Floating Off the Page

I sometimes feel I’m cheating when I read the quirky human-interest stories in the middle column of the Wall Street Journal. Those stories aren’t the reason why the Journal exists, after all. They’re just a sop to English majors like me who get tired of reading about GDP and inverted yield curves.

But how many yield-curve stories would still be fresh and readable forty years after they’re published, or even forty days? The pieces collected in Floating Off the Page still live, and some are forty years old, or older. Short, varied, and entertaining, they make perfect reading for hot summer days when the attention span is limited.

A surprising number of the columns are about animals. There’s one about people who get high by licking toads, one about people who put their dogs and cats on a vegan diet, and one about a guy who turns roadkill into recipes like “groundhog baked in sour cream, spiced mustard and a bit of rosemary.” There’s the New York City truck that picks up dead horses, sea lions, and bison, a man paid by the FDA to sniff fish all day, and the cannon that shoots dead chickens at the windshields of aircraft. There is also a heartbreaking story about the struggle to save sea otters oiled by the Exxon Valdez.

Some of these pieces actually have something to with business (though frequently coupled with animals). We find out about copyright enforcers who have cracked down on Girl Scout singalongs, about a Chinese restaurant that cornered the market on rat recipes, about a Scotsman who makes stainless steel braces for sheep, and about a maker of prison underwear whose business became much more profitable when he started turning the underwear scraps into gun-cleaning patches. Enjoy!

Bill Gross on investing

In my thinking about investments, I’ve tended to give short shrift to bonds. When I can invest, I try to do it for the long haul, and over most periods of ten years or longer, stocks tend to trounce bonds. (Right now is an exception, when the average annual S&P 500 return for the ten years that ended on June 30 actually stands at -1.59%.)

Bonds seemed incredibly complicated compared to stocks, and because they were subject to some of the same risks (like higher interest rates) it didn’t seem worth the trouble to figure them out. Peter Lynch and other investment gurus appeared to have no use for them either.

But in an effort to give the bond approach a fair chance, I recently read Everything You’ve Heard About Investing is Wrong!, a 1997 book by Bill Gross of PIMCO, who is accurately described on the cover as “the Peter Lynch of bonds.” (I figured out—fortunately before I bought both books—that Bill Gross on Investing is just the paperback version of the same book.)

Like his letters to PIMCO shareholders, Gross’s book is marked by offbeat analogies and some fresh insights. In 1997 as in 2010, Gross expected an era of low growth and low investment returns—at least in the “secular period,” or three to five years out.

Today he and co-CIO Mohamed El-Erian call this “the new normal.” Back then Gross called it the era of 6%, or the Butler Creek era, after a meandering stream of his childhood.

Gross admits (though not until page 133) that “stocks are definitely the best bet for the long haul,” but because not everyone has the stomach to invest exclusively for the long haul, he suggests measures such as investing in longer-term bonds, foreign bonds, corporate and mortgage bonds (because the risk of prepayment was low at the time), and the inflation-indexed bonds (now called TIPS) that were about to be introduced.

Everything You’ve Heard includes many nuggets of practical advice. Gross, for instance, reveals how his company eked out a little extra return on its cash, by buying “near cash” in the form of short-term callable corporate bonds. And despite some conservative talk about moral decay and how “JFK was no friend of mine,” he also makes this surprisingly progressive suggestion:

The only real government solution that incorporates the positives of a free-market economy while alleviating the plight of the bifurcated have-nots of our society would be to eliminate the taxes of all Americans earning less than, say, $25,000 a year. What could be simpler or more efficient and better rectify, in one giant step, the decline of the after-tax wages of the lower half of American society? Forget about a capital gains reduction; stockholders have more than their fair share already.

Just Give Money to the Poor

Books like Lords of Poverty and The Road to Hell have left me skeptical about the intentions and effects of much development aid (though not as skeptical as Dambisa Moyo, author of Dead Aid.)

AfricaFocus alerted me to a new book that argues what we might have suspected: that poor people can use money effectively on their own, and that the best way to help them may be simply to give them the money.

Discussing poverty with a Washington Post reporter last month, 5th graders at a Southeast Washington school (the poverty rate for Washington, DC is 32 percent) came up with an obvious solution. “Why not just give them money?” (Washington Post, May 11). Experts and policy-makers have found it easy to dismiss this common-sense suggestion, in favor of magical belief in trickle-down economics or of elaborate poverty-reduction plans. But a new book brings together weighty evidence that in fact the children are likely to be right.

In “Just Give Money to the Poor: The Development Revolution from the South,” Joseph Hanlon, Armando Barrientos and David Hulme look at the experience of recent cash transfer programs, in countries ranging from Mexico and Brazil to South Africa, Namibia, India, and Mongolia. The verdict: cash transfers work if they are both fair and assured. If poor people have even small amounts of regular ensured income, they are in general well-equipped to decide how to use it most productively. And the results not only alleviate immediate hardship, but also contribute to longer-term economic development and poverty reduction.

Africa Focus provides some links for buying the book.

Scott Adams on the BP disaster

Even Stephen Colbert has been having trouble squeezing any humor out of the oil spill disaster in the Gulf. Some of his lines have been getting more pained groans than laughs.

But Scott Adams has somehow managed it. A colleague alerted me to to Betting on the Bad Guys, in which Adams views the disaster through the lens of the investor. Some of his descriptions of investment methods are painfully on the mark. (But funny!)

Why it’s still tough to find a job

The picture really says it all, but here’s the discussion that went with it.