Investing while ignorant can be risky

Like most Vonage customers, I received a letter recently inviting me to participate in the company’s then-pending IPO. Unlike many customers, I declined to participate.

Vonage Holdings Inc. hoped to show its Internet telephone customers how much it valued them by making many eligible to buy shares in the company’s public offering last week. The idea backfired: Customers who lined up to buy those first public shares got burned, as the price of the stock has fallen 26 percent.

Now many are outraged, not only by the stock’s poor performance but also by what they say were glitches in Vonage’s unusual effort to include customers in its IPO.

I’d like to claim some prophetic understanding that the stock price would drop, but alas, I’m not that smart. I thought about the risk for a few moments, coupled that with my complete lack of knowledge about Vonage’s financials, and decided that I’d be a sucker to take the offer. While other customers logged on with dreams of sudden riches because they could get in on an IPO, I used the letter from Vonage as scrap paper where I wrote down directions to a car dealership. At least I’ve researched the car, which is more than most customers probably did with the Vonage prospectus.

The six years and many thousands of dollars I spent on a Finance education finally paid off.

He’s teaching me to change my instincts… or at least ignore them.

James Taranto, writing in Opinion Journal’s Best of the Web Today column, points to an article titled “Questions Raised About Kerry War Record”.

When John Kerry* ran for president, he offered one compelling qualification for the world’s highest office: He was a hero of the Vietnam War. True, America lost that war–but it was in spite of, rather than because of, Kerry’s battlefield efforts.

Timely, as opposed to partisan, this information enhances my trust that the only liar in Washington operates in the Senate chambers because he couldn’t win the presidency. Oh, and that the New York Times is biased. Shocking.

What’s most important, though, is the context of that all-powerful asterisk. It holds the key to relentless wit and insight. All included must bow before the “gotcha”.

* At least he served in Vietnam, unlike Harry Pelosi and Nancy Reid!

The same could be said about two important Republicans. But cheap partisan victories are vital to our national conversation. And only liberals in the media are biased.

Update: Kip at A Stitch in Haste dissected Mr. Taranto’s imbecilic attack on libertarianism, which appeared further down in yesterday’s Best of the Web Today. I’m glad he pointed it out, as I stopped reading the rest of Mr. Taranto’s nonsense after the John Kerry story.

How to win friends alienate fans and influence people

If there ever existed proof that government-imposed monopolies harm customers, the current cage match between Comcast, Peter Angelos, the Washington Nationals, and MASN is the shining example. (It also touches on a stupid business practice by Major League Baseball.) Comcast refuses to carry MASN, which has television broadcast rights to the Washington Nationals. I have no problem with the business decision by Comcast, though I despise it as a customer. Not because I want to watch the Nationals. I don’t, except when they’re playing the Phillies. The Nationals are currently in Philadelphia for a three-game series, of which all three games will be blacked out for all non-MASN outlets.

Last night, for example, Major League Baseball would not allow INHD to broadcast the game to my cable system, nor did it allow MLB Extra Innings to broadcast the game to me. It’s important to note that I’ve paid MLB for the games, yet they funnel me to MASN. This is where the problem culminates. Without MASN, I missed the game.

This could be easily resolved by Comcast or Major League Baseball putting customers first, but I’ve come to expect little from either. I tolerate Major League Baseball’s policy with my business only because I love the Phillies and watching the majority of their games not blacked out. I do write a letter every year, however. With Comcast, I only have the option to switch to satellite. That’s a fine form of competition, but it’s not feasible for my house and needs. The solution is simple, of course, but government won’t get out of the regulation business. Instead, I’m presented with idiotic symbolism:

Mayor Anthony A. Williams (D) [last week] signed into law a bill requiring Comcast, which is the District’s main cable provider, to begin broadcasting Washington Nationals games or face the possibility of losing its license to operate in the city.

The bill, which was passed unanimously by the D.C. Council earlier this month, says that unless the games are on the air beginning [last week], the District and Comcast must enter into negotiations to discuss the franchise agreement and explore ways of getting the games on the air.

So, rather than open the city to competition and allow the invisible hand to do the work of providing MASN, the City Council and mayor would prefer city residents (theoretically) be without cable television service completely. This is reasonable how, other than to prove that politicians want to be central planners masquerading as heroes? Remove legal barriers to entry and let the market decide; instead of just voicing an opinion, customers could then vote with their most powerful weapon possible. If the City Council and Mayor Williams did that, MASN would be on Comcast tonight.

