Jack Ratcliff: “Reading your column on shorts, I felt as though you had interviewed ME! I really did experience most of the same frustrations as those you mentioned. I might add that I had some GUILT feelings that I was profiting from the pain inflicted on those who had bought the stock in good faith. Then too, I was helping to destroy, something that might otherwise create jobs and useful products. Anyway, I have learned my lesson the hard way and I thank you for helping me better understand the horrific odds of shorting — especially in a run-away Bull Market.”
Well, I think a lot of us amateur short-sellers have felt the same thing. But I disagree about the guilt part of it, and disagree that by shorting a stock you were helping to destroy anything.
I suppose if you colluded to (illegally) drive the price of a stock so low it could not sell more stock to finance its expansion, etc., you’d be destroying something, and have every reason to feel guilty. But ordinarily, short-sellers provide, if anything, liquidity and a little healthy balance to the market, supplying stock to eager buyers at less than they would otherwise have to pay for it.
Dwight Weaver: “It seems strange to me that you approve of mandatory minimum wage increases, given my perception of your feelings about free markets.”
It may have seemed equally strange that Henry Ford arranged to pay his workers enough so that they could afford to buy Model T’s.
But the point is that, in addition to the issue of fairness — no small thing — there’s probably economic benefit from providing some reasonable distribution of incomes. Having 100 people with all the money and everyone else in poverty (to take an extreme) does not a healthy economy make. So unions, especially when they are run responsibly and with foresight (which they now often are and in years past often have not been), are good not just for the short-term wages of their workers, but for the health of the economy as a whole. And the minimum wage is — to me — almost like a bare bones union contract for our very least powerful workers.
Especially in a society where we wind up helping the lowest-income folks anyway, with food stamps and the like, the minimum wage to a certain extent doesn’t cost us anything! To a certain extent, it just shifts the subsidy from a self-respect-deflating hand-out to an empowering paycheck.
Clearly, it wouldn’t work to set the minimum wage at $30. (Or even $10.) And clearly, in a global economy, we should work equally hard at encouraging developing nations to institute, and then gradually raise, minimum wages of their own, even if they have to start at 10 cents an hour in some countries. This would be good for those economies, not bad, and ultimately good for the rich investors who own companies that could sell to those poor people, if only they had some money to spend.
So, yes: I’m a big believer in relatively free markets. But not completely free, Ayn Rand-type markets.
Dan Nachbar: “Although it is fun to characterize the HK telephone takeover as an ‘Internet’ thing [Three Signs], I think it’s misleading. This is a plain ‘old fashioned’ 80’s-style takeover where the assets of the target are used to fund the takeover. Although the security PCCW offered is ‘junk stock’ rather than ‘junk bonds’, the scheme is essentially the same. Sticking the word ‘internet’ in the story no doubt helped PCCW’s valuation, but it’s really a diversion. Another point to remember is that the ‘kid’ who is running this so called ‘start-up’ is, according to CNET, ‘the son of Hong Kong’s best known tycoon, Li Ka-shing’. So this isn’t some techno-geek running wild and hunting down a real company. It’s an experienced business family making yet another killing.”
Andrew [a gay Republican who asks that his last name not be used — possibly because if a Republican wins, it may become a less friendly environment in which to be known to be gay]: “I read your column for your financial opinions and investment advice, not politics. Today’s article [John McCain] was pure politics, as you well know. In addition, I think that it was somewhat disingenuous of you not to state within the article that you are an official of the Democratic Party.”
If I had thought about it (and truthfully, I don’t think I did), I think I would have just assumed most readers know this, as you do, because I do mention it from time to time. Also, I’m not sure that even consciously failing to disclose it is a conflict of interest (although I agree, readers should know where I’m coming from), because it’s an unpaid post and I get no bonus if we win — other than the bonus I think we would all get, with four more years of moderate, effective, progressive government.
Some might snicker that of course I’ll get a bonus — an ambassadorship, perhaps, or Undersecretary of Something or Other. But in truth I can’t imagine anything worse. I’d like to be ambassador to Boston, or possibly LA, but any other post would be like exile. It astonishes me anyone wants these jobs. And as for Undersecretary of Something or Other, the only such post I might be remotely qualified for is Undersecretary of Auto Insurance Reform, and even if there were such a thing, it sure would pale in appeal beside sitting home in shorts and a polo shirt writing self-indulgent columns like this one.
Quote of the Day
It was never my thinking that made me my money. It was my sitting.~Jesse Livermore
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