Forwarded by a neutral party: The Prime Minister of Israel, Ariel Sharon, sits down with Yasser Arafat at the beginning of negotiations to resolve the conflict. The Prime Minister requests that he be allowed to begin with a story. Arafat assents.

Sharon begins his story: ‘Years before the Israelites came to the Promised Land and settled here, Moses led them for 40 years through the desert. The Israelites began complaining that they were thirsty and, lo and behold, a miracle occurred and a stream appeared before them. They drank their fill and then decided to take advantage of the stream to do some bathing — including Moses.

‘When Moses came out of the water, he found that all his clothing was missing. ‘Who took my clothes?’ Moses asked those around him.

”It was the Palestinians,’ replied the Israelites,

‘Wait a minute,’ objected Arafat immediately, ‘there were no Palestinians during the time of Moses!’

‘All right,’ replied the Prime Minister, ‘now that we’ve got that settled, let’s begin our negotiations.’


Thanks to Kate for bringing this one to my attention – a site offering an investment in McWhortle Enterprises. I’m not recommending you take a flier on McWhortle; but, like Kate, I was impressed by its S.E.C. imprimatur. You don’t often see that. It shows up on the third page. Click here.


Randy Woolf: ‘I would be interested in your thoughts on total market index funds versus midcap or small-cap funds. I have some midcap spider shares [symbol: MDY] and plan on buying more. Isn’t the total market index very over-weighted by large, problematic companies like Cisco and Enron, and thus not really representative of the ‘total market’?’

☞ No, a total-market index fund is more representative of the total market, because, like it or not, the total market includes problematic companies like Cisco and Enron.

That isn’t to say which will do better over any particular time period. Your midcap index shares may beat the total-market index funds — or, if Microsoft’s automatic spellchecker is to be believed, the way it keeps automatically changing what I type, they may prove to be ‘madcap’ shares.

Are midcap shares, as a class, undervalued relative to the market as a whole? I can imagine intuitive arguments on both sides.

You could argue that the big cap stocks are overvalued because of the herd mentality – all the big fund managers feel they have to own them (where else are they going to park trillions of dollars?), and in times of uncertainty people gravitate toward the big names. Right? So they’ve been bid up past where they should be.

Or you could argue that the small caps and midcaps are going to get hurt worse if we have tough times – they’ll have a harder time securing financing, they have less clout in the marketplace, less legal and lobbying muscle.

I’m quite sure I don’t know whether the stocks of mid-sized companies will do better or worse, over the time period you had in mind to invest, than the market as a whole. If I were looking for an index fund, I would probably go with whichever one offered the broadest diversification with no more than a two-tenths-of-one-percent (’20 basis points’) annual fee.


Bob Ridenour: ‘I finally figured out why Ken Lay looks so familiar (and why he may seem nice) – he looks exactly like Tim Conway!’


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