Cheap Phone, Flat Tax, Mint Coke April 1, 2002February 21, 2017 Breaking News from the Borowitz Report: March 29, 2002 LAUGHTER NO LONGER THE BEST MEDICINE Bumped From Top Spot By Red-Hot Antidepressants Laughter, long thought to be the best medicine, has been surpassed in popularity by two widely used antidepressants, Prozac and Zoloft, according to a just-released market study paid for by the pharmaceuticals industry . . . * Last week we spent an inordinate amount of time calculating the annualized rate of return one might ‘earn’ by changing his or her habits to buy by the case. The answer came to precisely 177.46%. Or precisely 176.7%. The estimable Less Antman explains: ‘Those who got 176.7% are only compounding for 52 weeks (364 days). Using 365 days, you get 177.46%.’ And, yes, using 365.25 days you get even a smidgeon more. I promise never, ever to raise this again. * Did you know that some people – not you, of course, but perhaps an elderly relative, a frugally challenged son-in-law – actually pay the ‘Basic Rate Plan’ for long-distance telephone service? Last month, AT&T, MCI and Sprint all quietly raised these rates, from an astonishing 30 cents a minute, in some cases, to an even more astonishing 35 cents. This is about 7 times what you should be paying. Click here to find a better rate. And don’t tell me about dialing ‘ten-ten-two-twenty,’ whose celebrity pitchmen get all excited about paying only 99 cents for 20 minutes. That works out to a nickel a minute if you talk for exactly 20 minutes. If you get an answering machine, it works out to 99 cents a minute. If you really had only 12 minutes of stuff to say but – not being one to waste money – you found a way to stay on the line an extra 8 minutes, then you in effect paid 8.25 cents a minute (for the time you actually wanted to talk) and wasted 8 minutes of your life and 8 minutes of your conversant’s life gabbing pointlessly. * Sandy sent me this good article praising Russia’s 13% flat tax and lambasting Democrats for standing in the way of a flat tax here. Thanks, Sandy. Someday, we may enjoy an economy like Russia’s. Seriously: I’m all for tax simplification. But of the 45 billion pages in the tax code, it would take less than a single page to say (for example): the tax up to $20,000 is zero, from $20,000 to $50,000 it’s 13%, from $50,000 to $250,000 it’s 25%, from $250,000 to $2 million it’s 35%, and above that is 40%. Or whatever. The complexity is not in the progressivity. It’s in the other 45 billion pages. Yes, I understand some people don’t buy the notion of a progressive income tax, where the tax rate is higher for those who make the most money. That’s an honest philosophical difference of opinion. But we’ve had progressive taxation for nearly a century, and it hasn’t rendered our economy, or our society, totally unsuccessful. * I discovered something important at dinner last night purely by accident, the way Madame Curie (?) accidentally discovered the X-ray: Mint in your diet Coke. This is not exactly Cooking Like a Guy™, but try it.
Boref & Noble February 13, 2002February 21, 2017 Margaret Conomos: ‘I heard you speak at Barnes & Noble in DC recently. I advised my mother to buy 200 shares of Borealis based on your recommendation. It was about $5.35 then, last time I looked it was $3.80. Any advice? Why is it dropping? Hold? Sell?’ ☞ Several things to say about this. First, I always make clear that the stock will likely go to zero, and that you should only buy a few shares if you really, really don’t care if it goes to zero. Because it probably will. Second, last time I looked, Borealis (bulletin board symbol BOREF) had traded at $3.25. (The bid and ask are at $3.25 and $4.10.) So it’s even worse than you thought! At this rate, it should be zero by the end of the month! Third, I know of no good reason for people to be selling – which of course doesn’t necessarily mean they don’t have a good reason. But this may be the kind of stock people go into hoping for a quick killing; then lose patience with and sell. So it rises on good news, then falls back as people grow impatient for results. I just look at the preposterous claims on the Borealis web site and imagine that if even one of them were true, the company would be worth an easy $1 billion. That’s 50 times what it’s selling for today – which is reason enough to write this stock off as preposterous. Except that then I look at the Beckett and Boeing press releases and I wonder: why would they be party to something preposterous? Might there – conceivably – be something here? That simple reasoning has not changed since I was hawking my book at Barnes & Noble, so I would not sell the stock. It will either be zero one day or else . . . well, you pick the astronomical number. I’m hoping for the latter, but expecting the former. (While at Barnes & Noble buying my book – surely a more sensible gift than roses – be sure to stop by the Café and try a few varieties of iced Honest Tea!) Joe Cherner: ‘If you had $70 billion, would you rather buy Dell OR buy Sony and have $30 billion left over to throw me a party?’ ☞ If that’s how I had to spend the $30 billion, I would buy Dell. Otherwise, I’d go for Sony and the cash. Kenny: ‘Why don’t the pundits, experts, advisors advocate a pure indexed philosophy of indexing versus all the other nonsense out there.’ ☞ There’s no money in pushing index funds. Many financial writers like me, and finance professors, do advocate them. Our livelihoods don’t depend on what we recommend, so we can comfortably push what we think is best for you, not worry whether it’s also best for us. The least-promoted alternatives often provide the best value. Also, of course, it stands to reason that if you really do your homework and are very, very smart, you may actually find stocks the market has ‘mispriced’ – see yesterday’s column on shorting Enron – and beat the market that way. Almost none of the mutual funds do so with any consistency, so you’re best off going with the low-expense index fund. But people like to dream (and the marketing departments of actively-managed funds like to encourage those dreams). Finally, if EVERYONE indexed, then the market would become grossly inefficient and mispricings would abound. But we are a long way away from a time (and will never get to a time) when everyone indexes, when no one tries to discern value, and when, thus, ‘mispricings,’ ripe for easy picking, hang low from every tree. There clearly was such a mispricing with Enron. If I’m incredibly lucky, hindsight may show that Borealis was mispriced as well. If not, I will have enjoyed the dream. A bit like Sidney Greenstreet at the end of The Maltese Falcon.
Have a Donut December 26, 2001February 20, 2017 Barry Bottger: ‘You’re paying $2.59 a can?? Andy, Andy, Andy. I caught it on sale at my local Winco for $1.38. Had to stock up at that price.’ Joe Rident: ‘In your last column, you compared your more-gift-booze-than-you-bought party to nuclear fusion or a perpetual motion machine. But shouldn’t Andrew Tobias have compared it to ‘return on investment?’ You probably made a better return-on-investment on that party than you will from Borealis.’ ☞ Ah, probably so. I am steeling myself for a total loss. But it’s interesting: Two years ago, when this thing (Borealis) was valued at $15 or $20 million – less than the cost of a single commercial jet – it was flying on nothing but a wing and a prayer. Sure, it claimed to have all sorts of astonishing breakthroughs that, if true, could be worth billions. But give me a break! Indeed, the sheer number of these (unrelated) claims was one more reason to scoff. You mean you’ve invented a perpetual motion machine and you can turn base metals into gold? Give me a break! Now, two years later, the company is valued at more like $30 million – still considerably less than a single top-of-the-line private jet – but there have been two independent press releases of note: one, from Boeing, suggesting that the company’s ‘Cool Chip’ claims seem to have foundation; the other, from an old-line elevator manufacturer, suggesting that the company’s spectacularly-more-efficient electric motor may be real. Two press releases do not a bonanza make – clearly. But for my money (and to repeat, for the record: I have a ton of this absurd little stock, so I am not a disinterested party), it is a better buy today at $6 than it was two years ago at $3.50. Because two years ago, there was absolutely no reason to think it was anything but the most preposterous speculation. Today, it remains highly risky. But the Boeing news would seem to suggest it is no longer preposterous. Borealis has taken forever to inch even this far, and could take years more to inch any further. (Wasn’t TV invented in the mid-Twenties? Though real, and earth-changing, didn’t it take more than two decades before anyone made a dime of profit from it?) So Borealis stock may not go much of anywhere for a long time (unless it goes to zero, as one has to assume it will). All that said: If you have a little play money that you can truly afford to lose without hardship – and, more to the point, without getting mad at me – I think this is one speculation, with the stock back around $5 or $6 or $7 a share (after a momentary spike to $11), you should consider. The symbol is BOREF; your broker will find it traded very thinly on the “bulletin board.” (So don’t put in a “market order,” only a “limit order.”) You truly have to assume you will lose whatever you invest. But if the company did prove to have breakthrough technologies . . . and if the market ever did value the company at, say, one-quarter the value it assigns Krispy Kreme . . . the stock would be trading at $100 a share. (And in my wildest dreams, I sometimes imagine it could be worth even more than a quarter of Krispy Kreme. But then I wake up and smell the coffee. And crave one of those donuts.
