This bull market is driving me crazy. Is that normal?
Barring a major catastrophe, any stock market investor with a well-balanced portfolio knows that there’s rarely a good reason to worry, and never a good reason to panic. For me, though, all it takes is a momentary doubt or a market flutter to make the financial future go from bright to dark. I know what it feels like to hit a sudden financial tailspin, and it really doesn’t matter whether the Dow is heading up or down. Like anyone else, I can feel bad when things are bad. But I can also feel bad when things are good. We’re nine years into the greatest bull market in history, you say? Who cares? It doesn’t make a dram of difference.
After a tech fund that I own has had a particularly good week, for instance, I ask myself whether the profits are a reward for the hours spent poring over performance reports, or whether dotcom stocks are so unnaturally buoyant that any yahoo could have picked the same fund blindfolded. In other words, does making money these days depend on intelligence or is this just dumb luck?
To be honest, ever since the Nasdaq index broke 3000 (the composite has made approximately the same gains as my fund), I’ve had nothing but good luck. And that’s a problem. For one thing, I didn’t put much into the fund to begin with, and the daily reminder that I could have invested more is like water torture. For another thing, I mistrust luck. Luck runs out. My fund could crash at any moment—and probably will. It may already have.
Every neurotic investor follows this self-destructive line of thinking.
That’s why we can’t ever win.
Indeed, behavioral finance experts like to point out how wise investing requires just the right amount of cool and confidence. Overconfidence can lead us to hang on to a stock too long or to sell too soon. But as well. You may find yourself bouncing back and forth, as I do, between one state and the other— supremely confident that your investments carry just enough risk, until suddenly you’re sure they carry too much. The trick to riding out the ups and downs? Yoga. Or you might try t’ai chi, marathons, knitting or scream therapy. What’s most important, though, is to try to reassure yourself. Draw a deep breath and take the long view. This crazy market can’t go on forever.
Or can it?
27 WORLD ECONOMIC FORUM’S ANNUAL MEETING BEGINS Hundreds of top business, political, media and academic leaders (including several Nobel winners) will gather in Davos, Switzerland for four days to discuss issues including globalization, poverty and the backlash against U.S. economic dominance. After the WTO debacle in Seattle, any communication might help.
1 NEW HAMPSHIRE PRIMARY “The race looked like a shoo-in for a while, but now it looks more like a footrace,” says Carl Steen, an analyst at Maria Fiorini Ramirez, a global economic consulting service. “Wall Street, like the Republicans, would like one clear front-runner in the party.” Debate among Democrats, Steen continues, is par for the course.
1-2 FEDERAL OPEN MARKET COMMITTEE MEETING The Fed now gives warnings before making interest-rate changes. “So at the first meeting after Y2K, we can expect to see a leaning toward raising rates again,” says Kurt Karl, chief international economist at global forecasting firm WEFA. An actual hike is unlikely, he says.
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$79.87 per share1. Tiffany & Co. (TIF; NYSE), of the legendary blue boxes, has also moved its business into cyberspace with www.tiffany.com.
$24.95 One Hundred Years of Valentines, by Katherine Kreider; showcases over 450 valentine cards from the late 1800s up to 1998. Available at www.amazon.com.
$1,000 The minimum fee for a prenuptial agreement for a person of moderate means, with children from a previous marriage. “If it’s hotly negotiated, the sky’s the limit—or perhaps the marriage is off,” says Sandra Gohn, a partner at Piper Marbury Rudnick & Wolfe.
Note: 1Stock price as of Dec. 15.
The football fund
Facing a 325-pound lineman is intimidating. But retired football players Ronnie Lott and Harris Barton are tackling something even tougher these days: Silicon Valley.
The two former San Francisco Forty-Niners have founded Champion Ventures, a venture-capital fund for professional athletes, coaches and owners. Champion works as a fund of funds, investing in an assortment of high-tech VC firms—including Mayfield Fund, Crosspoint Venture Partners and Benchmark Capital—that expose its limited partners to companies in different sectors and stages of development.
“We’re not looking at business plans or analyzing deals,” says Lott. “What we’ve provided is access to VC firms.”
The former defensive back and offensive tackle aren’t exactly rookies on Silicon Valley’s playing field. Lott and Barton have scored big with VC firms, Lott as far back as 1984. The two have already recruited quarterbacks Dan Marino and Steve Young, among others, to their $40 million fund.