And I’d get to watch the Phillies.

Allowing is not the same as encouraging

This should surprise everyone no one, but North Dakota’s public smoking ban is causing harm in what I hope are unintended ways.

Ron Gibbens said there’s a “very strong likelihood” two charitable bingo halls will close because of a statewide anti-smoking law, yet he is not asking legislators for an exemption to the law.

Gibbens, who founded the North Dakota Association for the Disabled 30 years ago with his wife, Faye, has dismissed the idea of asking for a smoking exemption because of the nature of the organization.

“As an organization that provides for the health of citizens, we don’t want the NDADto be portrayed as being pro-smoking,” Gibbens said.

What about pro-property rights? Also, it seems reasonable to assume that the NDAD allowed smoking in its bingo halls before the ban. Were they pro-smoking then? Money-grubbing philanthropists? Questions worth asking.

Never mind, though, because the more interesting aspect to this story is how North Dakota residents work around the law.

The eastern bingo halls are more susceptible to closure because customers cross the border to Minnesota, where they can smoke in bingo halls there, Gibbens said.

Holy crap, someone needs to do something. Those poor bingo players are subjected to cigarette smoke. No matter what, North Dakota’s leadership must resist the urge to acknowledge that the smoke they’re being subjected to is the smoke rising from their own cigarettes. But don’t resist it because it’ll lead to the common sense acceptance that property rights and individual liberty matter. No, that would be too ambitious. Resist that urge because it will lead to more intrusive violations aimed at protecting people from themselves. It isn’t working now. How much further will politicians push to achieve compliance with “for your own good”?

One other consequence, which I’m sure smoking ban supporters ignored, was also foreseeable.

Gibbens estimated that the state would lose about $1 million a year if either one of those [charitable organization tax relief] proposals passes but that the state risks even more losses if two bingo halls in eastern North Dakota – one operated by the NDADin [sic] Grand Forks and another by the Plains Art Museum in Fargo – close.

Tax receipts decline when artificial barriers are imposed to protect people from themselves? Who knew? I’m sure a good general tax increase will follow, since all government actions must meet a revenue-neutral minimum standard. The smoking ban supporters will feel awful about it, I’m sure. Unless that was an end-goal all along.

For more amusement, I enjoyed a few of the comments posted to the story.

Al Gee wrote on May 25, 2006 8:03 AM:”Whaaaaa! Whaaaa! Our customers can’t smoke some heaters and daub some paper at the same time so we need a tax exemption. How about trying to improve your product and or marketing instead of blaming the law for your financial difficulties.”

The product was fine before the state imposed a restriction on what private property owners could do within their walls. And the marketing “problem” is that the NDAD can no longer sell the same product. But those are just facts, which are justifiably irrelevant.

Stop Whining wrote on May 25, 2006 8:32 AM:”I get tired of businesses complaining because of no-smoking changes. My grandmother plays bingo in these halls and is very happy to go and play bingo and plays more now that the bin is in effect. I realize that many smoking customers may have left, but that is the nature of the beast. No matter how you look at it, this is gambling. There should not be any changes made to the tax structure of these businesses.”

The beast. Finally, an honest assessment of government infringement on property rights. I disagree with the commenter’s approval of the beast, as if you didn’t know.

Not up to business wrote on May 25, 2006 10:33 AM:”It should NOT be up to businesses to decide whether or not they allow smoking. That would be the same as allowing businesses to decide whether or not they will allow vulgar profanity, nudity, or drunken behavior in their place of business; yet in many places, with a few exceptions, each is against the law. Simply put, the majority of people have determined that certain behaviors which infringe on others rights are no longer allowable. Smoke all you want, when you want, and where you want; as long as you don’t pollute anyone elses [sic] clean air in doing so. “

It would be the same, wouldn’t? Heaven forbid someone should smoke while saying “fuck” and drinking naked . We can’t allow that person to infringe on everyone else’s right to not witness it. It’s in the Constitution. Look it up. It follows the “free puppy” clause.