We Did It! And Notes on the Perfect Meal December 24, 2001February 20, 2017 For centuries, people have been trying to produce the perpetual motion machine, or the nuclear fusion process that will produce more fuel than it consumes. Well, last night Charles and I pulled off the holiday equivalent. We had a small throng over (small because we sort of forgot to invite anyone, and only our most clairvoyant friends and family members showed up), and we received more alcohol than we served. Bottles of wine, beautifully boxed bottles of champagne, a bottle of 20-year-old Port, a bottle of bourbon – are you hearing me? This is the Holy Grail of party-giving. The party that pays for itself – and then some. So, in the first place, I wanted to share some of that good cheer and wish you a very merry Christmas. I’d also like to point out that the days are getting longer – have you noticed that? Well, they are. (Still 24 hours, but you know what I mean.) Can Spring be far behind? But what I’d really like to do is extend this notion of produces-more-than-it-consumes to your own life, by calling to your attention Campbell’s Select 18.6-ounce can of ready-to-serve CHICKEN WITH EGG NOODLES soup in the convenient pop-top can. It is, quite possibly, the perfect food. * In the first place, for those of you under the weather, it is chicken soup. Need I say more? * For those of you concerned with convenience, it is prepared thus: 1. Pop top. 2. Pour into bowl. 3. Microwave a minute or two. 4. Drink. (Or eat, but that requires a utensil.) In the summer, you could just drink it cold, skipping steps #2 and #3. (In any season, some cracked pepper and coarse salt add zest, though this will kick the sodium content up even with Utah’s largest lake.) * For those of you concerned with diet, other than the sodium, you’re talking just 200 calories and 5 grams of fat in the whole 18.6 ounce can. Only Roasted White Meat is used in this soup – and ‘50% more chicken*’ (‘*than our previous formula’ reads the explanatory footnote – leaving me, I will admit it, just a tiny bit wary, as I prefer foods that result from recipes to foods that result from formulas). Will you gain weight drinking this soup? Yes. About 18 ounces. But not for long. * For those of you concerned with economy – and here’s the beauty part – the soup cost us $2.59, but peel off the label and you are left with a handsome ribbed canister that would surely fetch $3 on eBay or at the Pottery barn if attractively photographed and imaginatively merchandised. A pencil holder! A can to drop your spare change into (or other’s spare change if you’ve been downsized). Cans to fill with dirt with votive candles pressed into the top – use them to line your walk for parties. Cans to weld together into a sculpture or a small shiny dwelling. Everyone’s so focused on the soup, they miss the hidden asset – Campbell’s doesn’t even brag on it – and it makes all the difference in the world. You paid $2.59, you got the soup, the chicken, the 50% extra chicken, and an attractive $3 multi-purpose art deco canister. It’s as if they paid you 41 cents to have lunch.
Poor? It’s Your Own Fault December 20, 2001February 20, 2017 ‘I’ll take the floor covering,’ writes Jack (who asks that his last name not be used). ‘You write: ‘But relatively few folks are delivering mail, trimming hedges, or clerking at Home Depot one decade, piloting their own jet the next. And relatively few doctors’ daughters become hotel maids – at least not for more than a summer on the Cape.’ Well, if people haven’t moved up the income ladder, it’s their fault. There IS an even playing field in this country. People choose for themselves how far they go. I grew up in a lower income neighborhood in Brooklyn (my father worked in a movie theater, my mother was a store clerk). I finished high school at night, and college at night, working during the day as a stock boy at Macy’s (today’s equivalent of the Home Depot job you mention). I paid for college out of my paltry earnings. The people I worked with during the day back in the mid-sixties complained about not getting ahead, but they didn’t take advantage of the even playing field that lay before them (i.e., they never bothered to acquire skills that would enable them to get somewhere beyond where they were). Today, 35 years after graduating from college, I own a business that employs 45 mostly low skill-level people, who, like the people I left behind 35 years ago, complain, as you do, that the government is not doing enough for them, but too much for the rich. Every night as I drive home to my house in an upscale suburb in my luxury imported car, I hear people like you on the radio talk about the lack of a fair playing field. Too much being done for the rich? Not enough for the underprivileged? The song of the lazy and unenterprising, aided and abetted by social engineers. By the way, don’t print my name. I write this not to boast of my success – for there are thousands, no, tens of thousands, of my generation who started with nothing and ended up just fine, without the government doing ANYTHING for them. Let the church and other social engineers complain about poverty. In this country, people don’t-get-ahead by choice.’ ☞ Sounds good, if a little tough-minded. But a couple of points, Jack. Is it possible you did get some government help? For example, did you pay for your K-12 schooling, or did the government? And did you pay the full cost of college, or was your tuition subsidized? (At many state schools, ‘full tuition’ does not cover the full cost.) But leave that aside, and anything else I may have left out (was there a minimum wage that kept your Macy’s pay a little less paltry than it otherwise might have been?). Answer me this (as they say): Do we want people to trim hedges and change sheets in hotels and hospitals and so forth? I think we do. And if so, do we want them and their kids living decently? Or is it OK if they live as the really, really poor in some Third World countries do? If you answer ‘decently,’ then the laws of supply and demand may not be enough. The minimum wage and the earned income credit and unemployment insurance and Medicare may be the kinds of things needed to help the folks who do those jobs for us. Even then, working 60 hours a week at the minimum wage brings you just $15,000 a year, which isn’t much to raise a family. And if one of the parents has abandoned the family, the wage earner must also provide domestic services. Maybe it’s the parents’ fault – but is it the kids’ fault? Should poor people pay as much in tax as rich people? If not, where do you draw the line? What balance do you strike? I’ve been arguing that the balance we had during Clinton/Gore worked awfully well, even for the rich and powerful; and that we’ve made a huge mistake by shifting it even further in their favor. Jim Batterson: ‘I agree completely that the recent shifts and proposed shifts in tax law are foolish in the advantages that they afford the super-rich, and I strongly support a hefty estate tax and a progressive tax structure. The AMT corporate refunds are obscene. ‘But it is also fair to observe why it is that there is no revolution taking place in America over this issue. I am not quite as old as you, but I have traveled and lived in third-world countries, and do have recollections of the 1950s. Something is true in the United States that has never been true before, not here, not anywhere else in the world. Skilled tradesmen – auto mechanics, plumbers, carpenters, roofers, painters, electricians, factory workers, guys who do heating and air conditioning and construction and a thousand other jobs that require training but not a college education – jobs that 50 years ago we hoped our children would ‘do better than’ – these people all own, or can own, nice cars, pickup trucks or SUVs, bass boats, comfortable houses, entertainment centers with big-screen TV’s, VCRs, TIVO, good sound systems, cell phones, computers, internet access, summer cabins, you name it. ‘Explain to someone in China or even Japan that in the United States, carpenters and plumbers live in 1800-square-foot houses and drive SUVs, and there will be nothing but disbelief. When you look at the country as a whole, you should not see an upper class and a lower class. The dominant theme of our times is an enormous middle class with a very high standard of living.’ ☞ Well said. About the only guy who can easily afford to call a plumber these days is an electrician. OYSTERS – PART 3 Mark Harris: ‘Like you, I love Oysters, and they can be found on many of our nearby shores. In this area (and many others) bivalves become infected with Paralytic Shellfish Poisen (PSP) when the dreaded “ride tide” arrives (often June, July, or Aug). However, it’s important to know that PSP is NOT destroyed by cooking – raw or cooked, if they got it – you’ll get it. Here’s what you do: Eat a tiny (dime sized) chunk of oyster. Wait about 30 minutes. If your lips feel like you’ve gotten a shot of novacaine (i.e. they tingle), throw away the rest of the oysters. Otherwise, eat more – but remember PSP is only ONE of the several different deadly fallouts from eating oysters (actually on most of our Washington/Canadian seashores near population centers the fish and game guys have erected bivalve harvesting prohibited signs due to sewage contamination.’ ☞ Bon appetite.
Oysters – Part II December 17, 2001February 20, 2017 Steve Gilbert: ‘What’s this compulsive ‘fork‘ behavior all about? You wash forks every time you use them? I don’t think that a REAL GUY would be so picky. I mean, if you’re already eating something that might kill you, why worry about the next guy who’s going to use the fork? I’d at least wait a few hours to see if the oysters were fatal before I’d bother washing the fork.’ ☞ Point taken. Mike Koltak: ‘For recipe #1, I would add a shot of vodka. Dip the oysters into the vodka before dipping them into the cocktail sauce, or add vodka to the sauce. It is supposed to help kill the bacteria – probably not true but it is a good excuse to have a nip and it does taste great.’ ☞ So that’s why they call it cocktail sauce. Who knew? Alan Caroe, M.D.: ‘Cholera (epidemic diarrhea caused by Vibrio cholerea bacteria) is the disease most closely associated with raw oyster consumption. Death from this infection is uncommon (less than 1 in 100) if adequate nursing and oral rehydration is provided. (Chicken soup and Gatorade, in sufficient quantities, are live-saving.) Cholera epidemics appear to arise only in warm, salty water containing untreated human feces. This is the historic reason to avoid unrefrigerated oysters in the summertime. American oysters harvested outside of the Gulf of Mexico may be safer. Hepatitis A is also associated with ingestion of raw shellfish. It may be avoided by a commercially available Hepatitis A vaccine. It may be wise for any individual with immune deficiency or pre-existing liver disease (especially Hepatitis C) to talk to their health care provider about Hepatitis A immunization before eating raw oysters. P.S.: Cooked oysters do taste good. Ten minutes in boiling water should kill the most likely pathogens.’ Jim Summers: ‘No self respecting guy would eat oysters without first putting the oyster on a saltine with a spoonful of horseradish along with the cocktail sauce. A squeeze of lemon is also critical. This has extra shock value as it allows the guy to eat it in two bites, with a swig of beer in between, while the uninitiated gag at the sight of oyster liquor dripping from the soggy cracker between bites. Judging from the size of the Hilton oysters, it would appear that this would be a two-bite delicacy. If you don’t have horseradish, then a couple of shakes of hot sauce will do. As no cooking or measuring is involved, and it is eaten with fingers, it still qualifies as a guy recipe.’ Brooks Hilliard: ‘What? You can cook oysters?’