21st-century cash machines
If there’s anything the modern American has enough of, it’s passwords and PINs. A San Francisco company called Inno Ventry is rolling out check-cashing kiosks that do away with both. How do you access your cash? A machine scans your face. Inno Ventry (which is 40% owned by Wells Fargo) chose facial scans, according to CEO Frank Petro, after discovering that retinal scans—used to great effect in science fiction—“make you feel like you’re going to go blind.” Fingerprinting was worse, making users think of going to prison.
How do you use this futuristic ID? The machine takes your picture during your first visit; each time you return, your image is compared with the digital photo on file. All you need is your Social Security number.
But what if you gain weight, go bald, grow a beard? Will the machine still recognize you? Yes, says Petro. But he won’t promise protection from an evil twin.
Inno Ventry’s machines, now being tested in a few Southwest cities, are targeted at the 37 million Americans without bank accounts. Soon consumers will be able to use ATM cards, get cash advances on credit cards and request small instant loans. One key audience: gamblers in Las Vegas. Casino kiosks will not offer instant loans, though, says Petro, “for obvious reasons.”
Coming to an office near you
On Feb. 2—Groundhog Day to you—a million school-age children will “shadow” executives, doctors and other workers for a day, thanks to a campaign, now in its second year, to inspire kids to pursue ambitious goals. Leading the effort is America’s Promise, the organization founded by Gen. Colin L. Powell. “Job shadowing is a wonderful opportunity for students to gain understanding of the skills needed in the workplace,” Powell says. If your kids’ school doesn’t participate, send them to the Job Shadow website, online all February, at www.jobshadow.org.
in the making
RESIDENCE: Brockton, Mass.
BOTTOM LINE: Total assets, $370,000. Columbare has split his $135,000 portfolio among telecom, financial and energy stocks (such as Lucent, AT&T Capital, Lasmo PLC), and growth and technology funds. He’s stashed $25,000 in a CD and $30,000 in an annuity. When he retires, the 55-year-old carpenter will be entitled to a union pension; an additional union-sponsored annuity is now worth $180,000.
REMODELING: Two years ago. Columbare owned annuities and phone stocks. A financial planner convinced him to diversify. ‘Td always heard that, but I never practiced it,” he admits.
BUILDING BLOCKS: Columbare is fervent about DRIPs. Six $24 shares of AT&T that he bought 34 years ago are now worth $80,000, thanks to a combination of splits and dividend reinvestments. This year alone, the plan garnered him 17 new shares. “I’m satisfied with a little gain, a little gain, “says Columbare thoughtfully. “This isn’t a horse race.”
If you can’t beat ’em, buy ’em?
Perhaps the antitrust trial has convinced Bill Gates, who once pooh-poohed political giving, that it really does pay to have friends in high places. During the first eight months of 1999, Microsoft tunneled nearly $500,000 in PAC and soft-money contributions to both the Democrats and the Republicans. This puts the software behemoth on track to double the roughly $1 million it doled out during the 1997-98 election cycle, according to the Center for Responsive Politics. And this hefty sum does not include donations to presidential candidates.
The company no doubt hopes it will get more from this investment than it did last fall when, through its lobbyists, it tried to convince Congress to cut $9 million from the budget of the Department of Justice’s Antitrust Division—which Microsoft just happened to have been fighting in court.
—BRIAN L. CLARK
Case of the stolen 401(k)s is over
Almost two years after filing suit when they discovered that nearly all of their 401(k) money had disappeared (“Broken Dreams,” MONEY, May 1998), 90 former Emergi-Lite employees have settled with the company. Emergi- Lite will pay the employees’ legal fees and will add $500,000 to the $2 million it had already deposited into the plan. In addition, Emergi-Lite agreed to hire a benefits-analysis firm to reconstruct accounts for the participants. (In June 1998 the plan’s trustee, Gary Moore, pleaded guilty to embezzling the lighting manufacturer’s
“We’ll have our money in our hands, under our control, to handle in our own way” says Pattie Dammeyer, one of the litigants, who added that she and her husband Hank had had nearly a quarter-million dollars in the plan.
— LAURA WASHINGTON
The Dammeyers will get their money back.
Hemlines may go up and down, but shapely legs—particularly those belonging to prominent actresses, dancers and singers—are always in style. Indeed, the best legs are worth millions to their famous owners, who go way beyond aerobics to protect their prime assets.
In 1949, Betty Grable insured her legs (at right) for $2.8 million. In 1995, Tina Turner insured hers for $2 million. How do they compare with Jennifer Lopez’s reported $300 million policy (rear end included) in today’s dollars? Here’s how these great legs stack up.
Source: Reported insurance policies.