I wonder if Not up to businesses would accept the conclusion of the qualifier in the final sentence. That logic would allow the state to ban smoking in private homes with at least one non-smoker. The only way to enforce that would be require learning the wrong lesson from 1984. Mob rule has such pleasant outcomes.

Is critical thinking required in science?

I wonder what conclusions we should draw from this:

Experts don’t know precisely why HIV infection rates are slowing.

One reason suggested in The Lancet commentary is that conditions elsewhere in the world don’t match those of southern Africa, where a epidemiological perfect storm made the region the center of the world’s AIDS crisis.

The factors driving the region’s “hyper-epidemic” included a large population of migrant workers and low levels of male circumcision, a procedure that experts now believe helps reduce HIV transmission. Sexual mores also played a major role: African men tend to have more long-term, concurrent sexual relationships than do men elsewhere, and they rarely use condoms in those relationships.

Men in southern Africa rarely use condoms, but I’m sure low levels of male circumcision are the reason there’s a hyper-epidemic. We should also ignore conditions don’t match elsewhere in the world. The conclusions from southern Africa’s facts are still applicable everywhere.

Rates of new infection remain relatively low in West Africa, possibly, researchers say, because of the practice of male circumcision among many Muslim communities and local tribes.

Once again, the conclusion is obvious. It has to be circumcision. It’s not possible that cultural mores about sex would have anything to do with it.

This is an unblemished record

Based on comments from Homeland Security Secretary Michael Chertoff, should we worry more than we already do?

“The hardest thing to determine is the purely domestic, self-motivated, self-initiating threat from the guy who never talks to anybody, just gets himself wound up over the Internet,” Chertoff said.

By worry, I mean how much longer will it be before the U.S. government takes control of the Internet, with regulations and restrictions, to keep us safe from terrorists? Because a guy who gets wound up by the evening news, that wouldn’t be so bad. It’s the guy who gets wound up over the Internet. We have to stop that. And this administration can do it thanks to absolute powers in wartime.

It would be very ironical

Is it wrong that I hope there’s some serious embezzling occurring at this bank branch? Just to teach them a valuable lesson early on…

There’s a bank in Nate Folger’s Fairfax elementary school. A real one. Never mind that the teller is a fifth-grader and many deposits come from tooth fairy funds — it’s one way a nation of non-savers and big spenders is trying to teach the next generation to do better at finances.

It might be working: Nate, 10, recently plunked a rumpled $5 bill onto the counter of the new Sunrise Savings Bank and walked away with a deposit slip.

He earns about $4 a week in allowance — for setting the table and putting his clothes away — but he has a plan.

“It’s pretty tempting to spend,” Nate said. “But every week I’m going to deposit $2 and keep $2 so I can watch it grow and grow and grow.”

I’m not serious, naturally, but it would be funny. Not HAHA funny. Okay, actually, it would be HAHA funny, because then we could combine the lesson on personal finance with the lesson on how Congress treats taxes. Two birds with one bazooka.

Should police ticket under-inflated tires?

I’ve already said I won’t vote for Sen. Clinton when if she runs for president in 2008, so this entry is really just piling on. However, it’s important to highlight examples of why she’s every other hack politician, except she had the good fortune to be First Lady before entering public office. She gets more acceptance than she should. Her new energy plan proves it.

Sen. Hillary Rodham Clinton (D-N.Y.) said yesterday that the United States should cut its consumption of foreign oil in half by 2025, and outlined a national strategy of tax incentives, an oil-profits tax and more funds for research aimed at spurring conservation and development of alternative sources of energy.

“Our present system of energy is weakening our national security, hurting our pocketbooks, violating our common values and threatening our children’s future,” Clinton said in a speech at the National Press Club. “Right now, instead of national security dictating our energy policy, our failed energy policy dictates our national security.”

How creative. She managed to include fear of death, poverty, and morality, with a nod to the children. Classy leadership. At least she’s learned her trade well, no matter how despicable its current tradesmen may be.

Clinton said she plans to introduce legislation to create a strategic energy fund, largely paid for by an excess profits tax on big oil companies, who she noted earned a combined $113 billion in profits last year.

She estimated that the profits tax and a repeal of other tax breaks for the oil industry could pump $50 billion into the energy fund over two years and pay for an array of tax incentives and for $9 billion in new research initiatives for wind, solar and other alternative energy resources. Oil companies could escape the tax if they reinvested profits into similar programs.

