Riding the Wave

I took Paste Magazine up on their offer to let me make an Obama poster for myself. I think I'll ride the wave of my vast popularity (yeah, right) to expound on two things that have been troubling me. They don't have much to do with one another. Or do they? We shall see.

OK, number one: does Obama still smoke? It's clear he did smoke cigarettes (he admitted as much). It's clear he tried to quit. Perhaps multiple times. And he appears to be chewing nicotine gum. (He was seen in his new armored Cadillac popping gum. I can't believe a president would chew gum except if he was trying to kick a habit.) So...he did smoke and maybe he still does. He isn't supposed to inside the White House. So probably he's chewing gum, wearing patches or he has well and truly kicked it. But what if he did still smoke? Well, no one is out to bail out big tobacco and couldn't he do that by introducing his generation to the joys of (even furtive) smoking all over again? Well, it would do my RAI stock some good. (As it is if they keep their dividend and the price stays where it is the yield is over 8%. Go on, buy some. Even if Barack doesn't keep smoking, you know the homeless guy on the corner with the cardboard sign will still have cigs as a high priority.) Smoking is an interesting unintended consequence spiral. I hate secondhand smoke. I was against a local smoking ordinance because I thought it was too onerous on the bar and restaurant owners, but, wowie, zowie, I love sending those guys out on the street to smoke while I eat, drink and listen to music in comfort! And, yes, I still own RAI. I would own defense stocks, too, but I don't happen to at the moment. (Except somewhere in my mutual funds, I bet I do.) I mean, no, I don't think we should blow people up but still, we do. Have to invest in something. Can't just stick to solar energy and hybrid cars and health food restaurants.

So, yeah, now that you are listening because of my super campaign poster...I've got another ax to grind in a somewhat similar vein. Where did the money go?

Really, you always wonder that when market value in the stock market disappears and all these companies are showing losses, don't you? It's worth thinking about. Some salient points:

• Let's say you had some stock. Last January you checked the price and updated your net worth accordingly. You didn't sell the stock. You just valued it. Let's say it was selling for $60 and you had 1000 shares. You are thinking: I have 60K there. I could sell it and buy a fancy car. But you didn't sell it. You held on to it. If it's worth, say $40 a share today, you 'lost' 20K, right? Well, not really. You, personally, never traded the stock at 60. Let's say you bought it back in the dog days of 2001 (although before the 9/11 meltdown) for an average price of $24. As it happens you are sitting on your original 24K plus an unrealized capital gain of 16K. Oh, and by the by, maybe you got $3.40 a share per year in dividends for those years since 2001. That's 23K. Where is that money? I don't know, dude. Did you buy a (cheap) car? A bunch of iPods, iPhones, iMacs, iThis, IThat and flat screens? The money doesn't really disappear. Although we might not have it. (And, to be fair, Uncle Sam got 15% of your qualified dividend. So the government got $3400 and you know they wasted it maybe paying Congressmen or something but still the money didn't really disappear.)
  
• Let's say you had a dollar. You gave it to a homeless guy. He bought some cigarettes. (Ch-ching. Dividends for my RAI stock.) But your dollar is gone. The homeless guy turned it into smoke. But still. The convenience store got it. And they used some of it to pay the middle man for the cigarettes and some to pay utilities and a little bit to pay the clerk, maybe. (Remember that "Simpsons" episode where Apu said to Homer, who did a brief stint as convenience store clerk, "You stole from me, you were lazy, late, indolent, etc....you were the best employeed I ever had." I'm paraphrasing, sue me. I'm also digressing.) Anyway, the money never disappears. It really doesn't. (Well there is that change rattling around in dranis, but really not so much.) So when the government prints more money to give it to banks, there is MORE MONEY. And eventually, sadly, money is worth less stuff.
• So, yeah, maybe you bought a house. For more than it was worth. And got an insane zero down loan with a rate that was low until it was high, high in a way that gives usury a bad name. You are sitting there in the fancy house and you are going to be bounced by the bank. Still you got to live there. And someone got that much money for the house. The bank gave it to them. And they have collected some money from you and they have the house. The money is still flying around somewhere. You don't have it, but then what money did you put up? Some low payments? Count it as rent, pack your stuff, get out.
• Now let's say you invested a million with Bernie Madoff. (Did he take amounts that small?) Anyway, your money is toast. But that's your money. The million is around somewhere. If you never took anything out, then Bernie gave it to someone else. Or the yacht company. Or he bought some jewelry over at Tiffany's or bought a chateau. Trust me, your money isn't gone. You'll just never see it again.

Now, do me a favor. Go scrounge throught the couch and your drawers for change. If you smoke, go buy a pack. If you don't, give it to a homeless guy. Get that money moving. It's all out there.

I may have more to say about this subject. But I had a glass of wine tonight (the winery gave money to pickers and bought a bottle and distributors and the restauarant and...you get the idea) and it's muddled my thoughts. But my thirteen bucks? It's out there somewhere!