Oysters December 14, 2001February 20, 2017 Rob Schoen: ‘You are entitled to think whatever you choose to think, though I may find it wrong-headed and duplicitous. Today’s column was the first in my recollection, however, where you essentially called your critics stupid, or at least not as capable of reasoned thought as you. That’s a slippery slope and I hope not your intent.’ ☞ I appreciate reasoned criticism. But those whose e-mails just lash out with insult rather than logic are intellectually lazy, in my view – though, you are certainly right, not necessarily stupid. I would suggest that to call someone’s thinking wrong-headed is fine (even I think I am wrong-headed from time to time, not to mention tedious, self-indulgent, or – my favorite – just plain dopey). But calling someone’s thinking duplicitous may be a slippery slope of its own. Frank McC: ‘Even if the worst about Enron turns out to be true, is it any worse than Chinese businessmen financing the Clintons and the Democratic Party?’ ☞ It might well be worse, but let’s assume they are equivalent. Is your point that no fuss should have been made about the Chinese contributions? Or is it that since a huge fuss was made about them, that’s enough fuss for now and we should fuss no more? I think both were/are subjects of legitimate inquiry. Enron is, after all, the largest bankruptcy in our history, and energy policy affects us all. Frank continues: You write: ‘I certainly hope it doesn’t require special prosecutors or any of that – I don’t think any of us wants to go through that again.’ Really? Honestly? You mean you wouldn’t love to see the Bush Presidency destroyed and Democrats benefit? ☞ I sure would NOT love to see it destroyed. And when it does something good, like appoint an openly gay ambassador to Rumania, or handle the aftermath to 9/11 so well for the most part, I try to say it. And we all should say it. And I think you will find that a lot of Democrats do – most recently, Senator Clinton on ‘Meet the Press’ this past Sunday, loud and clear. Frank: ‘Fairness, I say. Fairness.’ ☞ Yes! But fairness for the 95% of Americans who are not at the top of the pyramid, too. Thanks, Frank. You’re right about the level of partisanship. Who doesn’t yearn for more collegial, frank discourse? But until we get that, how about a nice oyster cocktail? * Let me tell you something about HILTON’S FRESH PACIFIC EXTRA SMALL WILLAPOINT OYSTERS. They’re huge. I don’t know whether Hilton is being ironic by labeling them extra small, or merely trying to frighten people from swimming in the Pacific. Oysters are one of the few ocean dwellers I ordinarily do not fear; but if these are extra small, I can only begin to imagine those that would be extra large – and I don’t want to risk being swallowed by one. (‘What’s this, Orville – a pearl?’ ‘No, it looks more like some guy’s head.’) Oysters are a dangerous food. Any school kid knows they should be eaten only when they ‘R’ in season – months with an R in them (i.e., not May, June, July and August), except that with the advent of refrigeration, they may not be much more dangerous when they Rn’t than when they R. Hilton sells them in pint containers – all raw oyster, no shell – in the refrigerated (let’s hope) section of some supermarkets’ fish departments, and warns that if you suffer from liver or stomach problems, you should eat them fully cooked. Now let’s back up. Why would anyone eat raw oysters, you ask? (And how do they have sex? But that’s a separate column.) Two reasons: First, once you get over your initial revulsion, you may well decide that the good ones taste just great. Second, oysters have long held allure as an aphrodisiac. ‘Keep away from oysters, whatever you do,’ ran a sprightly line from Bottoms Up, the acclaimed 1969 Hasty Pudding Theatrical, ‘and just for the hell of it, you can be a celibate, too – da-doo-da-doo-doo-doo-doo-doo!’ And sure enough, if you click here, you will find this slogan: Forget Viagra, Eat Brady’s Oysters. With it comes an offer to buy some very pricey oysters, flown to your door, still in their big, heavy, clunky shells. The beauty of HILTON’S FRESH PACIFIC EXTRA SMALL WILLAPOINT OYSTERS (which have made it all the way from South Bend, Washington, to South Beach, Florida, though very possibly not to your supermarket) is that for $7.99 you get a pint container filled to the brim with oysters in their ‘liquor’ (as the liquid oysters live in is called). Because the extra smalls are so large, it’s probably about 10 oysters to the pint. To fill the same pint with the kind of oysters you get in some restaurants for $2 a pop it would probably require 50 of them, once you shucked and chucked the shells. (How many shells, he yells as she sells seashells, could a woodchuck shuck, if a woodchuck could shuck shells?) So look what’s happening here. You’re getting maybe $100 of oysters for $7.99, and you don’t have to put on a jacket and tie to eat them. You can eat them at home . . . like a guy. And how, exactly, does a guy do that? Well, I have two recipes to offer, neither requiring dishware; just a fork. Raw. I accept absolutely NO liability for this – if you eat raw oysters you will probably die – but here is what I do. Step 1: Open the container. Step 2: Open a jar of cocktail sauce. Step 3: Seize the above-referenced fork. Step 4: Use the fork to drop one of the oysters into the jar of cocktail sauce; mush it around a little, remove, and eat. Mmmm, mmm, good! Step 5: Repeat. Step 6: Wash fork. Call 911. Cooked. This involves a lot more work and doesn’t taste as good. But it’s still pretty awesome. Step 1: Pour the pint of oysters and their liquor into your smallest pot or pan. Step 2: OK, go crazy – toss in half a stick of butter or, if you’re cooking like a guy with high cholesterol, a big spoonful of I Can’t Believe It’s Not Butter Lite™. Step 3: Salt and pepper are always good. Step 4: Cook on low to medium until you think that whatever is wrong with the oysters is dead. Ten minutes? You can throw in a little milk, too, ala “oyster stew,” although I have a feeling a little beer might go well with it instead, but I haven’t tried that yet. Step 5 (the most important step): Restrain yourself! This sucker is hot! But then, after an appropriate cooling off period, seize the afore-referenced fork and eat from the pot, eventually (checking first to be sure you won’t burn your lips) drinking the salty, buttery liquor that remains at the bottom. Mmm, mmm! Step 6: Clean fork and pot. For elaborate recipes I have not tried – if you’re not really a guy, in other words – click here. Have a great weekend and please come back Monday or I’ll worry that I killed you.
Energy Policy: Le Boeuf et Le Salmon November 19, 2001February 20, 2017 Mike Leboeuf: ‘Didn’t want you to miss this column from the Washington Post.’ ☞ Good column. Thanks. Let’s tie the Arctic drilling he favors to the $1-a-gallon gas-tax hike he also favors . . . use every penny of that increased revenue to cut the FICA tax (giving people more take-home pay to spend and save, as well as a greater incentive to work), and let’s fund the hell out of alternative energy research instead of – astoundingly – cutting it in half. The problem a lot of us have with the administration’s energy policy is that it seems 100% designed to benefit the oil industry, from which our president and vice president came, as if that were even more important than doing whatever is best for the country as a whole. COOKING LIKE A GUY™ – GETTING TO KNOW YOUR HARDWARE I’m 54 and learned how a toaster-oven works today. It’s got two settings. One for toast, one for oven. Cool! This was much less complicated than I realized, once I really focused. I made some toast, then I made salmon. (My secret: salt, lemon, and first pretend the salmon is a piece of toast.) Before cooking, I actually drenched it in some fancy flavored olive oil someone gave us long ago – a kitchen decoration, is how I had always thought of the bottle, until inspiration struck. Hint: it’s OK to put a naked slice of bread right on the toaster-oven rack, but it’s a good idea to put the salmon in something, like an aluminum pan.