Theft, redistribution, and bribery are admirable public policy goals. And what will the good senator say to the investors whose stock portfolios get hammered because the major oil companies will no longer earn windfall average profits? Take one for the team, maybe? It’s for the children?

Or economic decline could be her goal. If we’re all a little bit poorer, we can’t afford so many vacations and wasteful trips in our gas guzzlers. (Don’t tell House Speaker Hastert.) Hence, we’ll use fewer barrels of oil. Conservation works, she’ll say. And we’ll all be thankful that she’s in charge.

Maybe, but it’ll be without my vote.

This will inspire faith in the market

Who knew that muddying the political waters could also include muddying the financial waters?

President George W. Bush has bestowed on his intelligence czar, John Negroponte, broad authority, in the name of national security, to excuse publicly traded companies from their usual accounting and securities-disclosure obligations. Notice of the development came in a brief entry in the Federal Register, dated May 5, 2006, that was opaque to the untrained eye.

Unbeknownst to almost all of Washington and the financial world, Bush and every other President since Jimmy Carter have had the authority to exempt companies working on certain top-secret defense projects from portions of the 1934 Securities Exchange Act. Administration officials told BusinessWeek that they believe this is the first time a President has ever delegated the authority to someone outside the Oval Office. It couldn’t be immediately determined whether any company has received a waiver under this provision.

I’m (not really) sure there is some logical national security reason for this provision, but why am I not surprised that the current president would be all too comfortable delegating such a decision to a subordinate? Lying Misinformation seems to be the only consistent m.o. for the decider in chief. It’s not surprising he’d use his unlimited wartime powers to encourage more of it.

Responses accepted in any language

E. J. Dionne offered a howler yesterday, attacking the demagoguery aimed at immigrants. If only he’d been correct.

… I can’t stand the demagoguery directed against immigrants who speak languages other than English. Raging against them shows little understanding of how new immigrants struggle to become loyal Americans who love their country — and come to love the English language.

As it considered the immigration bill last week, the Senate passed an utterly useless amendment sponsored by Sen. James Inhofe (R-Okla.) declaring English to be our “national language” and calling for a government role in “preserving and enhancing” the place of English.

There is no point to this amendment except to say to members of our currently large Spanish-speaking population that they will be legally and formally disrespected in a way that earlier generations of immigrants from — this is just a partial list — Germany, Italy, Poland, Russia, Norway, Sweden, France, Hungary, Greece, China, Japan, Finland, Lithuania, Lebanon, Syria, Bohemia, Slovakia, Serbia, Croatia and Slovenia were not.

Immigrants from all these places honored their origins, built an ethnic press and usually worshiped in the languages of their ancestors. But they also learned English because they knew that advancement in our country required them to do so.

There is certainly demagoguery aimed at immigrants. Language is certainly part of that. But that doesn’t prove a correlation, tying the opinion of both arguments into one neat xenophobic bundle. Sen. Inhofe’s bill may dream of disappearing ethnic presses and English-only worship. I doubt it, but it’s possible. However, demanding English language skills is not the same as expecting immigrants to stop using their native languages.

As an example, if I move to Germany, I know I will need to learn German to function. That’s reasonable. What is not reasonable is for me to expect German government documents in my native language. (That English is a universal language for government is acknowledged, but not detrimental to this argument.) They’d be helpful for me to have, but it’s not the average German citizen’s responsibility to provide them for me. That same standard should apply in the United States.

Ken Salazar, a Colorado Democrat, introduced an alternative amendment to Inhofe’s that also passed the Senate. It declared English the “common and unifying language of the United States” while also insisting on the existing rights of non-English speakers “to services or materials provided by the government” in languages other than English. As Salazar understands, the best way to make English our unifying language is to avoid making language a divisive national issue.

Sen. Salazar’s bill could be an improvement. Or not, if it implies an “existing right” to services or materials provided by the government in languages other than English. This shows more about Mr. Dionne’s expectation of what government should do (all things for all people, it seems) than it shows any alleged disdain for non-English speaking immigrants. We’re arguing for similar immigration policies, with different understandings of how to reach a solution. Mr. Dionne argues for big government, whereas I prefer limited government. We believe, and demand, that immigrants possess individual ambition and responsibility. English language expectations are consistent.