: A dollar left to compound at 26% a year for 35 years grows to $3,258. The same dollar compounding at the same 26% — but subject to, say, a 20% tax every year, compounds just 80% as fast, at 20.8% — to $745. So taxes matter. And index funds keep them to a minimum.)
And . . .
2. Consider the results of Value Line’s own mutual fund, which probably uses its ranking system as well as you could. Here’s what Morningstar says of the Value Line Fund: ‘This fund paints by numbers. It uses the Value Line ranking system to direct its stock picks. But this quantitative strategy has churned out so-so performance numbers relative to other large-growth funds.’
So if you really worked at it, and leaving aside Value Line’s not insubstantial fee, you might do a little better than an index fund – or you might not. Especially in a taxable account.
THEY KNOW EVERYTHING
Joel Williams: ‘The last time I downloaded a form from the IRS website, when I printed it out on my printer, at the very bottom of the page it said ‘Printed on Recycled Paper.’ How did they know that?’
THE MEXICAN FISHERMAN
Christoph: ‘Just to tell you. As far as I know: The history with the Mexican is an adaptation of a history from Heinrich Boell and features originally a Spanish fisherman, and a German telling him to work more. It is called: Anektote zur Senkung der Arbeitsmoral . . . which would be in English something like ‘Anectote to lower the working moral.”
Frances: ‘There was a book written by Paul ter Horst around 1984, Cashing in on the American Dream: How to Retire at 35. The story was in there.’
Fleming Bearston: ‘What if the fisherman gets injured? If he can’t fish for more than a few days, he and his family may starve. I don’t mean to be a party pooper – it’s just that this simplistic put-down of corporate life ignores some important issues.’
John Mahoney: ‘Not to be a spoil sport, but doesn’t the fisherman’s reluctance to expand his business explain why so many Third World countries are mired in poverty?’
Chuck Dean: ‘This reminded me of a Depression-era story: A beggar came to a household, which happened to be a whore house, and asked for work. The kindly madam asked if he could work on her accounts for her. He said no because he couldn’t figure. So, she fed him a nice meal, gave him an apple and he left. The good meal satisfied him so much that he fell asleep under a tree holding the apple. When he woke he found that someone had taken his apple and left him a nickel (remember, this is a Depression-era story). He took the money and bought two apples, which he sold. This went on. His business grew and he became known as the Apple King. When he was being interviewed by Fortune, the reporter was in awe of the rich Apple King and said, ‘You’ve done all this without an education. Think what you could have done if you had gone to school.’ The Apple King replied, ‘If I’d gone to school I wouldn’t be here now. I would be a bookkeeper in a whore house.”
Quote of the Day
A thousand dollars invested at just 8% for 400 years grows to $23 quadrillion. But the first 100 years are the hardest.~Sidney Homer
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