Is “Buy and Hold” Old Hat? October 26, 2001February 20, 2017 Let’s be honest: Kraft fat-free mayonnaise is pretty scary. It’s not just that it doesn’t taste quite right, it’s . . . well, have you ever seen what it looks like if left uneaten for a few minutes? It crusts up into a sort of cracked plaster, and you have to wonder what the rest of it, that you did eat, is doing. So it was with some amazement that I discovered Spectrum Naturals Lite Canola eggless mayonnaise. It has zero cholesterol and only 3 grams of fat per tablespoon compared with 11 grams for real (which is to say Hellman’s) mayonnaise, and about a third the calories. But it tastes an awful lot like mayonnaise. I claim no magical therapeutic properties for this one. (And yes, I know that neither the Kraft brand nor this one can technically call itself ‘mayonnaise,’ and neither one does.) But if there’s a health food store near you, you might stick a carrot in it and see what you think. And now I return you to the topic of the day: Is ‘Buy and Hold’ Old Hat? But first . . . Spencer Martin: ‘Re today’s column on shorting – yes, the kind of naked shorts you write about are pretty crazy. But you left out one group for whom shorting DIA’s is anything but crazy: people with 1) shorter horizons (e.g., near-retirees and above), who 2) are sitting on a portfolio that appreciated greatly over many years, and who 3) would incur big tax bites if they sold. For this group, shorting DIA’s in carefully measured quantities would be one relatively cheap form of insurance that would help to lock in those long-term gains. (Cheaper than puts today! have you seen the implied volatilities??) With ‘units’ of insurance so finely diced ($94 apiece), the truly nervous can insure themselves nearly fully, the partly nervous can insure partially, and so on.’ ☞ Good point. There is a difference between shorting stocks in hope of a profit and shorting them as a way to hedge bets you’ve already placed. If the market tanks, your holdings will tank, too; but you’ll make up some of the loss with your shorts. If the market zooms, you’ll lose money on your short sales but that’s OK – the long-held stock positions you didn’t want to part with are doubtless worth more, too. Nifty. The problem comes when this nice theory is tested in real life. Say you have $300,000 in the market and you short 3,000 shares of DIA, which is the rough equivalent dollar amount. And say there is a ‘flight to quality,’ meaning that the $300,000 of somewhat dicier stocks you own go down 20%, while the Dow Jones Industrial Average you have shorted goes up 10%. Now what do you do? Hang on? Take your loss on the short sale? Or say both go up 30%. Do you take your loss on the short position and hang on to your longs? What if the market then tanks? In theory, you’d just hold on; but in real life it could make you a little nervous. I’m not saying Spencer is wrong; he’s not. There is a place for this kind of hedging, much as he has described. But it’s still something to think through carefully before you pull the trigger. And now . . . Is ‘Buy and Hold‘ Old Hat? Or wait. Let’s do that Monday.
Two Analyses September 28, 2001February 20, 2017 Michael Dokupil: ‘You might mention that I-Savings Bonds are a particularly good deal right now. Until November 1, new purchases will yield 3% + inflation. With the 5-year treasury yielding 3.8%, it seems like a good deal.’ Indeed. Two sobering, but I think important, analyses: 1. WHY DO THEY HATE US? Thanks to John Farmer, Eric Houghton, and Vijay, who all pointed me to this in the Christian Science Monitor. If you have time, it’s worth reading. 2. WHAT SHOULD WE EXPECT? George Hoffer: ‘My son is a Cadet at the United States Air Force Academy. I received this today and I believe that it needs to be read and understood by every American. It is an open from his academic advisor.’ From: Dr. Tony Kern, Lt Col, USAF (Ret) 14 September, 2001 Recently, I was asked to look at the recent events through the lens of military history. I have joined the cast of thousands who have written an ‘open letter to Americans.’ Dear friends and fellow Americans, Like everyone else in this great country, I am reeling from last week’s attack on our sovereignty. But unlike some, I am not reeling from surprise. As a career soldier and a student and teacher of military history, I have a different perspective and I think you should hear it. This war will be won or lost by the American citizens, not diplomats, politicians or soldiers. Let me briefly explain. In spite of what the media, and even our own government is telling us, this act was not committed by a group of mentally deranged fanatics. To dismiss them as such would be among the gravest of mistakes. This attack was committed by a ferocious, intelligent and dedicated adversary. Don’t take this the wrong way. I don’t admire these men and I deplore their tactics, but I respect their capabilities. The many parallels that have been made with the Japanese attack on Pearl Harbor are apropos. Not only because it was a brilliant sneak attack against a complacent America, but also because we may well be pulling our new adversaries out of caves 30 years after we think this war is over, just like my father’s generation had to do with the formidable Japanese in the years following WW II. These men hate the United States with all of their being, and we must not underestimate the power of their moral commitment. Napoleon, perhaps the world’s greatest combination of soldier and statesman, stated ‘the moral is to the physical as three is to one.’ Patton thought the Frenchman underestimated its importance and said moral conviction was five times more important in battle than physical strength. Our enemies are willing – better said anxious – to give their lives for their cause. How committed are we America? And for how long? In addition to demonstrating great moral conviction, the recent attack demonstrated a mastery of some of the basic fundamentals of warfare taught to most military officers worldwide, namely simplicity, security and surprise. When I first heard rumors that some of these men may have been trained at our own Air War College, it made perfect sense to me. This was not a random act of violence, and we can expect the same sort of military competence to be displayed in the battle to come. This war will escalate, with a good portion of it happening right here in the good ol’ U.S. of A. These men will not go easily into the night. They do not fear us. We must not fear them. In spite of our overwhelming conventional strength as the world’s only ‘superpower’ (a truly silly term), we are the underdog in this fight. As you listen to the carefully scripted rhetoric designed to prepare us for the march for war, please realize that America is not equipped or seriously trained for the battle ahead. To be certain, our soldiers are much better than the enemy, and we have some excellent ‘counter-terrorist’ organizations, but they are mostly trained for hostage rescues, airfield seizures, or the occasional ‘body snatch,’ (which may come in handy). We will be fighting a war of annihilation, because if their early efforts are any indication, our enemy is ready and willing to die to the last man. Eradicating the enemy will be costly and time consuming. They have already deployed their forces in as many as 20 countries, and are likely living the lives of everyday citizens. Simply put, our soldiers will be tasked with a search and destroy mission on multiple foreign landscapes, and the public must be patient and supportive until the strategy and tactics can be worked out. For the most part, our military is still in the process of redefining itself and presided over by men and women who grew up with – and were promoted because they excelled in – Cold War doctrine, strategy and tactics. This will not be linear warfare, there will be no clear ‘centers of gravity’ to strike with high technology weapons. Our vast technological edge will certainly be helpful, but it will not be decisive. Perhaps the perfect metaphor for the coming battle was introduced by the terrorists themselves aboard the hijacked aircraft – this will be a knife fight, and it will be won or lost by the ingenuity and will of citizens and soldiers, not by software or smart bombs. We must also be patient with our military leaders. Unlike Americans who are eager to put this messy time behind us, our adversaries have time on their side, and they will use it. They plan to fight a battle of attrition, hoping to drag the battle out until the American public loses its will to fight. This might be difficult to believe in this euphoric time of flag waving and patriotism, but it is generally acknowledged that America lacks the stomach for a long fight. We need only look as far back as Vietnam, when North Vietnamese General Vo Nguyen Giap (also a military history teacher) defeated the United States of America without ever winning a major tactical battle. American soldiers who marched to war cheered on by flag waving Americans in 1965 were reviled and spat upon less than three years later when they returned. Although we hope that Osama Bin Laden is no Giap, he is certain to understand and employ the concept. We can expect not only large doses of pain like the recent attacks, but! Also less audacious ‘sand in the gears’ tactics, ranging from livestock infestations to attacks at water supplies and power distribution facilities. These attacks are designed to hit us in our ‘comfort zone’ forcing the average American to ‘pay more and play less’ and eventually eroding our resolve. But it can only work if we let it. It is clear to me that the will of the American citizenry – you and I – is the center of gravity the enemy has targeted. It will be the fulcrum upon which victory or defeat will turn. He believes us to be soft, impatient, and self-centered. He may be right, but if so, we must change. The Prussian general Carl von Clausewitz, (the most often quoted and least read military theorist in history), says that there is a ‘remarkable trinity of war’ that is composed of the (1) will of the people, (2) the political leadership of the government, and (3) the chance and probability that plays out on the field of battle, in that order. Every American citizen was in the crosshairs of last Tuesday’s attack, not just those that were unfortunate enough to be in the World Trade Center or Pentagon. The will of the American people will decide this war. If we are to win, it will be because we have what it takes to persevere through a few more hits, learn from our! Mistakes, improvise, and adapt. If we can do that, we will eventually prevail. Everyone I’ve talked to in the past few days has shared a common frustration, saying in one form or another ‘I just wish I could do something!’ You are already doing it. Just keep faith in America, and continue to support your President and military, and the outcome is certain. If we fail to do so, the outcome is equally certain. God Bless America Dr. Tony Kern, Lt Col, USAF (Ret) Former Director of Military History, USAF Academy But hey: For the most part, even if it’s as bad as Dr. Kern describes, most of us will be living awfully well. And somehow, we should fulfill our obligation – to ourselves and our good fortune – to enjoy ourselves much of the time. Not to recognize our blessings, even if they should be somewhat diminished, and not to enjoy them, seems somehow sinful to me. So kick back with a good supply of iced cold Jakarta Ginger Honest Tea, or maybe Community Green or First Nation or Moroccan Mint (I get a mil for every bottle you buy) and get ready: The season premier of ‘The West Wing’ debuts Wednesday. My guess is that it will be sobering – but inspirational. PS (sorry, can’t resist): Did you see my friend Eddy McIntyre on ‘Who Wants to be a Millionaire’ last night? My little Eddy! He was terrific! And he won $64,000! Is this a great country, or what? Goooooooooooo Eddy!