On November 25, I suggested buying some January 2005 Apple 20 LEAPs (long-term options to buy Apple stock at $20 a share). On March 31, with the LEAPS having a little more than doubled, I suggested selling half so that, from here on out, you’d be playing with ‘the house’s money.’ Yesterday, Apple reported good earnings and the stock jumped . . . so if you didn’t sell half, you have another even nicer chance to do so.

I’m holding the rest of mine – a speculation, to be sure, but Apple is one of the best brands in the world, selling at a not entirely crazy price.

One other reason to hold on is that, if everything else stayed the same (which it won’t), you come out ahead waiting to have your profit taxed at the lower long-term capital gains rate. I should stress, though, that there is a countervailing force at work here, summed up in the old saw that ‘On Wall Street, the bulls make money and the bears make money – but not the pigs.’ Many a dollar has been lost by investors – certainly including this one (oink! oink!) – who couldn’t bring themselves to sell and pay the higher tax.


A couple of weeks ago I suggested lightening up on our 30-year TIPS. You might want to reread that and, now that they’ve dropped from 132-and-change to just under 124, think about buying them back. My guess is that they may go a good ways lower still – they are still not cheap here. But the reason to own them (in your retirement plan, to avoid their unfortunate tax twist) is not to make every last cent of profit, but to have a core holding that is completely immune to credit risk and largely immune to interest-rate/inflation risk. At today’s level, some of the excess air has been let out of the tires, and – speaking of pigs – maybe we should be grateful for the little 8-point pick-up we’ve made in less than three weeks. (If you sold $100,000 of these in your retirement plan at 132 and now buy them back at 124, you are $8,000 ahead.) I plan to buy back some of what I sold and hold off on the rest, hoping for an even lower reentry point.


Bob R: ‘You wrote: shouldn’t we be inspecting more of the containers coming into this country? An awful lot of experts seem to think so.‘ No we should not! I have a container of household items which was supposed to have arrived recently (I’m moving back from Hong Kong). I was just informed that it is delayed 4 weeks because I got ‘randomly’ selected to be searched. The kicker is that I apparently have to pay the government up to $1000 for the privilege of protecting the country from myself and my furniture.’

☞ OK, until we can inspect containers without delaying someone’s furniture, we should accept the risk of a nuclear explosion in one of our large cities. But as soon as there’s a way to do this expeditiously, we should inspect more containers.


Don Culp: ‘You have lost the ability to objectively weigh both the pros and cons of political issues. Your relentless Bush bashing and constant failure to address both sides of political issues has become overbearing. I realize this is your site and you may be just trying to offset Republicans who think the current administration can do no wrong, but even a little more objectivity might encourage some of us to spend more time reading your political comments as part of our ‘due diligence’ in helping us decide who to vote for in 2004. I voted for Al Gore in 2000 and have not made a decision yet for 2004. Here‘s what I feel is a fair commentary from someone who hasn’t lost his objectivity that you might want to share with your readers.’


If you do read the David Broder column Don referred us to, you will see that it acknowledges the good in what President Bush is trying to do. Wouldn’t it be great if there were one day a prosperous, free and democratic Iraq in the heart of the Middle East? It would indeed! That’s the primary reason I generally say things like, ‘whether or not one thinks we should be in Iraq’ – because there are reasons to be there, even though they are not how the war was sold.

The question is: Is this effort worth the cost in the tens of thousands killed and wounded, the hundreds of billions of dollars, and the loss of global goodwill? And could not the same end have been achieved (if we do achieve it) at far less such cost? Whatever your answer to the first question, the answer to the second question, I think (as David Broder and so many others seem to agree), is – yes.

You will find none of the ‘pros’ – only the costs – in this weekend’s movie. But the side of the argument it presents is not unimportant.

(If you do watch, watch it remembering that during his press conference the President couldn’t think of a single mistake he’s made. And that ‘doing Iraq’ was on the Bush agenda long before September 11 . . . even though, as a humble-foreign-policy candidate, he chose not to mention it.)

Monday: Cheapless in Seattle


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